Friday, August 27, 2010
How REALTORS® help
VancouverCondo.info linked to an interesting article in the Toronto Star on Monday. In preparation for the looming communications battle between the Competition Bureau and the CREA, they've decided to strike preemptively with some never-before-seen-in-Canada ugliness. Now I know a lot of you are thinking to yourselves "HHV, why would you subject me to this ridiculous bombardment of nasty REALTOR® propaganda?"
It's simple: first, don't click on the link if you don't want to see the crap in the first place, but second, and far more importantly, we need to see that the CREA, and the REALTORS® who support them, don't respect their consumer group enough to advertise with any semblance of truthful intelligence. Take the video above, do the CREA really believe that speaks to any of us? Sure it's funny to see a pyjama-clad fat man put the beats to a shoddy tear down under a downtown Toronto? flight path - as if their consumers couldn't figure out buying that sh&thole was a bad idea in the first place - thanks for the added value! Not.
It's this kind of nonsense that leads to the bad reputation the REALTOR® groups must contend with in the first place. Furthermore, any argument that there is competition in their market in the first place doesn't hold water. As long as the CREA and their member organizations enforce the closed nature of the MLS® there will never be open competition in the real estate marketplace in Canada.
Until I can employ a REALTOR® to list my home on the MLS® for a flat-fee and then have them walk away from the rest of the buying and selling process, the CREA is limiting my choice as a consumer. There may be varying degrees of service built into the REALTOR® monopoly, and I may be able to negotiate commissions with some individual REALTORS®, but the monopoly still exists: the vast majority of buyers will buy using a full-service REALTOR® believing their service is free, those same REALTORS® will guide their clients away from low-commission or no-commission listed properties - a practice which their industry guidelines strictly forbids but rarely, and never with any significant consequence, enforces.
As a buyer, I would like to choose the option of buying without using an agent. Right now, if the property I want to buy is listed with a REALTOR® I have three choices: hire a buyer's agent, enter a dual agency agreement with the listing REALTOR® or walk away. Considering 90%+ of all homes are bought and sold through the MLS®, how do these restrictions on consumer choice equate to an open and competitive market?
Canadian real estate consumers suffer from a strangle-held, archaic and anti-competitive listings system, held under the guise of a bullsh&t argument about what constitutes agency between sellers and the agent who lists a home on the MLS®. I'm not holding my breath that the outcome of next April's court challenge will break this monopoly, but the next 8 months or so sure will be interesting for us market watchers regardless.
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1716 woodsend just sold for $910K
Assess 1,250,000
Asking. 1,249,000
Nice house on 5 acres
OUCH.
nice street too!
sold at 73% of assessed...
anyone else noticing a lot more court ordered sales showing up on PCS - Shakespeare, St. Charles and Lurline I've noticed in the last few days. If the pattern in the U.S. holds, then the foreclosures will lead the price drops.
Also, i am in kelowna right now, this must be ground zero.
For sale signs everywhere, good areas, bad areas, waterfront. I have been driving around different areas and it's all the same. I wish I could get a PCS account for here to watch.
Dave#1
@ Dave
I vacationed for a week in Kelowna in early August. While driving around I did a rough count of houses for sale and saw some streets where 1 in 6 houses were up for sale. What surprised me is that there wasn't much difference in the number of listings between the low income and ritzy neighbourhoods. The amount of partially-built condo developments in Kelowna was astounding!
To comment on the the article by House Hunt Victoria ... I just wanted to remind people that if the seller is not "locked in" with an agent, it is possible to do private sale using a lawyer who specializes in real estate. When I bought my house, the total fees were about $800 for the legal papers, survey and escrow service - a lot less than the commission for a REALTOR®.
In this type of market it should be possible to negotiate hard on the price. Pay what the place is worth and don't worry too much which dog gets the meat.
however, what are places here **really** worth? That is the essential question.
If you subscribe to the three times median income for the median priced house, we have a long, long way to go.
Sigh...wouldn't that be a dream - if I could buy a decent home for my family at that cost. I would then be given a lot more freedom to use my money elsewhere, to the benefit of many (ie. purchase more products and services, create small businesses and employment for others).
