Monday, September 27, 2010

Monday market update

Numbers courtesy of the VREB via Marko Juras.

Month to date September 2010. (2009 September numbers in brackets)

Net Unconditional Sales: 306 (776)
New Listings: 1,002 (1,129)
Active Listings: 4,181 (3,419)

Price Original = $649,357
Price List = $635,443
Price Sold = $612,296

SFH average days on market = 56

Price changes last week = 203

Sales volumes jumped last week. If the next three days play out similar, it won't be impossible to surpass 350 for the month, perhaps even hit 375. Regardless, this number can only be called disastrous as it is less than 50% of last year's numbers and still marks a 20-year-low for September sales volumes.

Due to the low sales volumes, average price reporting is going to be extremely volatile. In August, $586,000 was likely reported too much as a "drastic drop" without the corresponding explanation "lack of high end sales" skewing the average down. In September there have been considerably more expensive homes selling dragging the average back up - somewhere near $610K. The truth likely lies somewhere in between.

124 comments:

Marko said...

Inventory continues to be stubbornly high.

Marko said...

The real question is can October/November possibly be worse this year then 2008?

Jack said...

It would be interesting to do some sort of analysis about 'averages'.

You take the numbers from 1 to 100 and run simulations to see how reliable the average is when selecting x numbers.

If sales:inventory ratio is 1:10, then you would pick 10 numbers and run it x number of times.

Picking only 1 number will be within 2% of the average only 3% of the time, while picking all 100 will be exactly the average every time.

It is quite simplistic but it would be interesting to find out how many numbers you would have to pick to be within 2% of the average 95% of the time.

HouseHuntVictoria said...

Jack,

It's simply better to use the median. I don't typically, because the VREB uses averages predominantly in all their data/charts/etc. I use averages to simplify the counter-spin. It's bad, I know, but not sure what else to do.

Waiting said...

Here's hoping that Oct/Nov will be worse than 2008. As a young family that has been waiting (and waiting and waiting) to buy as we aren't prepared to take on a $650,000 mortgage (despite being pre-approved for crazy high amounts)I seriously hope the market takes a massive tumble!
Love this site and reading all the insightful comments!

DavidL said...

The problem with means (averages) and medians is that the values don't indicate the amount of variation within the data set being sampled. I'm sure that VREB could easily calculate the standard deviation that applies to their weekly/monthly statistics, but it would probably not be in their interest to do so - as it would indicate that that most of their prognostications are not based on sound statistical analysis.

a simple man said...

Good morning - thanks for the stats, Marko, appreciate them as usual.

Both the mean and the median are important with regards to describing the market, but both can be deceiving if you do not know the underlying sale price distribution curve - it would be terrific if VREB released one each month as they have all the data and it would just take a moment. Then the mean and Md could be plotted on the curve, etc. Would tell us a lot.

Waiting - I am in the same place as you - unwilling to mortgage an amount that is unhealthy to my family's financial well being. So I wait.

DavidL said...

@Marko wrote: The real question is can October/November possibly be worse this year then 2008?

I think a lot will depend on economic news and the stock market next month. The market has been rallying for a while, and if it takes a "traditional" October drop, then MSM (mainstream media) will ramp up their reporting of economic woes, etc. ... affecting consumer confidence.

If the popular sentiment is that the market is falling - then real estate sales will suffer.

omc said...

I don't mean to rain on the parade, but there are actually 4 more days of sales to be added. These stats don't include monday's closings.

I still think the 375 count is a reasonable expectation as my impression is that there are fewer sales in the last few days. There are still lots of lookers, like me, but the good homes at fair prices are gone. There have been some good deals on homes in the 800k range in the better neighborhoods. All we are left with on my PCS is the turkeys and people dreaming that they are still at the peak.

Is this what you are seeing Marko?

Alexandrahere said...

A week or so ago Just Jack made an observation about condos. He remarked the condos that have age restrictions i.e. say age 40 or 55, sell at lower prices than those that don't have these restrictions. I agree. Most of these condos with these restrictions are the "older" ones built in the 70's and 80's. Also most of them are in Fairfield and James Bay although there are quite a few in Esquimalt and Oak Bay as well. Not that it matters but many of those also don't allow pets or at least no dogs. These condos for the most part are not rentable as well. And so unless a specuvestor is very sure of himself in terms of a quick flip, he won't purchase one of these; instead opting for a newer and "rentable" one.

Anyway, the same kind of reasoning seems to be happening in SFH in Broadmead. Because you can't rent a suite out in your house there...the prices are dropping. Take a look at 4753 Falaise in Broadmead. It was priced at $679K and is now down to $589K. It has 3000 sq. feet with 4 beds and 3 baths. People just can't afford to heat (mostly electric heat there) and maintain these properties without the subsidy of suite income. They are just becoming monster unaffordable mcmansions.

Back in March of 2008 that house would have sold for at least the original asking price of $679K.

Back to the new condo scene versus the non-rental older type ones...I believe in a few years many of the owners of these newer condo's will be living in "hell". The ones that bought as owner occupiers are going to be sick and tired of the noise and extra maintenance levels of the renters kids, dogs, cats and the constant moving in and out of the tenants. Nothing like going out to poolside say at the Shutters and Spa and having the renters kids and their friends splashing, yelling, screaming (and
laughing). Or should we call that complex "Shudders and Spa"? The monthly strata fees of these condos can only skyrocket.

Marko said...

"Is this what you are seeing Marko?"

That is exactly what I am seeing. Just looked at 15 homes with a client, only about two were worth while making an offer on, remainder are dreaming.

My client did make a successful offer on one of the homes.

Marko

omc said...

I wouldn't use that house on Falaise as an example for a number of reasons. It is an extremely poor location, pretty much on the Pat bay hwy. It is fugly. It has 3000sqft only if you include the garage as living space. I can just imagine the quality of finishing in the garage if they talk about converting it back to garage in the ad and don't show any pics.

At $589k it is still way overpriced. I knew someone that was looking at properties of that caliber at similar locations during the peak and they were not high even then.

Tony Danza said...

The real question is can October/November possibly be worse this year then 2008?

