Tuesday, December 9, 2008

A typically slow time of year

is even slower than typical. No sales in my filtered PCS in December.

The last SFH with suite potential in the Saaniches, Colwood, Langford, Esquimalt and Victoria sold on November 18. It sold for $60K under its new asking price ($665K) once the adjoining lot was added to the property (original price $415K).

The last two-bed condo in the same areas sold for $50K under asking price on November 24.

I was walking through the electronics department of the Bay the other day. The salesman said to me, "even if it doesn't have a sale sign on it, it's on sale. Every TV."

"How much I replied?"

"Oh, give or take 25%" he replied. "Depends on the model. You interested in anything specific?"

"Not yet. Your prices are competitive. I think I will wait until they are compelling."

94 comments:

Anonymous said...

Thankfully for us Fairfielders everything is great. Just tonight I saw on the news that now is the best time to buy since rates are low and prices are steady thanks to the soft landing. Because Fairfield is the most desirable neighborhood in Canada we'll be fine.

patience said...

Fairfield????


HA HA HA HA HA

Within walking distance to downtown. Yup, every night after supper, the family could go for a walk and play the newest game:

"Let's pick up all the drug addicts' used needles! Yippee......Fairfield..."

Anonymous said...

We have a house in Fairfield and it would sell for about $65,000 less today than it would have last April. I expect it to be down another $50,000 by this time next year.

No worries if you're not in at zero down and 40 year mortgage. It's all good, enjoy your garden.

Anonymous said...

Apparently Patience has not spent much time in Fairfield, it's really quite beautiful.

Anonymous said...

"Thankfully for us Fairfielders everything is great. Just tonight I saw on the news that now is the best time to buy since rates are low and prices are steady thanks to the soft landing. Because Fairfield is the most desirable neighborhood in Canada we'll be fine."

From the lack of effort in this tack (that's a fishing term for you non-troll types:-), I'm guessing a bored bear wallowing in it's own excrement. At least pretend to try and make it sound vaguely interesting, eh.

Muriel said...

HHV,
I don't know what your filter parameters are, but did they not pick up the sale of of 2725 Roseberry (MLS# 256314)?

I think it's very nice house (2,385sqft), in a nice area and on a large lot. It has a bachelor suite in basement. It just sold for $590k after being listed for $599k 12 days ago. So I guess this is what the VREB would consider "well-priced" these days.

I've seen a few other sales in December, but I look for (any)houses, townhouses and duplexes in my search.

dub said...

Anyone watch the segment on Global last night about people walking away from pre-sales? I like the opening:

"I looks like the bubble has truly burst for the pre-sale condo market in greater Vancouver"

http://www.globaltv.com/globaltv/bc/video/index.html

(scroll down on the left to 'Global BC Stories' and then select 'Presales Abondoned' in the new menu that pops up)


I wonder if this will start happening here? Starting in Langford?

roger said...

Dub,

Thanks for the video tip. Here is a clickable link to the video:

Presales Abandoned

patriotz said...

I especially liked the woman who bragged that she had picked up 3 pre-sales and her husband 3 more.

See you in bankruptcy court, Dragon Lady.

VicREBear said...

Good for the builder. Prosecute every last greedy flipper and force them to honour the real estate call options they gambled on. Maybe the dumb bunnies did the same with grain futures a few months ago and are watching out their living room window in shock as the big truck is pouring out 10,000 tonnes of corn onto their front lawn. If you don't understand the risks of the game, don't play, folks.

Anonymous said...

Seller leaves town with a new haircut

Anonymous said...

Geez, that's 6 condo mortgages that lady is going to walk away from and the banks are going to unload on the taxpayer.

We are in some deep doo doo!

vg said...

"I especially liked the woman who bragged that she had picked up 3 pre-sales and her husband 3 more.

See you in bankruptcy court, Dragon Lady."



Yes that part was very amusing,and a 14 hour line up of more just like them. The bankruptcy lawyers will be busy boys this coming year. I say we break new records for people biting the big one.

Anonymous said...

Ha ha ha me walking all to bank to cash big cheque for money made from condo. You so foolish thinking presale not good for investment when stock market crash already 50% and keep going down like joe plumber drain. If you rent you pay me and mortgage gone soon so no worries.

vg said...

"If you rent you pay me and mortgage gone soon so no worries."


my, that was a fast 40 years, I just saved how much last month ? $40,000 ?....the trolls return.

Anonymous said...

Anonymous 1:19

Please stop by my office on your way to the bank.



U. Dontgetaway
Canada Customs and Excise

Anonymous said...

This owner was only looking for a light trim but will probably get a brushcut

Just Jack said...

From a quick look at condominium sales over the last month, it appears that the only people to have lost money are those who bought pre-sales. I could not find any sales of older condominiums that sold for less than what the vendor originally paid.

