Tuesday, January 13, 2009

Darn neighbours

One of these things is not like the other:

2nd floor. Likely owner-occupied. Likely not a "motivated" seller. Unsold.

3rd floor. Likely not owner-occupied. Definitely a motivated seller. Sold.

Man, that first seller must be pissed. Because one unit sale just established a new benchmark for this building: On Sale, over 20% off.

Me thinks there will be plenty more of this to come in the next few months.


roger said...

The condo market is headed one way - down. I prepared a new slideshow on condos and things look mighty grim if you are a seller. Check it out:

Condo Market Bubble Bursts

Townhouses are doing a little better but still down year-over-year. Here is the latest slideshow:

Townhouse Stats - Dec 08

The CMHC data is now available for Single Family Homes. The average price for homes is calculated excluding waterfront and acreage properties. Take a look at what has happened

Single Family Homes

The complete SFH slideshow is here

You will need to use the controls at the top of the slides to pause and single step. If you click the big X it will run in full screen mode.

Just Jack said...

As I am looking at the January sales. And thats quite easy since there are so few. I find that it seems a high percentage of them are vacant, which suggests to me that these are the homes that HAVE TO sell. I think a lot of sellers are still not giving into the idea of having to lower their price.

With these new sales, the agents may have an easier time in convincing the vendor. Maybe.

The properties that have sold tend to indicate that prices for homes have rolled back to the second quarter of 2007. While condominium prices have rolled back to Q2 of 2006.

If you have owned your condominium for a least 10 years, then most likely you have around $100,000 in equity built up to buy a home. Unfortuneatley, at 80 percent financing you would be looking at homes around $400,000 to $500,000. Not 500,000 to 600,000 where most properties are listed today.

I think we may see a dead cat bounce when prices drop into the 400-500K range, but it should be short lived as the pool of prospective purchasers is shallow.

Just my thoughts

hhv said...

The number of new condos for rent on craigslist is astounding right now. Juliet, Reflections, The graveyards, oops I mean Railyards, on and on.

Are speculators turning to rentals to stem the bleeding? Or are developers choosing to rent unsold units?

omc said...

I am not looking at condos, but owned one yeas ago. The third floor is worth way more than the second, so you can figure out the worht of the remaining unit. I still think that $200k is alot for one of those ex-rental units in that area. Good to see the lower end of the market finally making the moves that the upper end has been doing for a while. :)

roger said...


That third floor condo sold for a lot less but he guy on the second floor will probably stick to his price. Why? Because things are different here on the second floor (better view, closer to the laundry room etc.) :>)

hhv said...

Look at the date sold vs status change date. Someone please correct me if I'm wrong, but seems to me that the $200K offer on the $250K had some "conditions" that needed to be removed prior to finalizing the sale too.

"Yes, I'd like to pay 25% less than your last asking price, but subject to: A), B), C)... Did you just say yes? Wow... we over paid. Dagnabbit."

Anonymous said...

One sale does not make a market. It's location location location. The cheaper unit was probably in a bad area of the building.

roger said...

HHV said:

Look at the date sold vs status change date.

That is when the listing agent's firm finally gets around to updating the VREB database. This is not unusual. Sometimes they don't get around to updating the database for months even though the house has a sold sign on the lawn. Makes you wonder if they leave it listed so they get more calls and then they can sell the caller someting else.

hhv said...

thanks Roger... I was fishing.

patriotz said...

I think we may see a dead cat bounce when prices drop into the 400-500K range

You must be joking. 2009 is going to make 1982 look like a tea party.

Just wait for the provincial government cuts after the election. It's straight down, baby.

Anonymous said...

cuts? It sounds more to me like they were going to spend us into an abyss of debt. You know, to bail out the economy USA style.

I hear it works something like putting out the fire with gasoline. If you throw a high enough volume of gas all at once very fast over top a fire, there's some (tiny tiny) probability of it going out.

I say they just cut to the chase and throw the Canadian dollars into the fire.

Just Jack said...

Quite true Patriotz, there may not be a dead cat bounce, prices may continue to the bottom and then plateau for years until Canada's economy recovers.