Well Marko, since you stated in the last thread that you can't see a repeat of the price drops we experienced in '08 then I guess you already know the answer.

BTW thanks for the updates.

Marko said...

I think 20-30% takes us past drops experienced in 2008.

Just Jack said...

The property on Falaise is a conduct of sale.

In such a a sale, there would be no representations or warranties from the vendor; the sale is strictly "as is, where is". No appliances, window coverings, etc would necessarily be included in the sale.

Your offer can not have 'subject to' clause. You accept the condition of the property at the time of the sale, not necessarily what you viewed. And there is no recourse on the vendor for non disclosure.

Your offer and any others will be presented at court but can still be rejected by the lender or the magistrate. Those present at the court may also bid at that time.

When the market was HOT HOT HOT, rarely did these properties ever get to this court ordered stage. These properties sold at full market value and sometimes more.

Today, they sell at a discount for the above mentioned reasons.

A symbol of the changing times in real estate. After every boom market comes a bust that can be dominated by court ordered sales. In the early 80's we had a market where the prices were set by properties under duress with few solvent buyers.

Court ordered sales are highly regulated so you probably will only get a reasonable deal. Unlike estate sales, were the deals can be substantial and there are more opportunities for "creative" agents and lawyers especially when the families of the deceased do not live in Victoria.

You want to see how ugly real estate can get - just wait.

omc said...

Hey, JJ. Where did you find out it was a conduct of sale?

Take a look in street view; they didn't even bother to go up that road, but instead give you a view of the house from the pat bay.

kabloona said...

Yeah, the Falaise house is not only right on the freaking Pat Bay highway, it's located just a stone's throw from the cemetery as well. My realtot once told me a lot of people do NOT want to live near a cemetery, despite the prospect of quiet neighbours...

I admit I tend to think of Broadmead being more down towards Royal Oak, at least then you are close to the Canadian Tire.

;-)

Just Jack said...

Well the listing does say "Court Approval Required"

Just Jack said...

There is road noise from Pat Bay when you are in the yards. But knock off $35,000 and that should compensate you. And after a month or so, you won't even here it, especially with the new media centre cranked up that you bought from the $35,000 you saved. And who are you going to wake with it - the dead?

Other benefits of living near a cemetery is that you're wife always gets flowers on her birthday.

And you can always creep your mother-in-law out, by telling her that you've found a spot where she will be near her grand kids.

And whats up with this. An agent from Vancouver has the property co-listed?

Hmmmm, spidey senses on this one. Seems like someone in Vancouver is getting their cut on the deal.

Hell, go in 60K under market value, use the same listing agent and add a further paper bag cash bonus of $10,000 to the agent. Because you are never negotiating with the vendor - you're negotiating with the agent.

DavidL said...

@ Just Jack wrote: And you can always creep your mother-in-law out, by telling her that you've found a spot where she will be near her grand kids.

That's just hilarious ... I could almost see this working with my mother-in-law!

Alexandrahere said...

I sold a house in spring of 2008. I was lucky. Sold it for $700,000 and the buyer was unable to sell any of his other properties so he took a hit and sold it for $585.

DavidL said...

@ Alexandrahere wrote: I sold a house in spring of 2008. I was lucky. Sold it for $700,000 and the buyer was unable to sell any of his other properties so he took a hit and sold it for $585.

I'm glad you were able to sell near the "top" of the market. Am I understanding this correctly ... the new owner was financially overdrawn and was obliged to resell the same house for $115K less than was paid?!

Alexandrahere said...

DavidL -- yes that is what he seemingly had to do, although he owned other properties. He never moved into the house.

themoose said...

If this site was about alternative's to owning a home, it might convince me of a correction. But, isn't this site a clear signal of just how strong demand for real estate is around here. Think about it, a blog devoted to people whom are looking to buy on the first dip. Like a lineup of buyers as far as the eye can see.. hmmmmmm

omc said...

first dip has already happened moose.

Marko said...

According to another realtor, out of town buyers make up 7% of the local market. Pretty low, I thought it was in the 10 to 15% range.

a simple man said...

Most potential out-of-town buyers that I know quickly leave the notion of living here being disillusioned by the lack of well-paying jobs and the comparatively onerous cost of housing.

omc said...

I don't think you can give a straight % for the out of town buyers; it changes with the market. I was told that the last 2 years have had a very low % of out of town buyers, and that the last bull market was fueled entirely by local borrowers. We may only have 7% of out of town buyers right now, those that are set on retiring here. I couldn't imagine any out of towners buying as investments.

a simple man said...

more from the Time Colonist vaults of the obvious, published online today:

RBC economist Robert Hogue is raising a “red flag” about housing affordability in Vancouver.

The bank’s quarterly report on housing trends and affordability, released Monday, said Vancouver is one of a handful of Canadian markets where the share of household income taken up by home ownership costs “is at worrisome levels.”

RBC said the proportion of median pre-tax household income required to service the cost of a mortgage on an existing housing unit exceeds 70 per cent for both two--storey homes and detached bungalows. A standard condo consumes about 43 per cent of income, according to RBC.

In Vancouver, Canada’s most expensive market, RBC housing affordability measures are very close to their all-time high, which points to significant underlying stress and raises a red flag,” Hogue said in the report. “Very poor affordability is likely to restrain demand in the period ahead.”

Just Jack said...

The RBC report shows that affordability (how much of the paycheque is going to the monthly payment) is near or at an all time high and that Vancouverites are at the highest level of risk (the probability to payback the mortgage). So, in Vancouver you can still buy a home but if you bought with high ratio financing the chances of ever owning (being mortgage free) is not likely. For Vancouverites, exposure to even the slightest increase in interest rates, or a personal economic shock (divorce, job loss, etc) will mean the difference between home ownership and personal bankruptcy.

Only 2 or 3 percent of the total stock of housing is now trading each year. But because of home equity loans more than just high ratio home purchasers are at risk. Those that have maxed out on their payments and have extended the amortization period to the extreme end are at the greatest risk of a default. They simply have run out of options.

