Tuesday, August 4, 2009

Front page news

I don't know who was more excited by the news of a 19-year high in July sales volume this morning, the VREB or the TC. Both should be ecstatic with themselves, after all, they both managed to get themselves on the front page of the Vancouver Sun for a stretch of hours on a day when Vancouver discovered it's 17th homicide of the year--and they say the news media is all doom and gloom.

A very interesting thing occurred though; two papers, same story, but one major difference. Apparently, in Vancouver they invite readers to engage with the story by allowing comments. Shocker, I know. I was almost as taken aback as I was last month when the TC had comments turned on, oh so briefly, for a real estate story.

I grabbed screen shots, because, well, pictures or it didn't happen and all that. Here they are:

No comments.

Well, would you look at that! Front page news on the Sun and comments too to boot! Welcome to the interwebs, where you can read and engage, what a new fangled crazy idea!

Now, I know, I know, you're probably thinking I've spent the better part of the day with a bottle and now I'm just ranting a wee bit too much about something that really is inconsequential.

"Where's the story" you say, "this is nothing new. After all, 933 homes were traded last month, shouldn't we be talking about that?"

Well we would be, except an interesting exchange took place today on Twitter that tells a whole other story. This tweet prompted it all:
@timescolonist: That's hot! Greater Victoria's housing market regains its sizzle, with most sales in July since '90.
To which our regular, no nonsense analyst Roger responded:
@NeedsAnalysis: @timescolonist Too bad you closed the reader comments on the article. If you want to see reader feedback go here. (thanks for the link BTW!)
Of course, me being the surly, sarcastic personality I can be at times, I had to add:
@househuntvic: @NeedsAnalysis I think @timescolonist has a "push" only twitter account. Just like their real estate reporting, it's set to "regurgitate."
Well, I was wrong, and I say I was wrong, because whoever tweets on behalf of the TC, responded a couple of hours later:
@timescolonist:@NeedsAnalysis @HouseHuntVic We aren't opening comments on all stories as we must watch them & we're a bit short-staffed this week. Sorry!
Sometimes I wish I liked the sound of my recorded voice enough to record the laughter I emitted when I read that tweet so we could all share in the hilarity that overwhelmed me. I was lucky I didn't have a mouthful of coffee at the time or my laptop would have been toast. I'm glad I restrained myself long enough to let Roger intervene with something considerably less sarcastic and inflammatory than I would have posted:
@NeedsAnalysis: @timescolonist Tnx for reply. Unfortunately the TC has not allowed readers to respond to real estate stories very often in the past.

@timescolonist Many think it is because you don't do in depth investigative journalism on real estate and don't want to offend advertisers.
You know, I'm actually starting to feel sorry for the people stuck in the rot that is quickly overwhelming "journalism." After all, they've lived so long in a world where the ability to challenge their journalistic authority was mediated by two-day delivery paper mail and an editorial panel too consumed by the task of ensuring the city's social page photo content contained the appropriate image mix of advertorial clients' partners and children to bother approving half of the incoherent letters to the editor from the poor schleps with an axe to grind about public breast feeding or concert goers dancing in the seated area of the new arena.

At least they are starting to listen:
@timescolonist: @NeedsAnalysis Even on good days, we can't open comments on everything. But we'll make a note about real estate stories. Thx for feedback.
Which is the whole point of my post. I won't flatter myself by thinking the writers and editors spend too much time reading my blog (given the short staffed situation over there and all), but we have confirmation of their knowledge of my little internet corner here. So editors et al, one simple request: do some digging on your local real estate stories.

By republishing VREB press releases with a couple of original phrases tossed in for copyright purposes you only confirm your own irrelevance in the local real estate "news" scene. After all, in the Google age, if people want to just read the press release they can Google it. (I know some great SEO types who can help you crack the top page if you're interested)

Here's an original story idea I'd love to see you pick up: use Roger's Buy versus Wait spreadsheet to run financial calculations on the implications of buying versus renting over the near future. There, I've HARO'd for the day. HHV out.


Animal Spirit said...

Save that one for keepers!

Roger said...

The newspapers, VREB and the local real estate agents are excited about the sales numbers. Take a look at historical sales and inventory in this graph. Kinda puts things in context.

Sales & Active Listings..