Myself, I think we will see a short lived upswing in prices in a year or so. As a prospective purchaser, I am seeing more inventory and a better selection of homes on the market. I have a good down payment and have a strong desire to own a home, not as an investment, but somewhere that I can paint the outside purple and orange with green accents. I would also like to put a cannon in the front yard. But heh, that's just me.

And if you think I'm joking about the cannon. I found one for sale in a Jacklin road second hand store. I thought I might give it to mrs. jack for our bronze aniversary.

Anyway, I digress. The point is that the right home in the 400-500 range would be Okay with me. Even if prices kept falling afterwards. Hey, we might even be neighbours... I wonder where you can get cannon balls???

Anonymous said...

Provincial printing presses fired up ready for Obama spendathon since joe plumber defeated. Means good time to buy condo since money worthless anyway. Be merry and enjoy olympics!

womp said...

I'm also afraid of a DCB. I spent 20 minutes gently explaining the current market to one of my co-workers today. He has $180k in equity so he's thinking he can buy a second house at today's prices and get an affordable mortgage payment.

He didn't seem to care that he could save thousands by waiting... He was like "but, I can buy with 50% down! I can afford it." Literally, the math seemed to escape him that he could buy with 75% down next year.

I'm fearing that there are still too many people like that out there, and hence a dead cat bounce coming up. I would rather that I'm wrong though!

Anonymous said...

JJ asked: "I wonder where you can get cannon balls???"

Well, on Ebay of course! Hurry $22, bid ends Jan 17th, though I bet the shipping costs will tear a hole in your wallet. :)

Just Jack said...

Thanks for the cannon ball link. I don't know what is more ridiculous - that cannon balls are for sale on ebay or that 61 other people show up on the counter as having viewed the auction. Obviously, 61 other people wish to have a cannon on their front yard too. The neighbours dog that craps on my lawn, is going to be surprised.

patriotz said...

. He was like "but, I can buy with 50% down! I can afford it."

He doesn't have anything down. A down payment is cash. He just has (allegedly) 180K in "equity" in his first house which can evaporate at any time.

This is, of course, the same mentality that was prevalent in the US up to a year or two ago.

God help us all.

BTW I'm not saying that the provincial government is going to cut spending across the board after the election. It's just going to cut public service salary costs, since those ungrateful wretches don't vote Liberal anyway. Now where is that going to hit the hardest?

vg said...

"I'm fearing that there are still too many people like that out there"

Yes, there are many still, I overheard a coworker saying how he just bought after selling post split up and he sounded all upbeat so I didn't want to rain on his parade as I am sure he wouldn't have got it anyhow.

Enough to cause a bounce ? I don't think so,there is just too much bad news to come still that the majority of the buyers will be the ones who are move ups or move downs. The FTB pool is declining to a record low with tighter lending rules and the changing psychology.

Anonymous said...

Canada won't avoid recession, Conference Board says

A deep economic downturn will boost the unemployment rate and cause house prices to decline by a further 10 per cent in 2009, according to the Conference Board of Canada's 2009 winter outlook.

Federal fiscal stimulus, including tax rebates and infrastructure spending, won't be enough to avoid a recession, the report said.

Anonymous said...

10% down for Canada. then it will be sure much more for us. Because "we are different" here.

I still like the price target, FEB 2005 and FEB 2001. We are heading there.

Art Vandelay said...

Bounce? No way.
As of Monday, only 52 MLS sales. It's inconceivable that prices will go up.

We haven't yet had the cataclysmic job-loss event in Victoria (or BC, really) that would prompt a rush to the exits. But it'll happen sooner or later.

Anonymous said...

This is a crappy blog to read just as I'm about to put in an offer on a house in SE Saanich....

But since I'm already a homeowner (different market) I probably shouldn't be market timing.

roger said...

TC starts priming the pump for a spring bounce and more advertising dollars:

Road map to real estate

It's a buyer's market out there and first-time home buyers who resisted the urge to take the plunge when the market was hot are now finding good things come to those who wait.

Softening home prices, a larger number of homes to choose from and lower interest rates all help to make home buying more affordable and a lot less stressful for those deciding to buy their first home...

Despite an industry-wide slowdown, realtors are reporting a lot more activity this winter, a season when business is usually quiet.


Huh?? Slowest sales season in six years = "lot more activity"

Tony Joe just loves the limelight and keeps pumping to the press.