We are at stage 1, of a market correction. The first to be hit being the developers and speculators.

New condominiums and new homes will lead the older homes down to lower prices.

6 more months of poor sales activity will have the builders bleeding red ink into the streets.

Anonymous said...

Anonymous 4:19

That would indeed be a good brushcut. The last suite to sell in the building was #105 which went for $295,000. The last time prices in that building were that low was in late 2005.


This is an estate sale and in my opinion the agent has dropped the price to start a bidding war. Interesting one to watch and see what happens.

PS you wouldn't be the listing agent - would you?

Anonymous said...

anon said,

PS you wouldn't be the listing agent - would you?

How did you guess that??

It was listed at 249K but with the latest drop of 24K there will be lots of interest now. Multiple offers is a definite possibility. Everyone wants to live in James Bay or Fairfield.

patriotz said...

Geez, that's 6 condo mortgages that lady is going to walk away from

No, six sales. The point is that the pre-sale buyers are refusing to complete the sales. No mortgage in the first place.

The developer has the right to sue the pre-sale buyers for any losses it suffers from failure to complete. If the buyer has any assets to go after, rest assured they will.

vg said...

"Multiple offers is a definite possibility. Everyone wants to live in James Bay or Fairfield."


Not everyone, lots of leaky condos and damp, mouldy places down there, I'll pass.

But we are insulated from the world turmoil, so multiple bidders I am sure are lining up around the block as we speak with their cheque books. Maybe they will bid on 6 more that aren't even for sale yet ?

Libre Esprit said...

From the tone of some of the troll posts, I am wondering if people are migrating from VancouverCondo Info now that the site is down!

BTW - I'm in for the next beer night.

Art Vandelay said...

Everyone wants to live in Fairfield?
Well, as long as "everyone" includes me, you're wrong.
Need more examples?
What a stupid statement.

Mr.4AM said...

You know Real Estate is in trouble when you see this in your weekly Business Examiner....

Who's suing whom in ..

Victoria: 6/14 = Real Estate Related court cases

1)
Defendant: Kensington Realfund Corp.
Plaintiff: Home Trust Co.
Amount: $358,284

2) Defendant: City of Langford
Plaintiff: HomeTrust Co.
Amount: $358,283

3) Defendant: Romanoff Home Ltd.
Plaintiff: Baronet Inc.
Amount: $15,092

4) Defendant: RMS Holings Ltd.
Plaintiff: (individual person)
Amount: $14,699

5) Defendant: Unity Developments Ltd.
Plaintiff: Times Colonist
Amount: $69,303

6) Defendant: Marson Hardwood Floors Ltd.
Plaintiff: (individual person)
Amount: $25,809

==========

Nanaimo: 6/8 Real Estate Related

Companies involved are:
One Tree Developments
Coastal Pacific Insulation
Coast Underwriters
Torry & Sons Plumbing & Heating
Sims & Assoc. Land Surveying.
Salvage & Hauling Ltd.
========

Courtney: 3/3 Real Estate related

Design & Construction Ltd ($515,299!!)
Black Diamond Steel Products ($101,305!)
3D Mobile Home Specialists ($25,176)

=============

And to think this is only the beginning of the downturn.

Bar exam anyone? Looks like lawyers will be doing well in our upcoming tougher times.

Mr.4AM

Anonymous said...

The question becomes one of economics.

How cheap can you get a lawyer to fight each one of the pre-sale buyers and is it worth trying to sue international clients.

The lawyer will also have to be paid in some way.

If you walk away from your $500,000 pre-sale and the developer sells your condo 12 months later for $400,000. But the developer sold other suites in only a few months for $475,000 what would the damages really be?


As I was once told. Sure, you can sue me and you will probably win. But I'll keep you tied up in court for years.

phil said...

I wonder what this one is about:

5) Defendant: Unity Developments Ltd.
Plaintiff: Times Colonist
Amount: $69,303

Anonymous said...

"If you walk away from your $500,000 pre-sale and the developer sells your condo 12 months later for $400,000. But the developer sold other suites in only a few months for $475,000 what would the damages really be?"

Pursuant to the contract, the damages would be total agreed selling price plus all related selling and legal costs less distressed selling price. The developer would not likely (sorry, not a lawyer) be held to any standard of care in terms of selling the unit - other than his own interest in getting as much up front as possible.

I have't read too many of these, but I beleive this is not like residential rent where the landlord is obligated to mitigate his losses. The purchaser has agreed to purchase at said price and that contract was 20 pages long. The terms for default are spelled out very clearly.

B2B said...


I wonder what this one is about:

5) Defendant: Unity Developments Ltd.
Plaintiff: Times Colonist
Amount: $69,303


I imagine it would be unpaid advertising?