Vic said...

thats BS, the Sun and Province leave their comments section open and rarely moderate them unless absolutley necessary. TC has a paranoia problem about what will be said and offend the advertisers.

And how could they not make time for the biggest headline story ? Bias as usual.

VicTV said...

I am a local TV reporter and we are interested in working up a real estate story today with this blog's perspective as part of it, i.e. that VREB 'spin' is all that gets into the news.

I've emailed the contact email on the blog...if anyone has any faster way to contact the author(s) I'd appreciate if you could let me know.


Vic said...

I'm sure HHV will get back to you soon. Great to hear of a reporter who has an interest in the other side of the story. I hope you look at the reality of affordability based on average Victoria incomes.

Did you notice today how the TC changed the title to "Red Hot" sales ? I think they may be running out of descriptives soon.

Oh yeah, I hear Gordo is pulling all employees Black Berrys,another cost cutting measure before D-Day next month.

Roger said...


Very nice to hear that you will be covering the local real estate market from a different perspective. I will be posting a series of slides and graphs over the next few hours which may be good background info for you.

All material is based on publicly posted stats by VREB and CMHC.

Roger said...

Here is a different perspective on the Victoria real estate market...

Real estate sales in Victoria have a cyclical pattern which repeats every year. Sales bottom out in December, followed by a rapid increase which peaks in late spring and then slowly declines until December. This can be clearly seen in the following graphs.

Sales & Inventory..

Sales by month..

What was different this year? Due to the recession there was a sales slump last fall which extended into April 2009. With the Bank of Canada announcement that the bank rate would remain low until mid-2010 buyers left the sidelines and started purchasing again. The peak normally seen in May was delayed until June and sales were brisk in July. The June peak was not all that different from peaks seen in 2005-2007. Furthermore, sales-to-date for 2009 are well below levels seen in 2005-2007 and only 2% ahead of 2008 which was only an average year for sales.

To be continued...

VicTV said...

Looks like my story isn't happening for now...we can't find any bloggers to publicly comment, which we need.

Maybe down the road...

HouseHuntVictoria said...


Just for the benefit of all the readers here, I'd like to say thanks for your inquiries and let them all know that you and I have had a good e-mail discussion going this morning.

I understand the requirement your editors put on you to deliver an on-camera personality to give alternative perspectives. I encourage you to keep investigating though. There are some seriously excellent resource links provided by Roger and others in the sidebar on the main page.

Roger said...

But real estate sales are only part of the story....

Take another look at the active listings graph and you will see that in April 2008 the number of active listings rose to multi-year highs and peaked in September. There is still considerable inventory on the market.

With all the sales hype around the July sales numbers prices have not been discussed very much. Not surprising when you consider that the average and median prices for single family homes (SFH) peaked in April 2008 as shown in this graph. Even with record low interest rates and the burst in sales in May, June and July prices are still down considerably from last years peak. Specifically, the SFH median price is down by 7% and the average price is down by 10% as shown here. Prices fell considerably last month but we need to see a few more months of data in order to see if there is a downward price trend.

So where will the market go from here? Many prospective buyers will see their 3.7% fixed rate pre-approval letters expire and they will now be looking at 4.2% rates for a five year term. Some will stop looking. Others will be forced to consider lower priced homes. History also tells us sales will continue their seasonal decline until December.

Once it becomes common knowledge that prices are well below last years peaks and the real estate always goes up myth is exposed buyer psychology will change. Buyers will once again consider purchasing a home as a place to live, a hedge against long-term inflation and not as an "investment" to flip in a few years.

Roger said...

I had a telephone conversation with VicTV a few minutes ago. They are still interested in doing a story on alternative points of view about Victoria real estate. Unfortunately, we missed today's cutoff time.

An individual with his own blog, who also reads and posts on other RE blogs, is willing to do an interview. This individual is a professional in the industry and is well informed with stats to backup his point of view. Hopefully this interview will take place in the near future. Stay tuned.

I want to to thank VicTV for visiting the blog and giving us a chance to express our opinions on TV. I will select my words more carefully in the future when referring to the MSM.

Just Jack said...

It's truly amazing how Victoria is in locked step with Vancouver. Their real estate board says 37 percent of the buyers in July were first time buyers and I would expect the same to be here in Victoria.

And I would expect a heavy percentage of those first time buyers to be in condominiums and of course CMHC high ratio.