"People know money is cheap," says Tony Joe, a realtor and past president of the Victoria Real Estate Board. "The cumulative savings on tax, lower house prices and interest rates are bringing out people who previously were not able to qualify."

But don't expect to be able to steal a property, says Joe. He points out the properties that have the biggest discounts lately are frequently those that have been on the market the longest.

"If priced right, a newly-listed property can still sell in six to eight days at close to, or slightly below, the asking price in today's market," says Joe.

The author of this article is Pedro Arrais and he usually writes glowing buy now articles like this one last week about the happy buyers of a condo in the Juliet.

Couple starts out small

As first-time homebuyers without children, their one-bedroom, 616-square-foot unit feels just right.

"Anything bigger will be too big," says Yakelashek. A smaller space makes their new home more affordable as well. Monthly payments on the suite, which cost $255,000 when they bought it last year, are fairly close to the rent on their last apartment.

"Now we're finally starting to build equity," says Yakelashek.

roger said...

anon 12:15 said,

This is a crappy blog to read just as I'm about to put in an offer on a house in SE Saanich....

So you already own a house in another market which is losing equity. You come to Victoria and are ready to buy another one in a market which is clearly falling. Then you tell those who are warning you that they have a crappy blog.

I always wondered who the greater fools were that are currently buying. Now I know.

mln said...

"Now we're finally starting to build equity," says Yakelashek.

Lets run the numbers, shall we? They mention that the monthly payments are close to the rent on their last apartment, and that they bought last year.

Assumptions: Bought in March 2007, 40 year mortgage (bought last year), $240,000 mortgage @ 5%.

This would mean a monthly mortgage payment of $1230, plus strata fees but lets ignore those.

Year 5: $9,600 in equity
Year 10: $23,000 in equity

Hopefully their condo does not depreciate by more than $10,000 over the next 5 years, because all that equity could be wiped out!

hhv said...

But MLN, equity has nothing to do with the market value, it's all in the principle vs interest payment.... oh, wait.

roger said...

HHV said,

But MLN, equity has nothing to do with the market value, it's all in the principle vs interest payment.... oh, wait.

Actually the principle is quite clear for most FTB's - "Why throw money away on rent?"

hhv said...


The power of messaging revealed: say something often enough and it becomes its own truth. In this particular case, it may prove to be a very expensive truth.

Which is why CanWest may just end up squashed under the wight of their own "truth". 37.5% drop today.

dub said...

re: "Road map to real estate" article posted by Roger.

Obviously I don't know the couple's financial situation at all, but a teacher + a costco employee buying a $400,000 dollar house? I can only guess at what their combined income would be...

What I find funny is if it were only 6 years ago and a teacher + costco employee couple mentioned they were going to go buy a $400,000 house, people would think they were insane. Now, however, we're all impressed with their market savvy for getting one at $400K.

How times have changed.

Anonymous said...

I wonder if the TC will do a follow up on them in a few years when their house is only worth $200K, and they are contemplating bankruptcy.

I kind of doubt it.

Anonymous said...

Las Vegas had two significant dead cat bounces, about nine months apart.

There may be more, although I think most people burned by jumping into the second one will think twice.

Psychology is strong, and as long as the "experts" and the rags keep lying, they will sucker the clueless in at least a couple of times, then use the dead cat bounces to announce "Happy Days Are Here Again!" and then sucker even more suckers in.

However, suckers are in short supply.

Anonymous said...

Not a crappy blog at all. Been following for a while now. Just crappy to read at this time. No sign my current market is going to move any differently than Victoria tho.

Unfortunately life and the market don't always have the same schedule.

Anonymous said...

We watched this on PBS last night and it was excellent. I hope the link works.

"The Ascent of Money"



mln said...

Re: the costco guy with the $400,000 mortg... ahem, house.

I can understand spending that much money last year when it was still arguable whether or not Victoria houses prices would crash, but now? Prices have been falling about 1.5% a month, or $6,000 monthly for this couple's house.

I could even understand it if there were no examples of housing market crashes anywhere else. Isn't there at least a chance that a crash could occur here, just like the USA, the UK, Spain, etc? Because if it does happen, you realize you'll lose more than your down payment right?

If the T-C does do a followup story, expect it to be of the "whocouldaknowwwwwwnnnnnn" variety.