The question is what percent of the remaining 98 or 97 percent of home owners are maxed out. Because even if one percent of the remainder defaults on their mortgage, that changes the Vancouver market to a "foreclosure" market. Frankly, in my opinion, Vancouver is "tits up"

And we all know what my opinion is worth -a Tim Horton's cup of coffee and a day old bagle.

themoose said...

simpleman
Most potential out-of-town buyers that I know quickly leave the notion of living here being disillusioned by the lack of well-paying jobs and the comparatively onerous cost of housing.

Who comes to Victoria to work? This is a retirement haven and will be for the next 20 years. The boomers are just starting not finishing. When you sell your house in china for 2mill or toronto for that matter, it's easy to afford a nice place here. That's not going to end anytime soon.

a simple man said...

hi themoose;

I came to Victoria to work, moved here in the recent past.

You are correct that there are wealthy people out there that will buy real estate here, but as Marko said only 7% of the market is from out of town, and of that 7% maybe half are retirees (I am totally guessing on that one). The majority of Canadians retiring right now are not millionaires and will not look at Victoria as a possibility if it means taking on a big mortgage during retirement to live here (read: no more retirement and therefore need a job, which there are few that pay well). The market is speaking to you loudly right now - lowest sales in 20 years, rampant price reductions, sales below assessment. The goose is cooked, moose.

And to address you previous post, this post is mostly about the search for an affordable home. You are correct that most here are searching for that (some here own). However, I think that what makes us different as a group is that we really look at the raw numbers and do not blindly accept the interpretations of that data from groups with vested interest. Admittedly, most of us are biased in the aspect that we would like to see more affordable house prices, and we freely admit that. A lifetime of servitude to the bank is nothing anyone wants.

You are encouraged to make any argument you wish here, but please do so with logic and numbers.

omc said...

If moose wants to be seen as anything more than a troll, he should acknowledge replies to his posts. He states we are all waiting to"buy on the first dip". It is clear that the first dip has indeed happened (over $100k in my range), yet here we still are.

Free conversation is encouraged, trolling will be ignored.

omc said...
This comment has been removed by the author.
a simple man said...

and some local media reporting to read twice:

The cost of owning a single-family bungalow in Greater Victoria climbed for the fifth consecutive quarter, says a new housing affordability report from the Royal Bank of Canada.

According to RBC Economics, ownership costs -- the proportion of median pre-tax household income required to service the cost of mortgage payments, property taxes and utilities -- for a single-family bungalow in this city in the second quarter hit 50.5 per cent of household income. That was considerably above the national average of 42.9 per cent.


FROM THE TC online

So 50.2% of pre-tax income in Victoria - assume 20% tax. That leaves 30% for food, vacations,. clothes, savings, etc

Dave said...

"So 50.2% of pre-tax income in Victoria - assume 20% tax. That leaves 30% for food, vacations,. clothes, savings, etc"

I could only dream of paying 20% in taxes

Dave#1

Alexandrahere said...

Also from RBC: Google "Homeowners to see some temporary relief from rising home costs. A few paragraphs down says. "rising household income, a trend toward falling long-term mortgage rates & the expectation that home prices should moderate slightly will provide consumers with some short-term respite.

Well maybe the "existing" homeowners might get some respite, but if mortgage rates take another little dip for the short-term, (maybe) but doesn't this kind of reporting just entrap "new buyers"? Looks like they are still trying to encourage young people to dive into the 2" of water. Shame on them.

DavidL said...

Thanks everyone for mentioning the TC article ... here's the link:
Victorians spending more than half of their income on ownership costs

DavidL said...

From the TC: According to RBC Economics, ownership costs -- the proportion of median pre-tax household income required to service the cost of mortgage payments, property taxes and utilities -- for a single-family bungalow in this city in the second quarter hit 50.5 per cent of household income.

I suspect that if the distribution were graphed out, there would be two peaks - one at about 30% and the other at about 60%. The 30% peak would be people who purchased prior to 2005, bought for a more reasonable price, and have actually managed to pay down a bit of their debt. The 60% peak would be someone who purchased more recently.

A coworker of mine was in the 60% category. He sold his house just a few weeks ago - for 35K less than the original list price. He bought is a few years ago and was tired of his mortgage "sucking him dry" - no money left over for anything beyond basic needs. It was causing considerable stress for him and his partner. In the end, he made a minor loss on the house (after factoring upgrades and resale costs) - but he's glad to have found a "greater fool" to relieve him of his mortgage.

Alexandrahere said...

Here are three properties that just sold:

2397 Tod (OB) Original asking price:
$649K sold for $575K, assm"t $595K

953 Selkirk (Esq) with suite asking:
$545K sold for $495K, assm"t $527K

2904 Shakespeare (Vic) Original asking:

494K sold for $450K, assm't $472K

On the shakespeare one the last asking price was actually $529K.

Hmm which one was the best value?

Marko said...

I lot of people won't see the value in 2904 Shakespeare; however, that is a really good deal. All you need for that home is a report from an engineer that the home is beyond repair with a few little favours for the neighbour and you are set with two freehold 3600 sq/ft lots probably at a total cost for of around 280k each or so.

DavidL said...

@Alexandrahere wrote: Hmm which one was the best value?

Answer: none of the above. It may sound brutal, but even assuming 10% down, a mortgage for $400K to 500K is way too much for these modest homes. Even if someone is investing in a rental property, there is no way that the rental income can cover the mortgage. If prices continue to slide (as a believe they will), the new owners will find themselves in a negative equity situation very soon.

DavidL said...

@ Marko wrote: ... you are set with two freehold 3600 sq/ft lots probably at a total cost for of around 280k each or so.

Do you honestly think that now is a good time to be build in the Hillside neighbourhood? With all the inventory and slowing sales, I can only imagine that it must be a very risky time to build ...

Phil said...

The moose, if so many rich boomers are retiring here why is no one buying with cash? Why is everyone I know who has bought here in the last 5 years stretched to the limit?

You are echoing what they said about Florida real estate 5 years ago. Hows it going for them?

Sweetrealtor said...

18 listings changed to pending today as of noon (VREB, MLS data). These last few days of September are very active. Maybe this month will crest 400 sales after all. Still depressed from previous years but not as gawd awful as it was looking for the first half of the month.

Marko said...