Of course this allows the condo sellers to move up to a starter house and so on, and so on.

Incredible, our market is being driven by the same people who listened to Hanna Montana just a few years ago.

Oh my achy breaky heart

Tay said...

Just wanted to make a quick comment on the TC and why the comments should not always be open.
People are mean! I was in the paper a few months ago on a fairly controversial topic. (I won't go into it here)

The comments were low low low and very hurtful and mean. I know every nut job can post their opinion but in some cases their opinion is directly attacking a person. it may seem anon when people post, but the cruelty toward the reporter and the person in the story can be overwhelming when it is you they are talking about.

I know this is off topic, but the comments section is sometimes just a place for cruel people to be cruel with no repercussion to themselves.

as far as it being open to talk about real estate then the discussion is good. So in this case I think it should be open. I thought prices were going to drop. I wonder if all the 'cheaper' homes like kettle creek are part of this?

Vic said...


point well taken,the comments do need moderating when the whackos show up. I was referring to comments with just a strong bias opposite of the topic.

I have had a couple by the TC not posted on RE and they were well within the realm of the article,just a different opinion of course. One can only think they have an agenda when that happens.

Vic said...

From the Sun on Vancouver's record sales, too bad we don't see this fair reporting in the local TC rag :

Tsur Somerville, a real estate expert in the Sauder School of Business at the University of B.C. said there are signs of more stability in the overall economy, but it is difficult to see the pace of sales continuing at such peak levels.

"This is a very, very high level, and [long-term mortgage] interest rates have already started creeping up," Somerville, director of the centre for urban economics and real estate at the Sauder School of Business said.

"It's a wonderful, positive statement about people's outlook for where things are going," he added, "but it's hard to put together the set of circumstances where sales of this level are sustainable and persistent."

VicTV said...

HouseHuntVictoria and Roger, thanks for the help today.

We'll get the story done at some point, although as I mentioned in email, it may be awhile because of my schedule over the next few weeks. But that's ok, can tackle it when the next numbers are released.

I do think you'll be disappointed with what I'm able to provide, I'll say up front.

The reality of television news is reporters like myself cover a different topic every day of the week, have two minutes of length to work with on a story, and can only include very comparatively limited information to what is discussed here.

I think what you're looking for, that could do justice to the charts and graphs I know you make available to people here, is coverage from print media.

However, what I CAN do from the TV perspective is say to people "here are the latest numbers from VREB, yes the Victoria market is surprisingly robust considering the economic state, but this group of people here believe the numbers presented are misleading, and the market can't sustain this for long etc."

It's a simplified version of the story, which is all I think daily TV news has ever been able to offer. It gives you a taste of something, but can't fully flesh it out.

Anyway, what I'm saying is I'd be happy to be able to let the public in on the basics of what's being discussed online, and then they can dig deeper into it if they'd like.

What I don't think is the responsibility of the media, is teaching people financial planning.

The pitfalls of 35-year 5% down mortgages are for people to figure out for themselves. If you can't afford something, it's your own responsibility to not buy it.

To me this situation is no different than someone walking into Future Shop, and plunking down more than they can afford on a big screen TV and home theatre system, and paying for it on their Future Shop card which may end up dinging them for a ridiculous amount of interest. On top of that, don't forget to add the pricey and unnecessary extended service plan as well.

People get taken like that every day, I should know because I used to be the one doing the selling.

You can never fully trust someone selling you something, and I don't see why that would be any different in the case of real estate.

I'll halt my rant there, haha. I'm not much of a poster to blogs, more of a lurker, but I do agree in general real estate reporting can be one-sided.

That said, many of the predictions on sites like this one on where real estate would be in August 2009in Victoria are nowhere near what has turned out to be reality, so I believe buyers need to be wary about what they hear from all sides, and make up their own mind.

Roger said...


Thanks for taking the time to write a detailed post. Nice to know someone in the TV media is concerned about the other side of the story.

HouseHuntVictoria said...


I echo Roger's thanks.

I'd like to clarify that I am not seeking media attention for this blog. My criticisms were of my perception of balance in the media and the lack there of. I understand the issues you face in providing a balanced view point in 2 minutes of TV time with limited visual editing resources. I commend you for attempting to get that balance and apologize that I was unable to provide on camera comment.