I imagine many people in Victoria are in my position. I like to believe that would create a vibrant and diversified community. Instead we have a new development with a massive Walmart and two giant electronics stores that are owned by the same company.
The excessively high housing costs here have eroded quality of life here for many. I believe this will change, because people are starting to wake up and realize that a life of servitude to the bank is just not worth it anymore.
Thanks to everyone here for helping me open my eyes to the full breadth of the problem.
Here is how one REALTOR® is helping their client sell...
We want out of this house now!
A few years ago this same agent did a sale where he announced the price would drop 10K a week until someone bought the place. After several weeks it went off the market.
Animal Spirit,
I am also noticing more court ordered sales in the last month. The government cutbacks and construction slowdown might have something to do with it.
Here is an article from the Winnipeg Free Press. If people are having trouble with payments there you know it is worse here..
House of cards - Homeowners paupers in their own castles.
Even without rate hikes, some families are already struggling, says financial counsellor Ivy Mannil, with Community Financial Counselling Services (CFCS) in Winnipeg.
She says she has seen an increase in the number of families struggling under the weight of mortgages, quite often second mortgages.
"We're seeing a lot more people who also have second mortgages with non-traditional lenders like CitiFinancial and Wells Fargo, and those carry huge interest rates," she says.
"These people are house-poor -- and even though they're homeowners, they have no equity because they've borrowed and borrowed and borrowed the equity in their home."
@ a simple man: If you subscribe to the three times median income for the median priced house, we have a long, long way to go. Sigh ... wouldn't that be a dream - if I could buy a decent home for my family at that cost.
Take heart! Eight years ago, the average SFH in Victoria was selling for about 3-4 times the average family income (AFI). Do I think prices will be that low again ... probably not - but I suspect that they could eventually drop to 4-5 times the AFI. (Currently the average SFH is 8-9 times the AFI.)
Am I hoping that prices will drop that low? No, as it will financially cripple so many people and cause a significant ripple effect in the economy as homeowners will be obliged to spend so much of their income servicing their mortgage and debts. Am I worried that this is what will happen - absolutely!
Check out: http://demographia.com/dhi.pdf. The table on page 14 ranks Vancouver as #1 most unaffordable city. Victoria is #8. London is #14. New York and San Francisco are #16. Toronto is #57.
a simple man.......I feel ya dude!
My wife and I earn over 130k/yr between us, well above the Victoria average. AND still we cannot bring ourselves to buy anything that we would consider nice and in a decent neighborhood.
It's not about affordability as we could make the payments, it's about quality of life and what we as a family would have to sacrifice in order to own 4 walls and a roof. (believe having been a past owner that's really all it is folks)
3-4 times annual earnings is still a lot of money and at the Vic average household income/year is roughly 250 - 300k Still a lot of money dude!
Considering the average house is now @ 7-8 times annual earnings, OMFG!!!!I wonder just how many people can truly "afford" the home they occupy.
At some point common sense should prevail but alas it hasn't to date. Will it? I hope so but in the meantime affordability has been eroded, banks aren't giving away money anymore and the rules have changed......prices will come down. How long is the question. I would need to see at least 40% for it to even make sense.
I know a lot of bleeding hearts on here feel "bad" for all those sheep about to lose their equity and for some, their homes but I really don't care as it was those same sheep that perpetrate this mess.....IF people just said screw I'm not paying that price instead of chasing prices up (spelled bidding wars), speculating, and paying full price, none of this craziness would have happened. It really is that simple.
Jesus people do you go to a car dealer and pay more than the sticker says? OR do you NEGOTIATE the price possible? AND that's on something that is priced around 30k! Why the f*ck would you pay more than the asking price on something you will be paying 20 times that and for the next 35 years???? And why would you pay that ridiculous price in the first place if deep deep down you know it ain't worth half of that?
Bring on the carnage I say! Then maybe Victoria might again become a nice semi affordable place to raise a family. CUZ right now it's
anything but that. Personally I will looking to leave as soon as I can but should my kids choose to stay, I would love it if they could actually settle down here and not have to sell their first born to afford it.
BTW has anyone been trapped in that crawl out the wast shore lately? WTF right? Why would anyone who works in town want to do that day after day. Made me realize why people go off and start busting caps at each other on the freeway in LA!