Anonymous said...

So you are legally obligated to purchase the property. The right thing to do is complete the contract.

However, if a lot of people are walking away from their pre-sales in the complex it may put the developer into bankruptcy. If the building has yet to be completed - then I would think your off the hook as the developer can not deliver title to the property.

If the building is ready for occupancy and the builder is bankrupt, then it would be hard for the developer to find a lawyer to take the case.

In any case it would probably be years before the case would go to court.

Do you kick or gamble?

Anonymous said...

"However, if a lot of people are walking away from their pre-sales in the complex it may put the developer into bankruptcy. If the building has yet to be completed - then I would think your off the hook as the developer can not deliver title to the property."

There's always a Receiver. The Receiver will happily continue collecting from you on behalf of the developer's creditors (banks.)

As long as you have 4 dollars left the lawyers will be willing to take 3 for themselves. You collectively bankrupt a developer and I can imagine the liens will be flying all over the place.

You signed the contract in good faith and there will be no getting out of it - unless you also go bankrupt, which may be inevitable anyway if you over-paid.

patriotz said...

What will probably happen with the defaults is the developer (or receiver) will engage a law firm to take on all defaults for a development. That spreads the risk of collection around and makes it easier to negotiate a fee schedule which in all likelihood would be performance based.

Don't you worry, there will be plenty of law firms willing to take them on. We're in a recession you know.

roger said...

There is an interesting rumour thread about Bear Mountain over on Vibrant Victoria

Anonymous said...

Less sales meen more money available to buy! Good time to get mortgage with bank mortgage down. Stock market plumet mean more people buy safe investment in condo. More people drive now gas cheaper. Condo always good investment since Victoria most beautiful city in the country and butchart gardens bloom year round.

greg said...

I propose the Canadian Government, Government of BC and Municipality of Langford waste no time and immediately extend a bail out, if requested or required, to Len Barrie and all other investors at Bear Mountain.

Only if they need it and ask for it, that is. And of course, in exchange for equity stakes.

This is a joke with no factual basis, I am not libelling or inferring anything, just saying if real estate goes down the tubes, of course the first concern should be to protect the jewel of the region, bear mountain, from unwarranted international financial turbulence.

This may or may not be true or reasonable, you decide.

Anonymous said...

Risk of 'substantial' rise in home foreclosures: Bank of Canada


Gradual improvement is 'most likely outcome' of crisis, review says, but threat persists


The Bank of Canada is warning of severe economic turmoil, including the risk of many Canadians losing their homes, if the financial-market crisis worsens.

dub said...

Risk of 'substantial' rise in home foreclosures: Bank of Canada

What a ridiculous assertion. It's different here in Canada and we aren't at risk for this kind of thing.

Besides, we Canadians are NOT at all over-extended. We only require ~70% or our gross income to buy a house. And since home prices only ever go up, we have absolutely nothing to worry about!!

Anonymous said...

The sarcastic `but we`re different here` line is unoriginal and is getting a bit tiring. Yes, we know the we`re different here argument is not a good one. It won`t matter if we are in a great city... Plenty of great cities in the states have had massive price drops.

B2B said...


Gradual improvement is 'most likely outcome' of crisis


Hehehehehe. So the worst financial crisis in 75 years is 'most likely' to just improve on its own, when it's barely gotten started.

Anonymous said...

The sarcastic `but we`re different here` line is unoriginal and is getting a bit tiring.

Maybe you should send that note to the Real Estate Boards and the bank's economists. They're ones that use it every chance they get, but without the sarcasm.

Anonymous said...

This looks like a haircut but it is really a flip that flopped.

- Realtor commission, property transfer tax, city taxes, legal fees and maintenance all add up.

mln said...

Housing Trends and Affordability, RBC Report.

The situation is unraveling fast in British Columbia. Provincial housing markets
are correcting from extremely tight conditions that built up during the boom and
drove prices sharply higher (more than doubling between 2002 and early 2008).
By the first quarter of this year, RBC’s housing affordability measures for British
Columbia ranged from 38% to 50% above long-term averages — the most inflated
ownership costs of all provinces (the higher the measure, the least affordable is
home ownership) and clearly an unsustainable position.


You have to wonder why they wait until prices start decreasing to release a report on affordability, but better late than never I guess.

patriotz said...

, including the risk of many Canadians losing their homes

People are not at risk of losing "their" homes, they are at risk of not being able to keep renting them from the bank.

Not the same thing at all.

Anonymous said...

"This looks like a haircut but it is really a flip that flopped.

- Realtor commission, property transfer tax, city taxes, legal fees and maintenance all add up."

