Monday, November 22, 2010

Snowy Monday Market Update

MLS numbers courtesy of the VREB via Marko Juras.

Month to date November 2010 (last week's month-to-date totals in brackets)
Net Unconditional Sales: 333 (228)
New Listings: 552 (359)
Active Listings: 3,737 (3,750)

November 2009 totals
Net Unconditional Sales: 604
New Listings: 796
Active Listings: 2,973

The market appears to be in a holding pattern. Sales have improved from a terrible September but there is little to indicate November will be a good month relative to previous years nor is there any sign of increasing market activity from October. The current SFH average price is reading as $675,041. If this stays the same Victoria will set a new record for Victoria average prices - unfortunately this number is meaningless as prices are not increasing across the market, rather this is purely a number indicative of the types of homes selling in the Victoria market. There are a fair number of "good deals" in the upper end of the market where buyers are perceiving better value in higher priced homes. While the number points to increasing prices the reality is many homes are still selling for five to seven percent less than when originally listed.  

137 comments:

msr said...

@Marko,

What sort of data access do you have to the VREB data? Like, do you have a raw DB connection, or is it some sort of web-page?

Marko said...

I have the raw data which I can search using fields and then I have a stats function that yields the following based on the results of my search:

Price List Price Sold Price Original Assessed Value DoM S/L L/A S/A O/FinSF L/FinSF S/FinSF A/FinSF

and a Min, Max, Ave, Sum for each one of those.

Alexandrahere said...

Hi all....here are my stats from 15 Nov to 21 Nov:

SFH: Criteria - min 2 beds and 2 baths in price range between $375K - $775K and in the core municipalities of Victoria, Oak Bay, Esquimalt, Saanich East and Saanich West:

SOLD: 18
NEW: 17
P/C: 26
OM: 17

Avg selling Price: $540,888
Median selling Price: $563K

Houses sold for 94.2% of the original asking price.

Out of the 18 houses that sold; 10 had suites, and three sold for under the BC Assessment.

Condos'

Minimum 2 beds priced from $260K - $675K

Victoria: Most Areas
Oak Bay: All areas
Esquimalt: All areas
Saanich East: Most areas
Saanich West: Gorge,Tillicum and Interurban

NEW: 15
SOLD: 4 apartments & 4 townhouses
PC: 15
OM: 14

Average Condo selling Price: $381,750
Median selling Price: $422K

Average townhouse selling price: $445K
Median townhouse selling price: $426K

Three out of the four apartments sold for under BC assessed value and one out of the four townhouses sold for under BC assessment.

happy renter said...

The average person probably won't realize that the average price is high because high-end places are what's selling. So I wonder, then, what the psychology of all this will be. Will word spread that prices are only going up, prompting people to start buying again for fear of being shut out of the market? Or are most people unable to step into this market or to "buy up" because it's just way too expensive or they're already maxed out? It'll be interesting.

HouseHuntVictoria said...

Happy Renter, we've had three months of "phantom rising prices" in the market. We haven't seen a significant uptick in sales volume. I think your question is best answered as: many would be buyers have already bought or are sitting on the sidelines waiting for prices to fall. I don't think there is wide spread fear of further rising prices. I also don't think the FTBers can get their hands on the same volumes of money they could in the spring. They're still getting too much money offered, but it's still not enough.

a simple man said...

Always some great comments from Dan in Victoria on Garth Turners blog - he is a contractor that gives a good sense of what is happening behind the scene - wish he would drop by here. Here are his comments from yesterday:

"A report from some of my customers /friends. Here in Victoria.
Dropped into a little cafe that I have breakfast at once in awhile.
“Dan business is terrible, bad… bad … bad its down 30% from last year and falling.”Good location and great food.
From a retired house builder friend from up island.
“You have to be nuts to be even thinking of buying in this market, I only have one piece of dirt and a commercial building that I built years ago, I’m out till it corrects.”
From a gravel truck driver friend “Man i’m at part weeks here, the girl friend and me are hurting bad.”
Another friend who does reno’s “Its drying up nobody wants to pay that stupid tax” They all want to do it for cash.
Plumber buddy on the weekend, new house big mortgage, wife works in the hospitatily industry.
Holy crap Dan , work is slowing down and prices are dropping like a stone we bid two jobs at cost, lost both of them.
Girl friends tips have dryed right up and business is slowing daily, I think her hours are going to be cut.
And me? The phone is dead worst i’ve seen it in sometime, time to get some of my projects done.
The big boss is rubbing her hands together………LOL:

Just Jack said...