DavidL: thanks for your comments. I agree that there will be a more affordable time in Victoria than now (I think most of us here believe that, obviously a biased lot).
I have friends and family that would suffer should there be a serious downturn in the market, and for this there is a sadness in me should the market turn sour.
I struggled with my hope for the market to correct to a sane price-point so my family can afford a nice to grow in (nothing special, just clean and enough space for all of us). I felt my hope was in direct conflict with my desire not to see those I care about hurt. The only way I could deal with the conflict in me was to sit down with each of them and basically tell them what I thought would happen in the market in the next 5 years. In that sense I removed the responsibility from me to them. If they do suffer from the downturn, I will still listen and sympathize with them, but I can no longer be an accomplice in it. Gives me some peace.
Mark: I know what you mean. I have owned four homes prior to this, from old urban heritage houses to stunning acreages (not in Vic - moved here over a year ago). I understand what home ownership means and know when I am paying too much for a home vs renting. I expect to pay a bit of a premium to live in the core of Victoria, as it truly is a wonderful place - our move here was 100% for lifestyle. But the prices here are simply far more than the homes are worth. Perhaps 5 times average/median income, but not 8.
And yes, I have family in the Westshore and the crawl is unreal for a city of this size. I say the rail line is there - the city should approach the owners and see if a regional light rail (like the Go train in Toronto) is possible from Colwood to downtown, with a bus transit hub from the Colwood depot.
About the Colwood crawl.
When the blue bridge closes for (2 yrs?); the overall traffic is going to get very nasty. I think what might very well happen (and I have not heard this from anyone), is that the Federal government will temporarily issue a whole lot more buses to CFB Esquimalt. I can see them even driving up and down the streets of Langford, Colwood, Sooke and View Royal picking up and dropping off Military and civilian DND employees.
It really will be interesting to see what measures will be taken to help alleviate this looming catastrophe. Its a good thing that they did "work" on the small Admirals Rd bridge a year or so ago because the load on it is going to be incredible.
Currently after 1:30 on any given workday afternoon, trying to get over the Bay St Bridge is a major frustrating experience. We can only hope that it is capable of carrying the extra load when it becomes necessary.
Perhaps by the time the new blue bridge is in place, many of the traffic problems we are experiencing now will be alleviated by the necessary and inevitable creativity of the people and governments alike.
What a silly time it is to be talking of building that (for the rich only) marina in our already overcrowded and polluted city harbour.
If I'm not mistaken the old blue bridge will remain intact and operational as they decided to go with a new bridge.....thus no need to shut down the old one.
I think it's being built right next to the old one from the plans I've seen.
Regardless traffic all over Vic is getting worse by the day. The "crawl" is by far the worst and IMO you would have to be nuts to want to do that every day.
Oh thanks Mark, I didn't realize that.
Ah Victoria you don't have it that bad. You don't have too many traffic jams and your prices are coming down fast. Don't complain too much!
You guys really think a 1/2 commute is a nightmare? Are you actually serious? This really is fantasy island. Have you guys ever been in rush hour in any other city?
You guys really think a 1/2 commute is a nightmare? Are you actually serious? This really is fantasy island. Have you guys ever been in rush hour in any other city?
THAT'S WHY WE CHOSE TO LIVE HERE! The crawl used to be tolerable but since the growth out in the West Shore it is a giant pain in the ass.
If I wanted to deal with that kind of traffic I would move to Hongcouver...at least there I would be able to justify it because it is a true "city" with all the amenities - Theater, concerts, pro sports, no ferries I could go on and on.......
Vic is a Big Town that lost it's way and in doing so lost all it's appeal/quaintness that it used to possess.
Where you from "fairfield"? Vancouver? TO? Cowtown?
The Vic of present is not the small City we all chose to live in....it's a byproduct of over development and greed.
As I've stated many times on this Blog it lost it's appeal some 5 years ago for me and when I can I will be leaving.
In the meantime, yes a half hour of standstill traffic is a big deal to me!
Its not us that thinks the half hour commute is a nightmare - its the marketplace.
The inner municipalities have four months of house inventory. The Westshore 7 months.
So, by international world class destination city standards a half hour commute may be nothing - in Victoria it is.