If it's truly a flip, they will be able to claim a business or capital loss on the project. This may reduce any actual loss by 30 - 40% (depending on their taxbracket.)

So I guess the taxpayers (you and me) eat their share of it as well. Ain't life grand.

patriotz said...

If it's truly a flip, they will be able to claim a business or capital loss on the project.

Capital losses can only be written off against capital gains. If the property is being taxed on an income account (flipping as a business) there must have been gains made on other properties.

You can't just write off a failed flip against your regular income.

patriotz said...

Well reality is returning bit to bit to Victoria. Here's a reasonable house on a big lot, quiet street (yes I know it's across from the hospital), good location asking under assessment at 400K:

MLS®: 256306

Now when a place like this comes down to the low 300's, and it will, I'll come knocking.

Why would anyone in their right mind pay 400K for a condo, when you can buy a house even at today's prices?

Anonymous said...

Patriotz - Since you can find a place like that to rent in the $1600 range, wouldn't it make more sense to wait for it to drop under $250K? I'm pretty sure it will!

patriotz said...

It might well - but one thing to consider about price/rent multipliers.

I expect the multiplier for houses with suites to come down to 150 - that includes rent from the suite. But if you are buying a house without a suite the multiplier will be higher because you are foregoing suite income - probably about 200.

That's the price you pay for privacy and I'm willing to pay it.

Anonymous said...

Hope you're willing to put up with ambulance sirens blaring in the middle of the night. Sure not to often, but how many times is too much?

I'm sure that has a bearing on the price.

Anonymous said...

"Capital losses can only be written off against capital gains. If the property is being taxed on an income account (flipping as a business) there must have been gains made on other properties.

You can't just write off a failed flip against your regular income."

Correct on the capital gain (if by "gains on other properties" you are including shares, mutual funds etcetra.)

As a true flip it's a "venture in the nature of trade" and the losses are reportable as business losses(determined by when it was bought, how it was used for a period of time, the purchaser's orignal intention etc.) It is a business (and CRA will consider it a business from a profit perspective as well - ie no 50% capital gain deduction on the profit.) Think about it as the difference between a "day-trader" and a "long term investor" - one is involved in a business, the other is investing, business vs capital gains and losses.

Therefore the losses are written off against all income including other business and T4 income. Have a look at a T1 guide to see where the categories fall.

If all you do this year is lose money, you carry those losses back to other years (max 3 back) and recover taxes paid. The venturor is somewhat sheltered from the losses by your's truly, oh, and you.

Anonymous said...

Large predicted snow dump raise profile of condo for investors wanting olympic dream. Stock market continue to crash for poor renting bears means more buyers later for condos downtown.

Anonymous said...

From today's TC

"Rental Housing Hard to Find"

http://www.timescolonist.com/business/Rental+housing+hard+find/1064747/story.html

Not for long.

S2

roger said...

Tony Joe makes some comments on real estate before stepping down as VREB president:

West Shore real estate market slows down

“There is no question things have slowed down. We are seeing less buyer activity,” said Tony Joe, president of the Victoria Real Estate Board. “That being said the people out there shopping for homes are very qualified serious buyers.”

** Yes they are seriously trying to catch a falling knife!

Sales reductions were expected, though, Joe said. No one in the industry expected the escalating housing prices and sales to continue on the upward soar of the past few years forever, he said. “Although it looks quite weak compared to this time last year, we are accustomed (to these slowdowns).”

** Any realtor or buyer that entered the market in the last seven years has never seen a slowdown and is in for a shock.

Houses priced too high are sitting on the market for months while others continue to sell within days of hitting the public listings, Joe said. “It’s a real strong message about correct pricing,” he said.

** But a lot of the sellers aren't listening. Lower your price or chase the market down.

It’s impossible to predict, but if interest rates stay stable, current housing prices should also remain stable over the next year, he said.

The housing market historically has peaks in pricing, always followed by a decrease. With a recession affecting all industries in Canada, housing is no exception. ”I guess that’s our time now,” Joe said.


** He seems to get it but then wishful thinking takes over.

What's happening in Langford?

For Langford, single family home sales dropped from 32 in November 2007 to 12 in November 2008. Colwood dropped from 18 in November 2007 to three in November this year.

In October, Langford had 1,315 housing units under construction, almost double from the same time last year.

Starts, defined as when the concrete foundation is poured, were up in Langford this year with 902 underway by October. By the same time in 2007, only 572 units were underway.


Predictions??....

mln said...

Work stoppage at the Highlander on Bear Mountain--apparently everyone's still getting paid though. Crazy times.

G said...

http://www.canada.com/nanaimodailynews/news/story.html?id=a4453218-6c9a-408d-b090-18dc4689ae4b&p=1

An article about Nanaimo Real Estate that makes me want to start my own Nanaimo blog...I think I might.

roger said...