"Do you honestly think that now is a good time to be build in the Hillside neighbourhood? With all the inventory and slowing sales, I can only imagine that it must be a very risky time to build ..."

Yes I honestly think it is a good time to build in Hillside if the numbers make sense. A new 3300 sq/ft home in Maplewood went yesterday for 1.2 Million. Drive by 2171 Bartlett Ave, this home sold for 1.3 MILLION earlier this month!

I would sleep very well if I got these lots for 280k, spent another 250k on construction for a nice 2000 sqft home, and put them up on the market for $699,000 HST included. Location is awesome. I grew up two blocks away, walked to Oakland’s, walked to Lansdowne middle school, walked to Vic High. If the family had kids and both parents work this is a huge plus.

There is always demand for new homes in the Victoria core, plus you would have very limited competition.

PainInThe said...

News flash. Retirees like sun, sun, and more sun, and sun is VERY cheap in Arizona and Nevada and even Southern California right now.

Not so here. On any level.

Marko said...

I was in Arizona recently to pick up a S5 my friend bought down there. We looked at some of these 139k homes....and yea, I rather live in my 533 sq.ft condo downtown Victoria.

Mark said...

Marco you're on crack....LOL!
Did they hook you up to one of those realtor brainwashing machines when you got your license?

That part of town is the "HOOD" and no way anyone in their right mind is going to pay 699k for a 2000sq ft house on a tiny 3600sq ft lot! Well actually there are still plenty of stupid people out there so who knows.

Regardless as a builder I would not take that bet. You could be waiting a long time and paying a lot of carrying charges waiting for those houses to sell.

Same shack 3 years from now will sell for 350k - 400k.....wake up!

Sweetrealtor said...

Canadian retirees still love Victoria. Warmest postal code in Canada and you don't have to live in the US.

HouseHuntVictoria said...

I love the retiree argument. It's so grounded in the numbers.

Locals drive the prices here. The rest of the market is minuscule in comparison to have little effect on the overall market.

Put it this way (examples #'s only):

5000 total unit sales/year
7% of total = out of town buyers = 350 units
Maybe 50% of that is "retirees" or "wealthy boomers etc" = 175 unit sales annually set the market? Give your head a shake. This is nothing more than marketing drivel lapped up by industry lap dogs and the people with a vested interest in finding a greater fool.

Mark said...

Further to my post...Marco be careful, you are losing credibility every time you make bold, crazy statements like that. AND showing your inexperience and lack of real world common sense.

Exactly the opposite of what you are trying to accomplish pimping your biz here, no?

Personally when I hear a realtor talking like that , I run the other way......cost savings or not.

Just saying.....

Marko said...

I guess I have lived in the hood for the past 16 years! It has probably made me tougher eh?

DavidL said...

@Marko wrote: ... spent another 250k on construction for a nice 2000 sqft home, and put them up on the market for $699,000 HST included.

By my math, that $350 sq ft. - about the same amount as in Broadmead, Ten Mile Point and parts of Oak Bay, etc.

Let's say that it takes 12 to 18 months to do the build and then sell the new home. What do you think the "market" would be willing to pay at that time? Even a 5% drop means that you could kiss your profit margin goodbye. A 10% drop, and you are barely breaking even (after construction costs, permits, legal and Realtor fees). A "correction" of more than 10% and you are losing money ... high risk in my mind!

Enjoying the debate, though. ;-)

Mark said...

The retiree argument is old....aging boomers got killed in the stock market the last 2 years. What are bonds and GIC's paying these days? Not much! The only money they have is in their homes (for now). Why would they move to the second most expensive place in Canada?

The weather? Surely you jest....

Marko said...

Mark, what is your advice?

My old man and I fold operations, stop building homes, and both go work at a gas station until the market corrects 40%?

Like common.....

Mark said...

Blogger Marko said...
I guess I have lived in the hood for the past 16 years! It has probably made me tougher eh?

Dude I saw the video.....you don't look that tough LMAO! Good one though, I'm still laughing ;o)

Mark said...

Marko said...

Mark, what is your advice?
My old man and I fold operations, stop building homes, and both go work at a gas station until the market corrects 40%?
>>>>>>
My advice will fall on deaf ears but here it is....YES. The old man can go back to doing his masonry work and you should focus on your Biz. I don't think there is any money to be made building spec houses right now.

IF you can find someone to hire you as the general then yes by all means as they assume the risk of the home depreciating by the time it's complete BUT taking a risk as a builder that a home in that area will be worth 700k in a years time is financial suicide IMO.

Do you really, I mean really think that a home in that area on a postage stamp lot is worth 699k?

Marko said...

Obviously there is risk involved in everything, if you don't take the risk, you don't get rewarded.

We have made money on every single home we have built to date...so perhaps break even or lose money on the next project? Who knows?

DavidL said...

@ Marko wrote: My old man and I fold operations, stop building homes, and both go work at a gas station until the market corrects 40%?

There is room for quality construction in any market. It just might not be in teardowns and rebuilds when building costs are (essentially) fixed and the value of the land is dropping fast.

Now how about some renos and foundation repairs?

Waiting said...

Marko,
Can you really build a 2000 sqft home for $250,000? I was quoted between $300-350 /sqft from 3 builders when I inquired about cost. That means $600-700,000 for a 2000 sqft home. I only know one person building currently and they are paying $350. If you know a reputable builder (no pressboard for me please!) who will build for that price please pass on their name!

Tony Danza said...

Marko, How many years has your father been building spec houses?

Mark said...

Hey waiting...300-350k/sq ft is pretty Gucci dude!

I can tell that you are definitely being gouged by those builders.

Marco and other builders can get it built a lot cheaper and the finishing at that price is still pretty nice. remember that's Marco's price, not what you would have to pay for the spec house when the home is completed....unless you use him as the general contractor.

These guys throwing out insane quotes like that are going to be out of business if they don't get real, real fast!

HouseHuntVictoria said...

Marko contributes timely market data to this site regularly. While we may not always agree with others' views on the market, please be respectful and avoid personal jibes and name calling. Not saying that it is the intention of anyone commenting here, but if Marko is "run off the blog" we'd be forced to find a new source of weekly sales updates etc.

Mark said...