The silver lining is that you can use your home equity to finance (over the next 35 years) a Mercedez or an EVEN BIGGER TRUCK that you can't navigate in the new Wallmart parking lot without leaving tire treads over half a dozen smart cars.
I think of the auto wrecker yards of the future filled with vehicles that are still being paid for on a mortgage.
No one is forcing any of you to live here. If you don't like Victoria move to some small sleepy crap town. As for Vancouver I guess you haven't driven rush hour there lately have you? It is something that can actually destroy your soul. Waiting through 4 or 5 lights at Mackenzie is pretty enjoyable compared to that.
Go talk to someone from another part of Canada about how you can be at a great fishing/water skying lake in under 45 minutes. How in 3 hours you can be at a great ski hill. How many other countless great outdoor activities are so very close by. This region is really a very rare thing.
I have to agree with Fairfield that Victoria is fantastic, with few Canadian cities that come close to comparing - this is where my wife and I chose to live above all others when given the opportunity to live wherever we wanted (we are very lucky in that regard).
I also, however, agree with the other posters that a half hour commute is soul-sucking, albeit a fraction of what my friends in TO or Vancouver experience. For that reason, I chose to live in the core of Oak Bay, near enough to almost everything that I can walk or bike all year round.
I personally find a half-hour each way in a car on most days a terrific waste of time, not to mention the environmental implications.
"No one is forcing any of you to live here. If you don't like Victoria move to some small sleepy crap town."
Why would I leave when I can get someone who calls themselves a real estate investor to subsidize my shelter costs?
I love being a renter in Victoria at this time. I have no problems finding a place I can call home at a price that I believe represents good value comparative to my income and the true ownership costs if I were to buy it at today's prices. The best part is I can rent in Fairfield and avoid the 1/2 hour crawl and other traffic snarls.
Hmmm, interesting way of looking at it. Buying a house is like catching a fish.
http://ht.ly/2vNxV
S2
Wow - that fish tale was worth more than a few laughs...
You went to University to become a real estate agent? Funny, I never saw that faculty in any of the schools I attended...
Well said HHV,
Being fairly new to this city, it utterly fascinates me how investors have been coaxed into buying such low yielding properties. In many cases 2% cap rate range.
My head spins when i think of all the units around me listed for 300-400k, when my rent is only $900/mth (util's included, incredible ocean view, big balcony, pool, 4 min walk to inner harbor...)
Maybe my calculations are slightly off, but i figure our owner is netting about $6000/yr after strata, taxes, etc (assuming no mort. payments for cap rate calc's). Even if he only paid 300k for our unit that would be 6k/300k = 2% cap rate. He should have put the 300k in a safety deposit box, at least it wouldn't disappear there.
Makes no sense to me. Ten years ago in Alberta we wouldn't even consider buying anything unless it was close to 10% or higher cap rate. Perhaps i'd be interested in a 7-8% cap in this presently low-interest environment. But that still means maximum i'd pay for my rental unit is 6k/0.075 (7.5%) = $80,000.
Obviously prices have to fall big time or rents have to rocket. And i don't see rents rocketing anytime soon seeing how there are multiple vacancies in most buildings in our neighborhood.
Bullbear,
I know of two homeowners who have recently lowered their rental rates for their suites in order to find/keep tenants. One just knocked 15% off the monthly rent to keep her current tenants, and she's not overly fond of them. She had her suite listed for the first two weeks of the month, ready for September 1st, pets ok etc, and didn't get one application. She wasn't asking for the moon, she was slightly higher than the going one-bed rate, but her suite is one year old. Not only is it a buyers market its also a renters market.
HHV,
Yeah, I figured it was trending to a renter's market here. Somebody told me friday there were 9 vacants in our building right now (although i think there's close to a hundred units). I know in Ed & Calg some areas we follow are getting close to 10% vacancy. Who knows, maybe a couple years from now i'll only have to pay $700/mth for my place.
Hellos HHV! I'm trying to post a great video on Renting vs Buying but it's not showing up...
There was an interesting post over on KIV on August 8, 2008 that is titled "If the housing bubble pops will lower rental rates be next?"
Not surprising but not a lot of the posters thought that lower rents would happen.