Metaldwarf said...

can anyone tell me what

MLS®: 256241
301-2100 Granite St
Victoria, BC V8S 3G7

sold for?

Anonymous said...


It has not been recorded as sold yet with 55 DOM.
Listed on November 20, 2008 for 204.9K with no price reductions. One bedroom 787 sq. feet.

omc said...

To the guy looking to put an offer on the Saanich house....

I don't understand your statement about timing and life. It appears to me that you are going to buy a house in this market and that is your choice alone. If you didn't sell your house in the other market but are looking to buy one here first....well that isn't very smart. If you have already sold your other place why not rent for a year; that way you will save some huge bucks and ensure that you found the neighbourhood you really want to live in.

This blog sounds very negative, but every forecast I have read lately is negative. I am planning conservatively from the releases of the major banks' economists; another 20% down this year in Victoria. This should happen by early Nov from what I have read, and we will evalute the market as to wether we make the move then or not.

Don't cave to your realtor as the only honest ones I know admit they represent themselves not your interests. We are talking about huge sums of money here, in excess of $100k after tax money!

patriotz said...

Las Vegas had two significant dead cat bounces, about nine months apart.

When? Look at this chart:

US market decline chart

Anonymous said...

I have a relative who owns a centrally-located townhouse there... going by the value on zillow.com, there were two short-lived dead cat bounces that lasted about a month or so, one just two months ago.

But in the suburbs where most of the foreclosures are, there was never any bounce. So it might have been a neighborhood fluke thing.

Now by bounce, I only mean the value quit dropping for a month or two and rose a bit.

But don't worry... it's crashing now faster than before.

I think as long as the media lies, they will sucker clueless folks in. They see it as a battle, and any bounce "regaining lost ground."

And let's face it, even in the worst of times they have more money to buy lies than we do to get out the truth.

vg said...

sure those weren't foreclosure bounces ? Vegas has a little more fun to offer than here.

Anonymous said...

On sale: $350M of real estate in Lower Mainland

About 375 unsold condominiums in the Lower Mainland, developed by Onni Group of Companies, will be offered with deep discounts, a source tells CBC News. (CBC)

About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off, a real estate insider told CBC News.

Anonymous said...

40% OFF. it is now,already.

roger said...

Last night the Canadian Homebuilder Association held it's Crystal Ball Forecast dinner. CMHC, VREB and all the usual suspects in the Victoria real estate caper were there. The party was ruined when David Hobden, an economist with Central 1 Credit Union gave his speech. Here is what was reported in today's TC:

Recession forecast for Island

"I'm forecasting a recession in the Vancouver Island and Coast region for 2009," Hobden said.

If British Columbia isn't already in a recession, it's coming close as the world-wide financial crisis snowballs into the province, analysts say.

Negative or zero growth for B.C. is predicted for 2009 as the economic landscape rapidly shifts, forcing forecasters to frequently update outlooks and citizens to try and follow the changes.

"Everyone is surprised at the speed with which the financial crisis has spread to the real economy," said David Hobden, an economist with Central 1 Credit Union, the body representing B.C. and Ontario credit unions.

"I don't think people in households and businesses in general have had enough time to adjust to the new reality. It's a very fast downshift."

Hobden is anticipating regional housing prices will decline by as much as 10 per cent year-over-year.

Finlayson said B.C. may see double-digit drops in house prices followed by a period of flat prices.

roger said...

Developer wakes up and smells the coffee:

On sale: $350M of real estate in Lower Mainland

A Vancouver real estate developer is making an unprecedented move to offer a liquidation sale of $350 million worth of its condominiums throughout the Lower Mainland.

The marketing strategy by Onni Group of Companies is aimed at selling off hundreds of condos in its inventory.

About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off, a real estate insider told CBC News.

patriotz said...

Hobden is anticipating regional housing prices will decline by as much as 10 per cent year-over-year.

"as much as" -> more than

Finlayson said B.C. may see double-digit drops in house prices followed by a period of flat prices.

"may" -> will

phil said...

Just as predicted, desperate developers will be the first to spoil the party for greedy flippers. Down we go!

Anonymous said...

900K for a 1450 sq ft condo in raincoover? WTF??? I knew this thing was bad but I had no idea how insane these morons had gotten.