I'm sorry :o(
I like his stats too, just can't deal with the silly, unrealistic insights.

I am a very bad man....100 lashes with a wet noodle for me!

hammertown said...

For those of you interested in Garth Turner, he is coming to Victoria.

October 13, 7 pm, Victoria at the Convention Centre

Register here: www.victoriametro.ca

reasonfirst said...

About retirees and Victoria - although I don't have the stats handy, it is pretty clear that Victoria already has an older demographic which means (and sorry for the morbidity) we will see a greater rate of downsizing and dying than the rest of the province. This significant offset doesn't seem to be recognized very much with talk of boomers moving to the island. Also, and I have stats for this, Vancouver Island's population is expected to grow at a much slower pace the the BC average due to this and the fact that people don't come here for jobs - only to retire (and penny pinch). page 3: http://tiny.cc/euqj5

DavidL said...

I think that the mix of realtors, builders, home owners and prospective buyers who visit this site adds to the legitimacy of House Hunt Victoria. Instead of a radical fringe community, HHV is mainstream and pertinent.

Thanks to all that contribute ... even if we don't all agree.

Alexandrahere said...

Marko that neighbourhood is a very modest one comprising many 1940's style war-time homes. These homes have their place particularly for first time buyers. But if you think that you could build a house in that location and get someone to buy it for a million dollars or more you are really fooling yourself and certainly no-one else.

A much more logical comparison would be the one at 1538 Edgeware in the Hillside area. It is a 2010 built 1200 sq. ft 3 bedroom, 2 bath and it sold for $494,000. The areas are close and the street has similar homes. Even that home looks a little uncomfortable sitting there. Anything fancier would be totally out of place.

Alexandrahere said...

Marko: Please accept my apologies if at any time you feel that I have hit on you personally.

We are all just here to listen and learn & to give our numbers, our own logic, opinions and advice.

I actually truly enjoy your comments and look forward to your weekly/monthly stats.

Also, I had friends as well that grew up in the same area as you and they loved living there and their parents were very proud owners.

Just Jack said...

NEW HOME SALES of homes with finished basements

2320 Echo Valley
New 2,617 square feet home with a double garage and landscaped lot.

Sold for $642,500. Lot purchased at $180,000. Nets $462,500 for 2,617 square feet or $177 per square foot to build including contractor's profit.

2152 Players sold for $762,000, lot purchased for $210,000 Thats $552,000 for 3,709 square feet of $149 per square foot.

2529 purchased for $660,000. Lot cost $200,000. Nets $460,000 for 2,280 square feet or $202 per square foot.

3351 Sewell sold for $596,000. Lot was $220,000. Nets $376,000 for 2,304 square feet or $163 per square foot.

Ranged from $149 to $202 per square foot for all in costs in ready to move in homes with an average of about $175.

Gee, I don't know $350 a square to build? Did your builder also work on the Olympic Village?

We live in a free market. A builder can ask whatever they want. They just need to find the right person willing to pay it.

Leo S said...

What about 2870 AUSTIN AVE then? 15,510 sq feet + teardown for 435k. Assessed for 486.

Heck that's 3 good sized lots. I don't know anything about zoning though.

Dave said...

If Lansdowne Walk wants $500k for 1500sq/ft of 2010 built townhouse in that neighbourhood, Marko's $700k for 2000sq/ft freehold doesn't seem that unreasonable in comparison.
Dave#3 I guess?

PS Lurker since May-ish, first post, renter and RE neophyte.

DavidL said...

@Dave(#3)? wrote: .. Lansdowne Walk wants $500k for 1500sq/ft of 2010 built townhouse in that neighbourhood

But who's to say that $500K for 1500 sq. ft. is reasonable? In this current market, I wouldn't be surprised to see some price reductions soon.

For the same amount of money, a buyer could have purchased 3971 COLUMBINE WAY (MLS® 279611). It sold a few weeks ago for $493K. Yes, it was built in 1976, but it has almost 2000 sq. ft. on a nice sized lot with 8700 sq. ft. A better choice for a family with kids?

I don't understand the obsession with "new" homes. There are some perfectly good used ones available. (Kinda like used cars - you just have to do your research.)

Dave said...

Leo S said......
What about 2870 AUSTIN AVE then? 15,510 sq feet + teardown for 435k. Assessed for 486.

Heck that's 3 good sized lots. I don't know anything about zoning though.

Its only 66' wide, maybe 2 @ 33'

Dave#1

Just Jack said...

What are the prices like around the Shakespeare property?

Over the course of the last year, some 22 homes sold in the immediate area of the Shakespeare property. Prices ranged from a low of $365,000 for a small updated home on a small lot fronting a busy street. To a high of 688K for a 2 year old 2,900 square feet home on a 4,000 square foot lot. The median price was $472,750 which would be a 1940's built 1,527 sft. home a 5,225 sft.
Most of the homes fall within a 20 percent range of the median or from $380,000 to $570,000.

A new home in the neighbourhood would would lay at the high end of the range. Greater than $570,000 but because of Shakespear's smaller lot size and corner location slightly less than the 2 year old home that sold for $688,000. My guess is that $675,000 is the market value in the neighourhood for a new home on a 3,600 square foot lot.

Construction costs for a 2,520 (70% land to building ratio) square foot home at around $175 per sft. is $441,000. Residual value to the land is $234,000 less cost to subdivide and demolish the improvements of $60,000 or $30,000 per lot. Raw land value would be 2 x $204,000 or $408,000 as a development property. Assuming start to finished product of under 9 months. Shakespeare sold for $450,000 which indicates that the highest price for the property was as it was sold - just a home on a lot.

And that's why the neighborhood is not being re-developed. You get a better price as a home on a lot than as a development property.

Marko said...

Austin property...

1/ Not a corner lot
2/ Sannich
3/ 66' wide lot
4/ Sannich
5/ Sannich

Possibility to panhandle, I suppose, but a small one at that. I wouldn't pay more than 350k for that property.

Secondly, 1575 Westall Ave sold for $577,000 - 1522 sq/ft home, single car garage, and 2798 sq/ft lot.