You are absolutely right that some of the predictions made on this blog did not come true. I think the regular posters here have recognized where we went "wrong." Specifically, no one, not the industry, not the bloggers, no one, foresaw the size or the duration of drastic interest rate drops. They caught all by surprise and the extent to which they created a shift in buying patterns was unexpected.

Vic said...

Agree with what HHV said here, no one saw the interest rate drop as well as the buyers mind set that completely discounted what amounted to almost a complete global financial meltdown only a mere few months ago. I guess it comes back to the "being financially naive and ignorant" angle.

A few MSM comments here. It would be refreshing to see local TV news actually spend 5 minutes on investigative style stories like the one presented here and by showing both sides within the same segment versus the 2 minute standard.

And also show an edge, so many stories seem to not want to upset the advertisers or the viewers with the "quaint Victoria angle". We are a big city with big city problems that need some more indepth reporting but since CHEK may be soon toast it will be up to A-Channel to show their stuff, though I have my doubts.

The main problem I have with the TV angle is when we see news anchors on A-Channel and Global comment on high VREB numbers say "well if you were hoping to buy a house in Victoria" or "if you were hoping for a correction, you are out of luck", or "you are priced out forever". I heard all those statements the last year and I found it disgusting and irresponsible that a news anchor would make those ignorant statements.

I think what you have to do in your two minutes is ask the question, "is overpriced real estate a good thing for our city ?", "do you look forward to your kids moving away because they have no hope in hell of affording a home here ? " or "do you want them renting a crap hole or living in your basement forever ? ".

Breaking down the real costs is another thing the TV media ignores. Using Rogers numbers and comparing to 2 people making an average $25 per hour wage paying that $2200 month plus taxes and all the other bills leaves nothing at the end of the month for any emergencies,job losses etc let alone having kids,these impact the cities future growth of young families.

The TV media allows agents to blabble about "buy buy buy" cause "the action is so hot" does have a responsibility to show some financial insight here. If you are going to allow the salespeople to pump with no other viewpoint,then why not have a financial planner on to cover the real costs angle ?

On a side note, Seattle sales were up only 10% but prices are still down 14% YOY so our neighbors aren't following the same trends.

c said...

"no one, foresaw the size or the duration of drastic interest rate drops."

I wonder how many other Black Swans are waiting out there for those of us trying to predict the future direction of the RE market.

StargazerXL said...

Good news, everyone! The Times-Colonist has found time to open comments...on today's story about boozy tubers on the Cowichan River. Their recent story about our "red hot" real estate market remains comment-free.

Anonymous said...

All I can say is good riddance Chek TV. Your continued coverage of cats caught in the tree and joe the plumber who cares for one eyed dogs in Ladysmith will not be missed. I just hope Gordie paid for his stomach tie job in cash or some poor surgeon will be out a month's car payment.

Olives said...

I disagree, I think many people predicted this "dead cat" bounce in equities, real estate - as well as continued low interest rates.

Vic said...


don't forget the "red hot" rumours of Posh Spice going to American Idol,the comments are wide open there people,get in there while you can. But watch out for those Simon Cowell bashers though,they may have to close it up soon, LOL.

Not enough staff to man the Real Estate section though,times are tough down at the ole TC, shows the true mentality of that rag.

Ryan said...

"I wonder how many other Black Swans are waiting out there for those of us trying to predict the future direction of the RE market."

That's why a lot of us don't bother making predictions. The market is going to fall, but guessing how soon or how fast or how far is pointless, except as bar talk.

I wouldn't really call the interest rate drop a black swan, though. All it does is borrow the very last of the FTB demand from the future. Once that runs out, there is absolutely nothing left, unless the government decides to just hand over cash to encourage people to buy real estate like the cash for clunkers program in the US.

Roger said...

Ryan said:

Once that runs out, there is absolutely nothing left, unless the government decides to just hand over cash to encourage people to buy real estate like the cash for clunkers program in the US.

They already do that with the First Time Buyer Tax Credit. It is only $750 now but they can follow the US and increase it to thousands of dollars.

The RRSP withdrawal to buy a home has been set at 25K per individual. They could easily change that to permit completely draining your retirement savings. Why not - retirement is so far way for most FTB's. I wonder how many that use this program actually put the money back in. I bet most are so strapped for cash they just pay the additional income tax which is good for the government.

Vic said...