That article in the Nanaimo Daily News was real "pumper" talk. But at least one real estate agent in Nanaimo is calling it as he sees it.

Rob Grey - Remax

October sales statistics show an average sale price increase of 2% over October 2007. On a day to day basis watching the market intently I have viewed downward price adjustments averaging over 8% since Spring '08. Buyers have a large inventory of homes from which to choose with sellers demonstrating much more movement on price both in the form of price adjustments and additional movement on price during negotiations. This latter statistic is based on the average selling price being 97% to 98% of the current list price - this stat was common during the 2003 to Spring 2008 markets; as of October '08 the selling price was 94% of list price.

I wish we had a straight talker like this in Victoria!! They would likely get a lot of business.

greg said...

Roger - maybe as a buyer's agent.

Still think a lot of sellers don't want to hear this kind of talk from the listing salesperson.

roger said...

Greg said:

Roger - maybe as a buyer's agent.

Definitely as a buyer's agent. How is a buyer going to get an agent to put in an offer that reflects current market conditions if that agent buys into pumper myths and wishful thinking?? This is especially true if you want to lowball.

Even a seller that really wants to sell might appreciate some facts and straight talk about the market.

roger said...

Speaking of spin....

Real Estate Market Predicted to Stabilize in 2009

Chris Markham, 2009 president of the Victoria Real Estate Board, says the Victoria area housing market is expected to stabilize in the coming year. Markham notes that the strong local economy bodes well for the Victoria area despite the marked slowdown in the number of sales this year following several exceptional years of significant price increases and strong sales activity.

"Although these are uncertain times, we believe that the fundamental underpinnings that give overall long-term strength to the Victoria area housing market remain in place. Barring unforeseen circumstances, we expect the market to stabilize in the coming year."

Markham notes that with over 4,000 properties of all kinds currently listed on the Victoria Real Estate Board’s Multiple Listing Service® (MLS®) system, buyers have lots to choose from. "Given that the Victoria area population continues to grow, we believe there will be continued healthy demand for home ownership and that’s good news for both buyers and for sellers who price their homes realistically," Markham added.


Here we go again - new guy but same old, same old..

NanHousing said...

Ok I have created the Nanaimo real estate blog...it needs some fine tuning but hopefully hhv can include it in his blogroll.

Let me know how it is.

http://nanrealestate.blogspot.com

roger said...

NanHousing,

Your site looks great.

I made a post with a link to comprehensive Nanaimo stats. If bears think Victoria has lots of inventory take a look at Nanaimo.

greg said...

nanhousing - tried to post to your site but couldn't, your security settings are quite high relative to the other blogs around, it will of course prevent any anonymous commenting.

NanHousing said...

Ok, I've changed the settings so anyone can post with no word verification etc, getting the hang of this.

Anonymous said...

"From today's TC
"Rental Housing Hard to Find"
http://www.timescolonist.com/business/Rental+housing+hard+find/1064747/story.html
Not for long."

Thanks for the link, it is interesting to note that while housing supply has increased significantly over the past couple years demand continues to weigh heavier.

Exactly what about this article is bear friendly? The rental market remains strong and will for the foreseeable future.

Anonymous said...

"Exactly what about this article is bear friendly? The rental market remains strong and will for the foreseeable future."

With rising unemployment you will see an increase in rental availability. That and there are thousands of condos coming on line that will go from "for sale" to "for rent" as the buyer pool dries up. The forseeable future is actually one of great change, you can count on it.

Anonymous said...

"The rental market remains strong and will for the foreseeable future."

What more can be said, vacancy at all time lows in spite of significant increase in supply. As it starts to turn around at best it'll clean out some of the less desireables.

The funniest posts are those that extoll the virtues of coming unemployment. Give me a break already. This is a "first time buyer's" blog isn't it?

Victoria could use a bit of unemployment numbers, I'm tired of cold burgers.

Anonymous said...

"With rising unemployment you will see an increase in rental availability.:

With rising unemployment you will be living in Alberta, no Saskatchewan, no keep going East.

Anonymous said...

Unemployment ok since large population old gray hair rich asian and albertan no problem for economy. Huge walmart lineups and parking spot fights mean good times ahead. Lots of poor renters to flip burger for construction man.

beagle said...

How high-risk mortgages crept north

New mortgage borrowers signed up for an estimated $56-billion of risky 40-year mortgages, more than half of the total new mortgages approved by banks, trust companies and other lenders during that time, according to banking and insurance sources. Those sources estimated that 10 per cent of the mortgages, worth about $10-billion, were taken out with no money down.

hhv said...

Now's a great time to buy bank stocks and move your money off-shore though beagle because the banks just sold all those debts to your government.