Even with the low interest rates, Victoria has an affordability problem for quality housing.

The difficulty is finding a home that does not need a heap of immediate repairs. Repairs that a first time house buyer can not pay for. The first time house buyer is caught between a rock and a hard place. While they can afford a fixer upper, they can't pay for the repairs. And a home that doesn't need immediate repairs is too costly in monthly payments.

Yet, there are small group of buyers that have enough equity from the sale of their home to move up the property ladder. These people are generating enough sales to keep prices tottering on stable.

In the last 30 days there have been only 27 houses sell in the City of Victoria to support a median price of $550,000. Where prices ranged from a low of $412,000 to a high of 1,425,000.

So, how low does the volume of sales have to drop before the market becomes dysfunctional?

Back in April of this year, the median price was $630,000 for the typical home. So the typical Victoria City home is down $80,000. So the typical house costs $265 less per month today than in April.

Could the low interest rates actually be causing the slow down in the market. When an $80,000 drop in a house price, makes a difference of $265. A vendor dropping his price by 10K or 20K is more of an insult to the prospective purchaser and not worthy of a counter offer.

HouseHuntVictoria said...

"Could the low interest rates actually be causing the slow down in the market. When an $80,000 drop in a house price, makes a difference of $265. A vendor dropping his price by 10K or 20K is more of an insult to the prospective purchaser and not worthy of a counter offer."

That's an interesting point Just Jack, and one I'm inclined to agree with. These uber low interest rates do have a significant distorting effect on the market.

happy renter said...

HHV,
I agree with your assessment entirely. I still hear people at work say silly things about how people will be "priced out" here every time there's some report of prices going up, though. Granted, these are people who own and so who have a vested interest in prices only going up. I don't think they're seeing clearly.

Dave said...

The first time home buyer can absolutely afford a quality home that is not a fixer-upper. The problem is those homes are in Langford.
Dave3

Al said...

Besides low interest rate, another factor wrt house sale and price is the unemployment rate, it is low and stable here compare to other cities and to historic figures (see link below):

http://www.theglobeandmail.com/report-on-business/economy/history-of-unemployment-rates-in-canada/article1702302/

a simple man said...

Hi Dave - god point...there is a difference in Victoria as to where you buy.

But let's assume the first time home buyer has a $100,000 downpayment, which I think is on the high side, and they find a new home for $500,000 in Langford, which I think is on the low side.

Is a $400,000 mortgage really affordable?

HouseHuntVictoria said...

A simple man, a $400,000 mortgage costs between $1300ish and $1700ish depending on the type if it's amortized over 35 years.

That represents anywhere between 27% and 36% of an $80,000 household's after tax income.

In Langford, there is a glut of homes available between $400,000 and $500,000 many with suites (renting them is not going to be easy or profitable). In the core, (SE, SW, Vic, Esq) there are around 70 SFHs listed, most without suites.

a simple man said...

agree with today's interest rates it is "affordable" - but who really wants a $400,000 mortgage?

Just Jack said...

Al, I don't know if saying we have one of the lower unemployment rates is going to save us from a fall.

Since most of the jobs created in the last decade are related to the housing industry, if new construction were to substantially slow down, we may become a city with the highest level of unemployment quite easily.

So unemployment may not be a leading indicator in a town where construction is the largest private enterprise. Windsor had low unemployment until the auto industry vanished.

omc said...

I'd take those employment #s with a pound of salt. A lot of the jobs lost at the outset of the financial crisis were full time, higher paying positions, whereas almost all of the jobs created are temp, part time or contract. I wish I kept the link to that story.

Victoria well known not to be a healthy job market. You don't come here looking for a job, like you would to Toronto.

Just Jack said...

A $400K mortgage at 1.99% provides an affordable monthly payment.

The problem is paying the mortgage off. In the days-of-old, the desire of home owners was to pay off that mortgage fast. Those that bought prior to the run up in prices accomplished this in under 15 years due to falling interest rates. This is not possible for someone buying today. Unless, you have a rich uncle who doesn't get his car brakes serviced, you will have a mortgage for all of your working life and more.

That's what your giving up - being mortgage free. And for the first 15 years of the mortgage your seriously restricting the ability to move to another city for career advancement or a change in life style.

Now if you're retiring to Victoria, you're just spending the kids inheritance. But then again they're ungrateful buggers anyway, who never call you on father's day or your birthday, just when they need m-o-n-e-y. Or because they just broke up with their latest brain dead boyfriend, who's entire life is spent designing better bongs and finding some other body part to pierce of "Tat". I mean what was the point in having them, if all they are going to do is suck the life.....