S2
Oops, sorry. The date it started was actually Sept 10, 2007. Thank goodness Just Jack is the numbers guy in our family.
S2
I was thinking the number of foreclosures must be rising as I have had to show 4 properties in foreclosure this month - very unusual for me. However, the number of mortgages in arrears in Canada remains at .42% - same as this time last year.
As for rentals, my clients with rental properties are finding it a bit more challenging to find good tenants.
The death of an American dream. Coming to Canada slowly over the next decade.
Good article HHV.
In the USA housing went up because of buyer sentiment. It also came down on buyer sentiment.
Seeing as our buyers have fallen off a cliff, maybe it is finally our turn.
Month-to-Date Market Statistics
Posted by
Aug 30 2010
Monday, August 30, 2010 8:30am:
MTD August
2010 2009
Net Unconditional Sales: 396 764
New Listings: 877 1,094
Active Listings: 4,254 3,509
I was wrong, no way we are breaking 500 this month.
Morning everyone. Here are my stats for last week the 23 Aug - 29 Aug.
SFH: Victoria, Esquimalt, Oak Bay, Saanich East & Saanich West min 2 beds, 2 baths, priced from $375K to $775K.
New: 22
Sold: 17
P/C: 23
OM: 16
Breakdown of areas:
Vic: 5; Esq: 4, OB 1, SE 5, SW 2
1329 Monteray in OB sold for $698K down from $769K.
Average asking price within this criteria was $622,000 with an average selling price of $599,000 i.e. houses sold for 96% of original asking.
Average selling prices have gone up each week in the past four weeks:
Aug 2 - 8 $534K
Aug 9 - 15 $551K
Aug 16 - 22 $$576K
Aug 23 -29 $$599K
Condominiums (Apartment & townhouse)
Victoria: Most areas
Oak Bay: All
Esquimalt: All
Saanich East: Most areas
Saanich West: Gorge;Tillicum & Interurban.
Criteria: 2 beds, 2baths between $260K - 625K.
New: 12
Sold: 9
P/C: 12
OM: 3
Out of the 9 sold; three were townhouses.
#507-11 Cooperage in the Songhees sold for $430K down from asking of $500K. The assessed value was $531K.
MTD August
2010 2009
Net Unconditional Sales: 396 764
New Listings: 877 1,094
Active Listings: 4,254 3,509
Thanks for these numbers Marko. The number that stands out for me is the active listings volume. It should be dropping this time of year. It appears not be.
3026 Donald listed at $474,500 since mid july, came off market and then relisted at $485,000.
Is this how realtors help???
Dave#1
Victoria was a beautiful city in the 60's and 70's too as well as much more "quaint". But house prices then were in line with cities of a similar size throughout most of Canada.
August has been a dreadful month for real estate sales in Victoria. Here are the weekly sales stats...
Week ending - MLS Sales
August 8 - 78
August 15 - 108
August 22 - 115
August 29 - 95
Click here for graph
I am lowering my monthly forecast from 475 to 450 sales. This is well below the July sales of 527 and the 625 in June. We have to go back to the late 90's to see sales levels this low.
Some sellers are throwing in the towel and going off the market. However new listings have kept the active listings stubbornly high. Active listings actually rose last week.
Click here for graph
Poor sales and high inventory have driven the months-of-inventory (MOI) to nearly 10! This is not good for sellers as we head into the slow fall and winter season.
MOI and sales ratios
Prices will continue to fall for the foreseeable future. This may not be evident from the VREB reported average and median sales prices. As sales drop high end sales have a considerable effect on the average sales price. This number can have big swings from month to month. The median price is being affected by the exodus of many first time buyers from the market. Bears need to observe prices in a given area using PCS in order to get a feel for market value.
1716 woodsend just sold for $910K
Assess 1,250,000
Asking. 1,249,000
Nice house on 5 acres
UPDATE
this house was just listed again at $1,175,000
I have seen this before when houses are falsely reported as sold. A couple of other higher priced homes have done this.
Seems very un-ethical, I wonder what the VREB thinks of this practice.
Dave#1
I am just going to put in my 2¢ about the traffic congestion Langford (and beyond). From what I have read about urban planning, virtually all highway and roadway expansions reach capacity within 15 years. More lanes of traffic = more vehicles = more expansion in suburban areas.