And now they're about to throw $2.8B into producing cars that can't be sold at a profit.

Solid investment skills at the Department of Finance.

(yes, that is my toungue in cheek)

roger said...

From today's TC:

Regional house prices drop 12.5% in November

The facts...

Across the province, the average home price of $395,687 in November is the lowest in more than two years, the B.C. Real Estate Association said yesterday. That's a 12.5 per cent decline compared with November of last year.

Greater Victoria's November average for all types of housing was $429,204, down by 12.4 per cent from November 2007, but still the second-highest average in the province, following only Greater Vancouver.


The twisted stats...

** 11 Month averages are used to hide the rapid fall in prices since April.

However, comparing figures from January through November of this year, the average home price came in at $486,465 -- an increase of 4.4 per cent from the same 11 months in 2007, when the average price was $465,766.

And then the spin...

Tony Joe, Victoria Real Estate Board president, said that despite November figures, business has picked up. "Realtors out on the street are reporting things are pretty busy," Joe said.

"I can't help but think that people are maybe seeing this as an opportunity to buy. Prices are good." He anticipates that the market will be fairly stable next year.


Did Muir skip Economics 101?

It's ironic that when prices peaked in the recent boom there were plenty of buyers, but now that prices have slid into a trough, buyers are scarce, said Cameron Muir, the association's chief economist.

VicREBear said...

...but now that prices have slid into a trough, buyers are scarce, said Cameron Muir, the association's chief economist.

Uh...Cam...

Prices slide into troughs because there are no buyers, not the other way around. Econ 101? More like Econ Grade 5.

Just Jack said...

Incredibly low vacancy rate at 0.5 percent

Or is it?


The data sample mostly includes apartment buildings only. Most of these buildings were built in the 1970's and represent the lower rung on the ladder for rental housing. Given the high employment in Victoria, I would expect these lower rung rental market to be tight.

However, an apartment building owner can not raise his one-bedrooms to $1,100 or the applicant will gravitate to a newer condominium or basement suite.

When you look at craiglist Victoria, you will find that there are around 750 or more properties to rent in Victoria. Obviously, no shortage here.

So what we have then is a low vacancy rate just in the lower rung rental market.

As more condominiums are listed for rent, the rate that the owner will except will start to drop. As the rental spread between an apartment and condominum decreases, prospective renters will go for the condominium. This will have an affect of lower apartment rents and increasing the vacancy rate.

If one were to believe that a 0.5 vacancy were the true state of the rental market, then landlords could charge any amount as there would be almost nothing available for rent.

Typically, our rental rate hovers around 1.0 percent. At that rate there is little difficulty in finding an apartment for rent in Victoria. During poor economic times that rate has gone as high as 3.0 percent in some Canadian cities. These cities have high unemployment and falling real estate price.

If you are thinking of buying a rental property of four or more suites, you may want to consider that the currents rents are probably at the highest affordable level and the vacancy rate may start to increase. Also, your renters may tend to be more transient resulting in higher level of bad debt.

But its your call.

Anonymous said...

Did Muir skip Economics 101?

It's ironic that when prices peaked in the recent boom there were plenty of buyers, but now that prices have slid into a trough, buyers are scarce, said Cameron Muir, the association's chief economist.


Yeah, I really hope he didn't put a lot of thought into that statement. Surely he attended grade 8 Consumer Ed classes like the rest of us.

Anonymous said...

Well put Just Jack... It's interesting that the TC seems to have to run one of these low vacancy stories every time they run a decline in home sales story. I wonder why?

Anonymous said...

101 reasons to buy and to sell at anytime,really?

Have a look at of the Oak Bay beach hotel.

Anonymous said...

"It's interesting that the TC seems to have to run one of these low vacancy stories every time they run a decline in home sales story. I wonder why?"

It's also interesting to see people jump and down to cheer a TC story on declining prices yet when discussing low vacancy rates they have no idea what they are talking about. Just a little transparent.

Prices are going down and vacancy remains low - it's two separate stories, although not completely unrelated issues. In fact it may be said that they are often at inverse relationship to one another depending on which stage of the cyclical market we're at (with a parallel somewhere in the middle)and therefore make news at the same time.

Anonymous said...

The low vacancy is just another example of why prices will never fall too far. The pent up demand is building back up as we read this.

roger said...

anon said:

The low vacancy is just another example of why prices will never fall too far. The pent up demand is building back up as we read this.

You should take another look at Just Jacks post above. It is the multi-unit apartment rentals and classified ads that are used to determine Statscan vacancy rates. Take a look at Craigslist, Kjiji and Used Victoria and you will see plenty of rentals are still available. And there will be lots more soon because with all the condos for sale some will undoubtedly become rentals.