But, I digress.

Just Jack said...

The problem with the housing industry is that contractors are building homes that last too long.

Homes should be built like American cars. 10 year life spans, then its off to the crusher and back to China to be recycled into shopping bags. And that would give us truly affordable housing. No one will pay 400K for something that will have to be demolished a year from now. Houses would be like used cars and would always be depreciating.

So, I say forget cement fibre board siding, concrete foundations and nails - think cardboard, tent pegs and a glue stick. Heck, the box your TV set came in could be your new nursery. An addition would be a simple as inserting flap "A" into "B". And urban renewal would be just a wind storm away. And at Christmas your kid get's a new Mega Barbie Castle, and Daddy gets a new den! And how about a divorce, now you can split the assets with a pair of scissors and a roll of duct tape.

"Cardboard, its not forever"

Just Jack said...

I think we all should get together and make a anti-monopoly board game and call it "Virtual Value". The purpose of the game is to inflate your property value and sell it, just before it implodes.

The money will be "bubble bucks" where the value changes depending on the throw of the dice. So on one turn everyone's money is now worth six time more than before and you have to buy more property before the next throw of the dice. If you don't buy for three rounds you're sent to MSM jail and have to read Carla Wilson articles until you are re-conditioned to the new reality. Also, everyone wants to live in Ireland. The board pieces will be bobble heads of Bob Rennie, Joe Flaherty, Mark Carney.
There will be Go To Olympic Village cards, Bridges that go nowhere, Tax Evasion penalties, basement renters from hell and property taxes for sewer and blue bridges.

First one to accumulate a billion dollars in debt wins.

happy renter said...

Today I told a colleague who I hadn't seen in a while that I sold my place and am now renting, and he proceeded to tell me that I'd made a huge mistake and might not be able to get back into the market in a year or two as planned. Who knows, maybe he's right, but I just couldn't believe how smug he was. If things turn bad with the housing market here, a lot of people are going to be in for a very, very bad time. I honestly think that many have convinced themselves beyond all reason that there's no way that real estate prices can go down in Victoria.

Bubble 'n Fizz(le) said...

Finally, Garth Turner says something sensible:

Some people come to this sorry blog because they’re anxiously awaiting a 50% plunge in housing values so they can buy one. Others come to argue a housing collapse is impossible and sustained demand (as we see now) will propel it higher, emasculating mortgage debt. Neither group gets it.


It’s not that housing won’t correct. It will. But Vancouver won’t become Phoenix or Toronto turn into Toledo.


Food for thought for the bloggers here, assuming HHV doesn't push the delete button right away, that is.

a simple man said...

I certainly don't foresee a 50% drop. 20-25% from last Dec, but not 50%.

Still, 25% of a million dollars is worth waiting a few years.

Just Jack said...

Bubble, if Victoria prices plunge by 50% you have more serious things to worry about than a house. We're talking Ireland and the IMF. Which probably means part of the deal would be for the yanks to store nukes in your garden shed.

But prices could slide for a decade and with the affects of inflation, the kids leaving elementary school today may be paying half the multiple of gross income that real estate newbies are today.

What's important is to realize that buying a home today, has the possibility of being the worst financial decision of your life.

In other times, those fortunate people, like Bubble, who bought a home in the city have built up a lot of equity in their homes. Most Victoria home owners never new that the typical house price peaked in April and has come down some $80,000 since then. Most don't even care, as long as their home is worth more than their mortgage they are happy campers. But the hounds are at the door, our mortgage default rate is soaring and its not just new home buyers. Its people who have gorged themselves on home equity lines of credit. These people live in both your and my neighborhoods.

My opinion, is that we are slipping into a "foreclosure market" like we did in the mid 1980's. And its going to be a very long time before people get excited over real estate again.

HouseHuntVictoria said...

BnF, perhaps if you visited more frequently, or actually read what I write, you wouldn't snipe by once every to make a baseless accusation.

I have never called for a 50% correction. I've never said this market was 50% over-valued (though if it were to correct 50% that would make it 100% over-valued). I rarely, if ever, make predictions regarding market performance in the future.

BTW, if the market does correct 20%, or 10%, that's still representative of a significant amount of money; in the case of local SFHs it's close to a year's worth of income. So while a 50%, Phoenix style collapse would be catastrophic, a 10%-20% Victoria correction would be significant none the less (note I'm not predicting this to happen, just playing the what if game).

Leo S said...

The main thing is that it's not different here. Timing is almost impossible to predict but the end result is not.