This is exactly what we have witnessed with the expansion of the TransCanada in the early 1990's between Bolenskine and Spencer roads. Within fifteen years later, outlying areas have experienced tremendous growth in real estate such that the roads that lead there are fully congested during rush hour.
The solution isn't to build more roads. It is to change the way that are city operates - mixing residential and commercial so that people may work closer to where they live. Significantly expand local transit, build more bicycle lanes and implement an LRT.
Outside of rush hour, it takes a maximum of 25 minutes to drive from one part of Victoria to another - which is pretty incredible compared to most other comparably-sized cities.
Cameron Muir of BCREA tries to spin the July stats and pretends that BCREA predicted this temporary downturn in a video release. He predicts all will be well in 2011.
BCREA Video
The video is about 5 minutes long but the stat charts are worth looking at. The analysis of Vancouver Island buyer stats is quite interesting.
Interesting stats on Canadian Mortgage Trends blog
Average Mortgage Grows 36% In 48 Months
Size of mortgages is way up and 1/3 have variable loans. When interest rates start rising next year watch out!
wise investor, that's Broadmead Ave, not Broadmead neighbourhood. Broadmead Avenue runs parallel to Cedar Hill X Rd, half way up the hill to Uvic.
Wise Investor:
I believe that is Broadmead in Saanich East Mt Tolmie area
Wiseinvestor, looked at the pics of the suite on mls. What a dump, I can't believe someone is paying 950 for that!
Skeptic: One thing about taking a Variable rate mortgage is that the borrower must usually qualify for the current 5yr posted rate.
If it were me I would definitely go for the variable rate and then lock in when it is practicable.
10 months of inventory - how long until we reach that psychological magic level of a year of inventory - that will really put the breaks on pricing.
@ Alexandrahere: Skeptic: One thing about taking a Variable rate mortgage is that the borrower must usually qualify for the current 5yr posted rate.
This qualification is only for CHMC-insured mortgages since April 19th, 2010. Over the past few years, there have been many first-time buyers paying "zero down" with 35 or 40-year amortizations. (The 40-year amortizations were introduced in June 2006 and rescinded in June 2008.) These buyers may have significant challenges being able to qualify when the mortgage renewal becomes due sometime during 2011 through 2013.
These buyers may be in a negative equity situation and unable to renew = must sell for whatever price the market will bear.
Re the house on Broadmead Ave - it is assessed at $463,000 - why would it be listed so much higher at $599,000? I live in that very modest neighbourhood and it is similar to the other houses around it (or in fact less desirable).
Fixed Rate Vs. Variable
I say do both, get say half locked in a a low rate, and the other half floating variable.
This is my plan, as a commissioned sales person my income can fluctuate month to month. good months plow down the variable, on bad months, do interest only on the variable.
If variable rate skyrockets, half your payment is still locked in.
Might not save as much as you could if you went all variable, but the diversification is worth it to me personally.
Yes, I agree with you Robert. It really does all depend on ones current/future financial status as to the type and length of the mortgage they opt for.
When people over-extend themselves financially or otherwise, the result usually turns out to be a detrimental one.
I applaud HHV and others here like him that are doing the sensible thing in this current real-estate climate by renting, saving and watching. The best time to jump-in, if at all possible is when you see the beginnings of a upward trend.
As I have said before, the payoff is one that you will last you for the rest of your life.
Olives - the house is probably listed that high because:
a - there was a signficant flip renovation done on it
b - the owner is greedy
c - the owner is maxed out the HELOC and will be bankrupt if selling for less
d - all of the above
All (including RE agents)- please post links to 3-4 good 2-3 bedroom main floor or whole house rentals east of Westshore for a good price. Missus has agreed to rent for another year - haven't found anything to our liking yet (we are renting top floor of a character house for 1135 a month and want to move to something that meets our current needs better)
Hey HHV. I tied posting a handful of excellent video resources yesterday from the khan academy but they never made it on. Is there a reason my posts get blocked?
Thanks.
hammertown, no idea at all. try just posting a link
wiseInvestor, i deleted your comment because the link gave away your personal information.
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