As far as pent up demand I think you mean pent up desire. The recent 5% down requirement for CMHC insured loans puts many folks in the want to buy but can't buy camp. You can still buy with zero down if you are foolish enough to take a cashback mortgage at a high interest rate.

Anon - Do you really think a renter paying $1100 a month is prepared to pay $2200 a month PIT for a 2 bedroom condo or crummy house??

Anonymous said...

That's just the point. It's not $1,100 per month for a decent SFH it's $2,300 for a home that might sell for $500,000. These people want to buy and will at the first opportunity. Albeit that it may be at $450,000.

As a landlord of both a SFH (duplex) and a small apartment rental life has never been better. The apartment bldg hasn't had one month of vacancy in ten years (except where we have intentionally kept it open for a month for painting etc) and any turnover on the SFH reflects lineups around the corner for people wanting to rent.

Turnover at this stage in the game just allows for higher rents, which already pay the overhead plus.

Where were we, oh ya, the extremely low vacancy rate, which is also at least somewhat representative of all housing ($hit flows down hill) reflects the increasing pent up demand for first time buyers which in turn provides a floor for prices (and not in the rent vs buy analysis that Patriotz would have you analyse.) They simply want to be homeowners.

Actually this blog reflects the demand nicely as well.

hhv said...

Anon,

this blog reflects demand for homeownership, not home-slave-ship. You obviously have owned your rental properties for some time.

Very few people can afford to become homeowners at an equivalent to rent, unless they have a significant downpayment, at today's prices, even factoring in the 17% correction thus far. It will take another 17% correction to get "almost there" and that's only if incomes don't suffer in the meantime.

This blog reflects a voice of sanity in an otherwise insane market (steadily gaining sanity I may add) that is so far out of whack with rent-equivalence that it is exhausted.

For all you would be trumps out there who seem to think the spring will be the "awakening of pent-up demand" I have this to say: every correction in Victoria in the last 30 years has seen an over-correction in price to rent ratios and an almost equal timespan from peak to trough as it took to get from trough to peak of the previous run-up. So watch for a pull out of the bottom beginning around 2014 or 2015 if this proves true again.

Keep sipping the kool-aid...

mln said...

Anon, read this article. It makes a little more sense than your "pent up" demand theory.

I can't believe you're using the existence of housing blogs as evidence that prices won't decline "too far". LOL

Just Jack said...

Anon Said"

"As a landlord of both a SFH (duplex) and a small apartment rental life has never been better. The apartment bldg hasn't had one month of vacancy in ten years (except where we have intentionally kept it open for a month for painting etc) and any turnover on the SFH reflects lineups around the corner for people wanting to rent."


Your living in a fool's paradise.

Call up an agent and ask them what has happened to the value of rental properties. I will save you some trouble, they have simply STOPPED selling.

Without the specter of price appreciation, buyers for rental properties have vanished. Buyers are no longer looking at the balance sheet showing how the property's value was going up.

Now, they have returned to the income statement. How low does your property value have to drop until a prospective purchaser can get a return on their equity equivalent to a long term bond.

Let's try 30, no make that a 40 percent drop from what the your property's market value was last Christmas. That is if you can find a buyer even at that lower price. Because most of those prospective purchasers that would be buying your property are hurting bad too. The ones that are not hurting can smell fear in anyone trying to sell a rental.

Anonymous said...

"Your living in a fool's paradise.

Call up an agent and ask them what has happened to the value of rental properties. I will save you some trouble, they have simply STOPPED selling."

I don't have an issue with sales prices because THEY ARE NOT FOR SALE. Not everybody in the real estate rental game is in it for speculation. Some of us actually make money on rents with long term appreciation the end result.

Paid less than $300,000 and could sell today for $1,000,000 + (actually today, not wishful thinking today.) Tomorrow (20 years from now) it might sell for today's equivalent of $2,000,000. Regardless of price it will pay a monthly income for the foreseeable future. It is part of a retirement plan that I am quite happy with.

Given that you beleive that rental properties are now 30 - 40 % off value from a year ago what would you be planning to do? I am planning to buy another somewhat larger property. And yes, I'll probably wait until next year.

Why is this blog so doom and gloom when there is so much opportunity today to plan for tomorrow?

Anonymous said...

"I can't believe you're using the existence of housing blogs as evidence that prices won't decline "too far". LOL"

This blog is all opinion-based demand and desire and nothing more. I can't beleive you would even question this fact. LOL'2.

mln said...


This blog is all opinion-based demand and desire and nothing more. I can't beleive you would even question this fact. LOL'2.


You definitely don't sound scared or worried about your RE investment, no, not at all. Which is why you're reading a bear blog. Right.

If there's so much opportunity out there with no one else buying, why aren't you busy making purchases?

Deep down, you know you're wrong.