I work with a guy that worked his whole life in California, where for a long time the prevailing wisdom was that you better not leave because you would never be able to afford to come back if you did.
Now they've been absolutely clobbered by the real estate decline and the state is teetering on the edge of bankruptcy. In the end it wasn't different there and it won't be here either.

Mark said...

HHV said...
I have never called for a 50% correction. I've never said this market was 50% over-valued (though if it were to correct 50% that would make it 100% over-valued). I rarely, if ever, make predictions regarding market performance in the future.

>>>>>Well I'm of the opinion that 50% is possible. Given that your average piece of crap fixer upper was selling for 250k not too long ago AND that was overpriced IMO, then why not correct back to 250K???

People will be leaving Vic not coming....just watch. Construction jobs are going to end soon, hosp and tourism is dead...thx HST and high CAD $. Cot of living is waaaaaaaaaaay too high for what you get here.....have you all looked outside? This ain't Miami!

Heck buy a condo in Mexico and stay in Edmonton (in a home half the price of Vic) make more money cuz our wages here suck and Bob's your uncle.

I most certainly think 50% I possible. Probably more like 30% and sooner than most think but it is possible!

reasonfirst said...

Al - Re: unemployment in Victoria.

Have a look at this (page 9):

http://www.bcstats.gov.bc.ca/pubs/lfs/lfsdata.pdf.

It's not unemployment that's important it's the number employed which has been on decline for what looks to be about 4-5 years. People are retiring, giving up, or leaving....

Leo S said...

1910 Woodley. Started at 599k, dropped to 499k over the course of 3 months, and sold for 470. 50k under assessment.

DaMann said...

I think 40% is very real. What people forget is that the interest rates we have now are ridiculously low!

Australia was one of the last hold outs, it's starting to crumble too. It has a variable rate of 7.5%!!! Can you imagine what would happen if we hit a variable rate of 7.5%? Half of Vancouver would be brankrupt and I suspect Victoria as well. I'm not saying we will hit 7.5% variable anytime soon, but 5% in the next few years is almost a certainty. That would put a 5 year rate at almost 7%. Couple that with prices dropping and all the specualtors no longer buying and 40% is very real.

I would bet that of all the buyers in the last 5 years, if you said to them prices would be flat for 5-10 years, probably 60% wouldn't have bought.

It's the great get rich quick scheme that everyone wated a part of.

Everyone is drunk on free money right now. Sooner or later the piper has to be paid.

Vancouver dropepd 15-20% in 8 months only 2 short years ago, it was only zero % interest rates that saved it. 40% is easy

Alexandrahere said...

Another Vic West Condo at the "Leeds" sold. This one was assessed at %516K, asking $530K and sold for $417K. Guess people just don't care about "going green".

happy renter said...

Alexandrahere - Maybe I'm just out of the loop, but what's the Leeds?

Alexandrahere said...

Happy Renter: The condo is the newest two towers on Tyee Road in Vic West called "Dockside Green" LEEDS stands for Leadership in Energy & Environmental Design. The project was an award winner. Has own sewage disposal system and much more.

happy renter said...

Ah, yes. I'm familiar with Dockside Green and with LEED as a building standard, but I guess I just didn't realize that one of the towers in the project was actually called that. Thanks.

Introvert said...

This blog is getting wild! Makes for great reading...

Waiting for the collapse reminds me of waiting for the Rapture. Any day now...

More likely, house prices will continue to decline for a while ... until (God forbid) they rise again as the Canadian and regional economies both start to improve. In other words, no disaster. I know, it's not a very exciting or sexy conjecture, but I personally think it's much more likely than the "kaboom" theory that's going around.

Fun Fact: The CRD projects that by 2036 the Capital Region will sport a population of 433,000. Do most of you suppose that as a regional population increases, real estate prices decrease?

Rhino said...

"Fun Fact: The CRD projects that by 2036 the Capital Region will sport a population of 433,000. Do most of you suppose that as a regional population increases, real estate prices decrease?"

That kind of depends, what are all these people doing? Are they 6 figure professionals or minimum wage service workers? rich retirees or counting every last cent of CPP?

This idea that because a population grows real estate prices will automatically grow too never made sense to me.

Leo S said...

Fun Fact: The CRD projects that by 2036 the Capital Region will sport a population of 433,000.

Population of the US in 2006: 298 Million
Population of the US now: 307 Million

And real estate is down 25% nationwide. Guess I just blew your mind Introvert.

And you do realize that 2036 is a quarter century in the future, right? A growth rate of 25% over 25 years isn't exactly explosive.
Not to mention that no one here has ever said that real estate in 2036 will be cheaper than it is now, but nice strawman.