B2B said...

That TC story on rushing into the market is depressing indeed. The folks in the picture look familiar, as they resemble many of my 30-ish friends who have bitten off far more than they can chew, in inadvisable places such as Langford and Sooke. Sigh....................But anyone who reads the TC without cursing aloud at what an execrable rag it is, has never read a real newspaper and to a degree deserves all they get.

Anonymous said...


In a short time (weeks), one of Victoria RE will on sale at 20-45% discount. Just as they did in Vancouver today.

roger said...

Here is one real estate agent that gets it! Unfortunately he is in Vancouver. Here is his youtube video:

Mike Stewart on Lowballs

Just Jack said...

I don't think low ball offers are that affective, unless the home is overpriced to begin with. If the home is overpriced, then you should go in with a firm low ball offer and not counter. If the home is overpriced, chances are that you will be the only bid on the property.

To me, that is the key to finding a deal in real estate. You have to find the properties that most people would pass on. That old shack that needs cosmetic remodelling, or a new roof. Or properties where the agent has screwed up in the listing. An example would be the size of the home. Obviously a home that is wrongly advertised at 900 square feet but has 3 bedrooms is worth looking at as it would not be possible to have three normal sized bedroom, kitchen, dining area and bath in only 900 square feet. It is unlikely that this home would be less than 1100 square feet. The difference of 200 square feet, on a newer home, at todays cost could be some $30,000 or 5 percent of the list price.

I would stay away from court ordered sales, as every low baller is looking for them. Instead look at vacant homes that have had minimal updating since the 1970's. These homes tend to indicate an older vendor who may have recently gone on to assisted home care and the family is trying to unload the home. Thankfully we are in Victoria, so there won't be a shortage of these coming up for sale.

Lastly, determine the maximum price you will pay and do not get talked into paying more. This is why I like to make firm offers and rarely will I counter. I would choose three homes and put my offer in (one at a time) if I don't get the home I move onto the next. And I make sure the listing agent knows that I will be making offers on other homes! If I don't get any of the homes, I'll back off from the market awhile, a month or so, and then try it again.
I back off for a month or so, because in a slow market, the listing agent may call you back in two weeks to ask if you are still interested.

Play it cool, play it slow, don't look interested, and never answer the phone on the first ring.

hhv said...

"Play it cool, play it slow, don't look interested, and never answer the phone on the first ring."

Sage advice. It's how Ms. HHV landed me.

Anonymous said...

B2B said "The folks in the picture look familiar, as they resemble many of my 30-ish friends who have bitten off far more than they can chew, in inadvisable places such as Langford and Sooke."

Pretty broad brush you're using there. We love Sooke and wouldn't move back to Victoria for anything. The only hurdle for us is the highway and once you have driven it a few times it can actually be fairly therapeutic. I enjoy the drive.

Did someone cut you off on the Sookahalla B2B? What exactly do you think is different about Langford and Sooke that warrants receiving so much of your frustration?

Quite frankly I'm happy for some people (not mentioning any names) to keep thinking bad vibes about the west shore, just leaves more room for the nice people, and there are plenty out here.

Anonymous said...

I think they were probably refering to the fact that paying $400K for a little SFH in Sooke might not have been a such a good idea...

Anonymous said...

In Vancouver, the 25-40% discount is based on the current price, not the peak price.

Isn't it great?

B2B said...

I should clarify - didn't mean to step on any toes. I love Sooke as a place, and indeed there's lots of cool folks out there. I am just referring to folks who bite off more than they can chew out of desperation, and they don't really want to be in (e.g.) Sooke. For those who can manage their costs, and are in for the long haul and like Sooke, fair play and full respect.

victorianna said...

"Jan. 15 (Bloomberg) -- Canadian existing-home sales fell in December to the lowest level in eight years for that month, a national realtors’ group said, as consumers lost confidence amid a recession and rising unemployment.

Sales of existing homes in 25 markets listed on the Canadian Real Estate Association’s Multiple Listing Service fell 1.8 percent to 27,357 units in December from the previous month, the Ottawa-based group said today in an e-mailed statement. The average resale price fell to C$307,318 ($243,565), down 9.9 percent from a year earlier."

roger said...

Ozzie is back in the news again with the old good time to buy story.

Ozzie on Youtube