You see it as doom and gloom. I see it as an opportunity to get in at the bottom. It's fan-freaking-tastic if you ask me!

I just want to buy a house at a fair price. Why on earth would I buy when I can bank $1000-1500 a month renting? Not to mention the $10,000 per month I save by waiting.

The rental market is tight right now, sure. So was San Diego, Phoenix, Vegas...

Fodder said...

This seems like the start of an argument that isn't an argument at all. To the poster with good rental property, you are what we are talking about. You bought property at a time when the value of the investment could be covered by the rents. With multiple properties providing income you will be able to buy another property long before I can. I have no choice but to wait until my spouse and my income can pay for the home.
In the long run there will be a point when a percentage of people will be able to start buying again. I don't think that means the bottom will be reached. In the end we are above average earners who cannot afford a below average house. That can not work out in the long run.

Anonymous said...

"You definitely don't sound scared or worried about your RE investment, no, not at all. Which is why you're reading a bear blog. Right.

If there's so much opportunity out there with no one else buying, why aren't you busy making purchases?

Deep down, you know you're wrong."

What exactly am I wrong or do I have to be scared about? That the properties are income and cash positive? No...That they will go up over the next 20 years? Don't think so...That like most everyone else here I think properties are going to come back down yet another 20% and allow buying opportunities? We'll see.

Why am I not buying today? I also see this market falling and will wait for it go far enough for buying to make sense to me. In the meantime I will look for specific opportunities where owners may be distressed and the properties have inherent underutilized value.

If this economy goes into a longer term slump, none of us will be buying more property. Except of course those that are sitting on mounds of cash and managed to avoid the temptation to pile it into the stock market prior to September (I know most of you guys only made smart decisions there and didn't join the masses in that collapse either:-)

You're right Fodder, we are on the same side of the discussion, I just don't agree with the doom and gloom nonsense. I think there will be a lot of opportunity in the next few years. Actually I think the opportunity is there now in the stock market but that gamble scares me.

B2B said...

Anon 6:56 - you seem confused about what constitutes "doom and gloom". Let me clarify for you - most of us predicted falling prices in real estate and are therefore happy with what is developing there.

We have had carbon copies of you commenting on here before. People who bought property when it made sense (yields cover mortgage) and now you think that means (a) you're an investing genius and (b) property will continue to be the best investment. Here's an education for you - diversification is the key to investing. Thus you don't want to buy more Victoria property - you are overweight in it already. You need to invest in alternatives, such as good companies. You say you are too scared to invest in the stock market, when it has outperformed housing since the dawn of time. Think about it.

vg said...

"Thus you don't want to buy more Victoria property - you are overweight in it already."


Many a Trump wannabe has suffered a painful fate,thinks it is the market bottom still into paper profits only to see his portfolio disinegrate as he underestimates Victoria's real economy.

Once the construction business tanks further (which it will), the spin off effect in to other businesses will cause loss of jobs which means many less people moving to Victoria to rent from overpriced slumlords. There will be an exodus from Victoria for jobs that pay more than $15 an hour as in past recessions.


There is already a hiring freeze on government consultant jobs and I am hearing the same from several other prominent places as well which is a true baromteter of this towns so called "gauranteed" job foundation. Anyone planning a real estate purchase to play landlord needs their head examined.


Praying for higher rents has as much chance as winning the 649,they are already a gouge trying to rent a main floor of a house in an average neighborhood for $2000 unless you like 10 cokeheads for tennants.

Anonymous said...

WOW you people really are angry aren't you. Keep to your prayers.

Fodder said...

Angry over the state of our present situation doesn't sum it up for me. I'm sad. Look at Victoria to see the long term implications of run ups. People are putting off starting families. It is getting harder and harder for a young family to start out in Victoria. This can be seen with the closing down of schools in the same areas housing is climbing.
Families that have taken the jump to provide their children with the same experience as they had didn't realize that ideal was being preyed upon. Now we see the consequences looming in the near future, can we guess who the people are who will be hit the hardest. Yep a young couple with kids.
A bubble on a basic building block on our future is a real swell thing. And for our government to stoke the fire with new ways to borrow tells something about how they see the average person in Canada. Business first at any cost.

vg said...

I'm not angry, I am thrilled this joke of a market is just beginning its descent back to reality. Those who bought in at the top is not my fault they did not do their homework.

But I am disgusted that our so called "safe" lending practices the MSM and financial institutions keep touting is all bullshit. Anyone who dared to sound the warning bell all the way up past average affordabilty levels was labeled a headcase who is just jealous he missed out. Sorry to say the realists were right though 2 years early when we now see our own government promoted overpurchasing to keep the bubble alive.

Anonymous said...

You're right, that doesn't sound angry at all.