For 2000 sq/ft, quite side street with two new homes already on it, double car garage, and much better finishing (we put soaker tubs, in-wall speakers, granite, custom cabinets, real hardwood, etc. in anything over 500k) and a small but 60 x 60 flat lot 699k is not out of the question. Refer for finishing to 1009 Limestone Lane pictures on our website, www.jurasconstruction.com, we sold this for 585k.

"Can you really build a 2000 sqft home for $250,000?"

Our cost only. Your cost over $315,000 on an equivalent home.

"Marko, How many years has your father been building spec houses?"

We did spec homes for two years, and last two we have been doing custom homes; however, would prefer to move back to spec homes and density. All of the money is in making a good transaction on the land. On the actual land improvements the money is very small. Before we came to Canada my old man built a number of high end homes in Croatia.

Open to doing anything from 1,500 sq/ft townhouses to waterfront homes up to 1.5 million. Just show me the numbers.

Marko said...

"To a high of 688K for a 2 year old 2,900 square feet home on a 4,000 square foot lot."

Have you been inside this home? lol

Westhall is a much better comparable.

Just Jack said...

I don't have to. The stats say it all. You build to the most the neighborhood can support. The 2 year old home sold for $200,000 or 45% more than the typical home in the neighborhood when most homes selling in the neighborhood range in size and condition by only 20 percent.

So now it comes down to taking a risk. And sure there is always a chance that it will work. But the odds are against you in this case. Best to find another property with a better chance of success. At least one where the odds are 50/50

Marko said...

There is the academic world of lets figure out the probability of a home selling in Fernwood over 700k and than there is real life.

Just Jack said...

So what are we squabbling about? 50K a 100K? Basically a new 7 series bimmer.

If it were my money I wouldn't do it, but if I'm spending your money then we start next Monday.

ps. I'm not in the Academic world. I tried teaching once, but was fired when I started the class with...

"Smoke if you got em!"

Just Jack said...

Damn those fifth graders!

Alexandrahere said...

DavidL "I don't understand the obsession with new houses"....I don't either.

"once it's driven off the lot it is used".

Kids of my friends both bought new homes in Langford on very small lots.

One of them has a small dog and the nice "wood floors" are so scratched and scared already in just a few months.

The kids have also done their "art work" etc. and the house already seems extremely used.

I don't know but it seems that the 60's homes with the "real oak" floors seemed to stand up so much better. Plus most of them, because of their thickness can be sanded up to four, five times.

HouseHuntVictoria said...

"Damn those fifth graders!"

I see the elementary smoking prevention programs are working... in my day we started as soon as we could reach the counter tops to grab the old man's Export A's.

Just Jack said...

A lifetime ago, I worked in Vancouver and the new Asians immigrants would only buy a new home. Feng Shui

But then again they would not buy a house with the number four in the address, on a T intersection or if you could see a bedroom at the end of the hallway.

But with money so cheap and people thinking that this may be the last home that they own, I can see why new is appealing. What I can't understand is why people want those old Fairfield shacks with leaking windows, newspaper or zonolite insulation, low damp basements and a ton of lead paint hiding the buildings defects. Maybe its nostalgia for granny and grampa times, Leave it to Beaver TV shows, and Norman Rockwell paintings. When the bad guys had shaved heads and neck tattoos and not the cops.

Will the demand for character homes end when the kids raised on the Brady Bunch and Pee Wee's Playhouse reach retirement. Will a generation raised in Gordon Head boxes want to reach back to the those nostalgic years instead of the home Wally and the Beav or Andy and Opie Taylor grew up in?

Will the side by side split level home be the envy of the neighborhood. Only indoor/outdoor carpeting, Harvest gold appliances and Champagne colored stucco will tell. Oh gawd - that's Broadmead.

DavidL said...

@Alexandrahere wrote: I don't know but it seems that the 60's homes with the "real oak" floors seemed to stand up so much better. Plus most of them, because of their thickness can be sanded up to four, five times.

That 1960's oak has been drying out thoroughly for the past 50 years - so it's rock hard! I grew up in a house with solid oak 3/4" flooring ... I could scuff it a bit when I was a kid, but now it's too hard.

I have a friend with a late 1930's house that has solid fir floors. (They purchased from the original builder/owner.) They sanded off the various stains and nicks when they purchased in 2004. They have a lovely, very hard floor.

DavidL said...

@Just Jack wrote: Will the side by side split level home be the envy of the neighborhood. Only indoor/outdoor carpeting, Harvest gold appliances and Champagne colored stucco will tell. Oh gawd - that's Broadmead.

My late 1970's house came with "avocado" appliances and "deep 70's shag" carpet*. Before reno-ing, I took some photos to show the kids when they grow up ... :-)

*The amount of dirt and kitty litter in that shag carpet was just disgusting ...

Just Jack said...

Hey in my high school, we actually had a smoking pit for the kids! Airplanes had ash trays in the arm rests and your parent's would ask you not to smoke in bed. But then again you could ride in the back window of the station wagon, and digging into Uncle Buck's trouser pocket's for candy was something your parents were okay with.

DavidL said...

@Just Jack wrote: What I can't understand is why people want those old Fairfield shacks with leaking windows, newspaper or zonolite insulation, low damp basements and a ton of lead paint hiding the buildings defects.

No amount of realtor-applied Febreze can stifle the mouldy smell in some older Victoria homes. I've gone to open houses where the seller has tried the baking (reheating) an apple pie or baking fresh cookies schtick - only to burn incense to try to cover up the mouldy smell.

Invariably, when I mention "Gee, it smells kinda mouldy" to the agent, I'm told "Oh really, I don't smell that ..."

DavidL said...

@Just Jack wrote: But then again you could ride in the back window of the station wagon, and digging into Uncle Buck's trouser pocket's for candy was something your parents were okay with.

I asked my mother how I came home from the Royal Jubilee when I was born ... she said "We just wrapped you in a blanket, then put you in a clothes basket, then kept you up front on the bench seat in the station wagon".

Times have changed.

HouseHuntVictoria said...

Just Jack,

You really ought to write a satirical post for the main page soon. email it to me. some comic relief, like you're giving us in comments, is just what the doctor ordered... too funny.

Marko said...

"Basically a new 7 series bimmer."