CCB to Cut New Lending by 70%, President Zhang Says

Aug. 7 (Bloomberg) -- China Construction Bank Corp. President Zhang Jianguo said the nation’s second-largest bank will cut new lending by about 70 percent in the second half to avert a surge in bad debt.

“We noticed that some loans didn’t go into the real economy,” Zhang, 54, said in an interview yesterday at the bank’s headquarters in Beijing. “I feel that some industries are expanding too rapidly. For example, housing prices are rising too fast, and housing sales are growing too fast.”

Can you imagine the last sentence ever being uttered by any banker/politician here ?

Roger said...

In the last thread I posted some output from a Property Investor spreadsheet I developed. An updated version of the spreadsheet in Excel format is now available for download.

Click here to download..

The output gives standard RE investment calculations like cash on cash return and capitalization rate ("Cap rate"). It also shows profit or loss after 5 years if the investor chooses to sell. Opportunity costs (lost interest on downpayment & principal payments) are also factored in. If you enter todays selling prices for condos, townhouses and houses in Victoria and market rents for same you will find the conclusions interesting.

Feedback and comments welcome.

Vic said...

Just caught wind Gordo has brought down his first round of job cuts. Didn't take long for that, take away their Black Berry's then start cutting at the knees.

patriotz said...

The RRSP withdrawal to buy a home has been set at 25K per individual. They could easily change that to permit completely draining your retirement savings.

The vast majority of FTB's don't even have that much in their RRSP's so increasing that limit would accomplish nothing.

It would have to be an outright handout like an increase in the FTB tax credit but I don't see that happening due to fiscal constraints.

Roger said...

Patriotz said:

It would have to be an outright handout like an increase in the FTB tax credit but I don't see that happening due to fiscal constraints.

The Feds do not have any fiscal restraints. Look at the billions spent on the car industry bailout and infrastructure projects.

They will continue to spend money by printing it or increasing the national debt. The future means nothing to politicians. Whatever it takes to buy votes and stay in power.

omc said...

What people, and the media, need to realize is that the housing market isn't the recession. The western canada housing market was on the way down before the crash driven by market fundamentals of affordabillity. As Roger was saying the gov't looks only as far as the next election, and has chosen to inflate the housing bubble to stave off an economic downturn.

That being said, I sure hope we see a drop soon because I am sure feeling a pinch having to stay in our rental. If things don't start happening by January/ February, I don't know what we will do. We can afford to buy, but I really don't want to.

Just Janice said...

I'll say if it looks like a bubble, it'll pop like a bubble, and the Victoria RE market looks like a bubble.

Prices are disjointed from average annual incomes (this may not apply as strongly in Victoria as in other areas as there may be a strong 'wealth' component that causes some distortion).

Prices are disjointed from market rents - this is the bit that to me really indicates bubble territory. If Victoria RE was really 'that valuable' then market rents would be higher.

Prices are disjointed from economic fundamentals, the unemployment rate used by EI is now 6.9% and the three month moving average is 6.1%. This is double the rate last year. The provincial budget comes down in January, I expect there to be pain. The dollar is once again on a tear, further deteriorating the prospect of those who must sell their goods to the US (our largest trading partner) and those who rely on tourists to use their goods and services. The bankruptcy and loan delinquency rates have surged in BC. The HST is also likely to have a detrimental effect.

Before buying, ask yourself if you'd be comfortable owing more than the house is worth, paying more in interest to the bank than what you could rent the same place for, and being unable to move because you can't sell your place.

Before saying it's different here, ask yourself - Why is it different here?

Just Janice said...

January = September, my oops.

Just Jack said...

I don't know when, how or where the cracks in the marketplace will begin. The staggering run up in prices has been unprecedented and so will be the fall.

I have some inkling that rents may be our Canary in the coal mine. As unemployment continues to skyrocket, renters will search for cheaper accomodation. This may mean moving back home with mom and dad, double up with friends or leave town. When I look at craiglist, used victoria, etc. I'm getting the sense that there are more rentals available and rents may be starting to decline. If a lot of these high price rentals go vacant, this could undermine the real estate market.

In Victoria, our annual rent to value ratio for a single tennant occupancy home lays around 25. If rents fall then this rate could go even higher into the 30's. Which is higher than rates ever reached in downtown Manhattan. Which is just ludicrous, and we all know what happened to US market.