7 series is an old mans car, M3 or Audi S5 is what I would prefer to roll in.

Marko

Just Jack said...

HouseHuntVictoria said...
"Just Jack,

You really ought to write a satirical post for the main page soon. email it to me. some comic relief, like you're giving us in comments, is just what the doctor ordered... too funny"

Oh gawd! Don't encourage him. lol

S2

Alexandrahere said...

We had just moved from a gorgeous albeit old ornate house in Fairfield as I had purchased a home in Gordon Head.

So one day soon after the move (and change of schools) for my daughter, she came home elated that she had just made a new friend.

We talked back and forth for awhile about her new buddy and eventually I asked, "What does her house look like?". She replied, with rolling eyes.... (even this bored 12 yr old knew) "Mom, Gordon Head, has two floor plans.....they have the other one."

a simple man said...

new development downtown (from the TC):

If all goes smoothly, Le Fevre figures the New England project will be finished in about 18 months.

Prices have not be finalized but Le Fevre said units will be "affordable," which he considers about $200,000 at this time. Units would be about 27 to 46 square metres, or about 300 to 500 square feet. A bicycle vault would be in the basement but there is no vehicle parking.

Leo S said...

A bicycle vault would be in the basement but there is no vehicle parking.

I was told the developer had to provide a certain number of parking spots to cover X percent of the residents. Not true?

Just Jack said...

"Basically a new 7 series bimmer."

7 series is an old mans car, M3 or Audi S5 is what I would prefer to roll in.

Marko"

Just Jack is an old man. :-) Wise but old.

S2

Just Jack said...

Teaching our 5 year old daughter about the different body parts. Grampa came over the other day and our little daughter asked him if he had a Vulva.

His reply was "No, grandma has a Volvo, grandpa has a BMW." I don't know if it's a 7 series, but he's very proud of it, waxes it on a regular basis and takes it out in public a lot.

.... I mean the car.

DavidL said...

@Just Jack

I laughed aloud! I have a 5-year daughter and can totally relate. There's lots of funny conversations with grandparents who try avoid answering "difficult" questions.

Alexandrahere said...

I wonder if the TSX will ever go below 12,000 again.

Not too much happening on my PCS...quite a few sales.....nothing spectacular however. Not very many new listings either.

Hope everyone is enjoying the nice bright sunshine filled day.

DavidL said...

... and considering three out of the four grandparents are hard of hearing - it's just that much funnier when my kids are obliged to shout their "impertinent" questions ...

DavidL said...

@Alexandrahere wrote: I wonder if the TSX will ever go below 12,000 again.

I'm expecting it will drop within the next month. Some analysts are quietly suggesting that the market is over-valued considering the state of the tenuous "recovery".

PainInThe said...

Let's see, $18 million for three bedroom Villa Madrona, or $4 million for Nicolas Cage's SIX bedroom Las Vegas foreclosure in a neighborhood full of other movie stars and sun and fun, fun, fun.... hmmm.... decisions, decisions.

Nicolas Cage's $4 million loss

Or let's see... I could go ahead and blow the $18 million on FOUR OF THESE VEGAS MOVIE STAR HOMES.

And have enough left over for how many of Marko's postage stamp condos?

And the deals are even better at the bottom of the market.

This island has a LONGGGGGGG way to fall to even begin to hit reality.

Mark said...

Thank you for putting into perspective.....beyond me how people just don't see the obvious.

"reality" is right....amazing how people try to justify the prices here in Vic.

I've heard them all (the bold arguments for Vic deserving some kind of premium) and still think back to 2003 and the prices, thinking damn that's a lot of money! Fast forward 7 years and prices are double....now I just laugh!

If I was a retiree I wouldn't give Vic a second look. You can do much better elsewhere and still put some of your hard earned savings in the bank.

Mark said...

Nearly one in four second-quarter home sales a foreclosure

NEW YORK (Reuters) - Nearly one in every four U.S. homes sold in the second quarter was a deeply discounted foreclosed house, putting the market on pace to work through distressed properties in about three years, RealtyTrac said.

Banks stepped up foreclosures through the summer and will take over a record 1.2 million homes this year, up from around 1 million last year and about 100,000 in 2005 before the housing bust, according to a forecast from the real estate data company.

Foreclosed homes accounted for 24 percent of all second-quarter sales, at an average price discount of more than 26 percent compared with homes not in the foreclosure process.

"This is the kind of volume of activity that we need to see for the market to heal," RealtyTrac senior vice president Rick Sharga said in an interview.

http://finance.yahoo.com/news/Nearly-one-in-four-rb-3742863101.html?x=0&sec=topStories&pos=3&asset=&ccode=

Interesting point about the market needing to heal. We have yet to start bleeding out so IMO our "healing" process is still a ways off. Mind you I think our collapse is going to happen quicker than the States's did.

I'm waiting for the it's different crew to reply.......

Just Jack said...

Well, we should see some odd numbers from the VREB this month. Our market is contracting into the city, and this is reshaping the geographical distribution of the sales. Far less sales occurring in the lower priced outlying areas, makes both the median and the average appear higher as inner city sales now dominate the marketplace.

Think of it as a false positive pregnancy test. However, the real estate market, like the rabbit, dies.

Marko said...

Interesting to note building lots are fetching some the highest prices I have ever seen in Victoria

One on Texada place just sold for $405,000 with previous sales ranging from $325,000 to $387,000 and some being better lots with better views.

A 6000 sq/ft lot on Natures Gate just sold for $345,000, I thought it would go for about $280,000.

HouseHuntVictoria said...

Marko,

Do you know if they were bought by builders to build spec homes or builders/owners to build custom homes? Those would be two very different markets IMO, no? I'd assume custom home owners will be willing to pay more than builders looking to build and sell.

Any chance of an end of month stats update please?

Marko said...

Most likely owners to build custom homes. There is nothing for builders out there right now; no one is developing a large amount of lots of sale, other than Sooke.

In my opinion the markets are different, but that is in some ways irrelevant. Does it matter whether it sells for $405,000 to a builder or an owner/builder? Still sold for $405,000.

For accurate stats we have to wait until tomorrow morning, my pending sales when I search the database are always off by +/- 20.

DavidL said...

Just last week, the recession was officially declared over, but today ...

Carney warns of economic risks
GDP shrinks in July for 1st time in 11 months, bank signals halt to rate hikes

Just Jack said...

Marko

I think those sites are re-sales so there should'nt be any extra HST on top of the price?

But I'm frequently wrong.

HouseHuntVictoria said...

It matters only to the economics of the build. An owner/builder would care less about true market value than say you and your dad who need to be able to price in profit in order to make the lot work right?

DavidL said...

Economy will slow further: CIBC

Western Canada could face a tougher challenge in its housing market, where prices have overshot fair market value by the largest margin. That's expected to have a slowdown effect on residential construction, the report said.

Follis fam said...

In my listings, 100 Dorothy Lane keeps coming up. It was listed this summer for 489,000. Relisted a few weeks ago for 488,900, a whopping $100 reduction. New price today, at 487,000.

Follis fam said...

Sorry, that should read new price today at 487,900. Can't forget that extra $900.

DavidL said...

@Mark wrote: I'm waiting for the it's different crew to reply.......

Oh, it is different here, because when the Governor of the Bank of Canada made the following remarks today, her was referring to everywhere in Canada except Victoria. ;-)

In remarks to a Windsor business luncheon, Carney painted a portrait of a recovery that has lost momentum, and suggested the slowdown could be attributed to domestic factors — namely, consumers dragged down by their bloated balance sheets.

"Investment in housing has outstripped their total savings for over nine straight years. . . . This cannot continue," Carney said.

The recovery's early spurt, highlighted by annualized quarterly growth in the five per cent-plus range, leaned heavily on people capitalizing on low interest rates to buy homes and consumer goods. "The limitations of this reliance are becoming evident," Carney said, warning it appeared "unlikely" private consumption would be bolstered by further gains in housing prices.

Just Jack said...

So a CIBC report states that properties in BC are over "fair market value" by 16.8%.

What they really mean to say is their computer model is having a tough time reconciling what people are paying for real estate and there is a 16.8% variation with the application's estimate.

Joe six-pack walks into the CIBC bank with an agreement to purchase for $600,000. The computer program spits out $499,200 as the "fair market value" hmmmm And Joe states the obvious that there are no homes like this for sale at $499,200. And Joe is right. Because if Joe sold the home next week, he'd get $600,000 or very close to what he paid for it.

So do you think CIBC says no to the mortgage? No, they lend on the $600,000. Because they don't want the Royal Bank to get the mortgage.
This sale now goes into the computer program which updates the next valuation in their assessment tool or CMHC program. see CMHC "emily"

The weird thing is that, the banks and CMHC have been fiddling with the program for years. Tweaking it to make the program match the purchase price to the point that the program has lost its reliability. And now, no matter how much more they tweak, they can't get the program to match the sale price. So they say the people are wrong - not the application.

Our society relies too much on computer programs and too little on common sense. In my opinion, these computer models are the main cause of why our prices are so crazy. The need of nano second approvals for McMansions, so that the next bank won't get the mortgage. Lie, cheat or steal to get the purchaser to ink the initial deal, knowingly get the purchasers into a mortgage that they can not afford.

The banks should not get away scot free in this downturn. They have to wear some of these deals. Because it isn't fair that some 20 or 30 something person's credit and life will be destroyed because of the bank's lack of due diligence, predatory lending policies and perhaps fraudulent activities.

Maybe we will see a class action suit against the worst perpetrators and put some of these programs on trial.

rant, rant, rant, rant.....

I need a hug.

omc said...

I was talking to a realtor today. The subject of spin came up and he said it might be difficult for VREB to put a positive on the lowest sept sales in 20 years.

I am getting a bit of deja vu from 2008 with all of these banks talking about how over priced real estate is as the market is showing a definite downturn. It seems they don't comment until the market is under way.

Just Jack said...

IT SOLD, IT SOLD, IT SOLD

Finally that boarded up house on Mason on a 3500 square foot has sold!!!

No more will I have to pass by the pics on my pcs, no more wondering who will buy this beauty. A year has passed to market this charming little fixer upper.

339,000
309,000
289,000

And the winner takes it for (drum roll)

**********210,000**********


Rumor has it that the owner is waiting for the area to gentrify and flip the property for a tidy profit. As it is within stumbling distance to boulevard camping areas, exclusive dining facilities, trendy needle exchange services and 24 hour ambulance service.

You should have bought in September!!!

Mr.4AM said...

Well, it looks like we won't have to wait until April 2011 after all. CREA & The competition beaurau have finally reached a deal.


Competition Watchdog & Realtors reach a deal

"In a development that could drastically change the way Canadians buy and sell their homes, the real estate industry has reached a landmark agreement with federal competition authorities.

The legally binding deal will allow for home sellers to pay for only those services they want from their real estate agents. Previously, under the rules established by the Canadian Real Estate Association (CREA), consumers had to opt for an entire slate of services, a practice the Competition Bureau deemed anticompetitive."


Get ready for a la cart realtor services. Just want to pay for an MLS listing and you do the rest? It's finally coming! I just hope there was a clause in the agreement somewhere that realtors can't collude to price fix a la carte services.

This is great news for bears because it means SELLING just got much cheaper!

Mr.4AM

DavidL said...

@Mr.4AM wrote: Well, it looks like we won't have to wait until April 2011 after all. CREA & The competition beaurau have finally reached a deal.

This is great news ... it will help to legitimize the type of business model that Marco (and others) are using.

jesse said...

Congratulations, Victoria, on your lowest sales numbers in 20 years. This is a positive step towards what will be a healthier economy in the long run.

DavidL said...

This afternoon, I got talking with my banker about real estate ... she said that the rate of new mortgages picked up since the early summer. However, what really surprised her was how many owners were coming in for lines of credit so they could add a new suite to their house as a "mortgage helper". Some owners were taking out loans so that they could add a second suite. I'm guessing that she's been in the business for 25+ years ... she says she's never seen anything like it before.

Marko said...

I can't believe 1558 Gladstone Ave sold for $445,000! This makes the Shakespeare property for 450k look like a bargin.

Went to look at the Austin property today. Already two offers on it!