HouseHuntVictoria said...

I love the population increase theories. Did you know pop. Increased in the 1990s while real estate lost 16% to inflationary effects? Did you know pop. Increases have been within 0.002% in Victoria year over year for over 25 years of below 1% growth? In other words pop increases have been flat while real estate has risen over 250%. Did you know Victoria lags the provincial average for pop. Growth?

It's locals. We drive up the prices because for the most part we buy the unsupported by fact tripe that permanent bulls try to pass off as reasons why "Victoria is different"

patriotz said...

Bubble, if Victoria prices plunge by 50% you have more serious things to worry about than a house. We're talking Ireland and the IMF.

No we're not, because house prices outside of BC, even in Alberta and Toronto, are nowhere near as inflated as in BC. Nor is the economy as dependent on RE.

The "best place on earth" is only 10% of Canada and it could certainly go right down the toilet, but the rest of the country will do better.Canada produces oil and other stuff that the world is willing to pay for.

We had a RE and oil/commodities bust in the 80's and we didn't get anywhere close to IMF territory. We did get a very low CAD, which is another big difference wrt Ireland, Spain, and Greece - a floating currency.

omc said...

I know people who bought houses after the crash in the 80s in the west side of Vancouver. At the peak, the price for the actual house they bought was twice as much as they eventually paid for it. The stats don't show that prices declined by 50%, but houses on the west side dropped near that.

In the 2008 drop the reported drop was 10%, but there were decent houses selling in South Oak Bay in the $500k range. WAY more than a 10% drop.

It will be near impossible to know how far prices drop here, even after the fact.

It looks to me that the dead cat has bounced for this market and is now continuing down.

Introvert said...

It's locals. We drive up the prices because for the most part we buy the unsupported by fact tripe that permanent bulls try to pass off as reasons why "Victoria is different"

So your analysis is basically: Victorians are more gullible than other folks. Sorry, HHV, but that's as flimsy an argument as anyone has ever put forth.

---------------------------

In terms of the comments on this blog, it's owners vs. renters. Plain and simple. Let's not pretend there's any objectivity here. Because this blog is frequented mostly by renters, comments offering doomsday predictions are the norm. In your comments, you renters are as guilty of "lobbying" for your cause as we owners are. Your outlook on the market is as self-interested as our outlook. The only difference, of course, is that renters far outnumber owners in terms of posting comments. But that shouldn't be such a surprise considering the blog's name.

Maybe homeowners should start their own blog called House Poor Victoria. We could spend all day posting comments reflecting our particular warped view of the market.

I just want to finish by saying that I think the short-term future of Victoria's real estate market isn't as dire as most of you renters generally think; and at the same time, I don't think the short-term future is as rosy as I and some other owners may think.

a simple man said...

Thanks Introvert - and I agree, we are a biased bunch, but we disclose this openly and encourage good debate - so please, stick around and put forward good resistance - we need it to have an accurate view of all sides of the question.

I also think a lot of the people on "House poor Victoria" would have many of the same arguments we do in terms of affordability - they are just on the other side of the coin for the time being.

Alexandrahere said...

So far this week, within my criteria in the four core municipalities, the average selling price (for 11 homes sold) is at approx $500K. I kinda like it.

Al said...

Agreed. It is very important to see views from both sides, to get the whole or more accurate picture.

For example when someone said here that we could buy because we had 150% windfall (for a house bought in 2004 and sold 2009), without asking any details, that arrogance really turned me off. Maybe that 150% is the up stats, but interesting the same person does use the exceptions in the down stats to make a point.

There is no argument that Victoria house price is definitely on the high end, even in 2004. We are the lucky ones, as my brother also came to look but couldn't afford to buy around the similar time.

I do see that house price would drop or at the least grow less than inflation, but regardless the drop percentage, at the end, Victoria price would probably still be higher than lots other places in Canada, just as it has been in the past.

vawr said...

I have been following this blog now for about a year and I agree with the bulk of posters that current house prices are ridiculous-whether it's Victoria or the Lower Mainland.

My interest in Victoria goes back many moons when I was in the process of finishing off my schooling. Fate might have led to me living there but at the time no suitable job opportunities existed.

But I do like to look at the many older period homes in Oak Bay that are still around. Nothing like that in the White Rock area.

My guess is that home prices will correct downwards(conservatively) to the tune of 15-30% within the 1-3 years.

It appears that house prices in the Oak Bay are slowly moving closer to their current assessed values. Many Victoria homes that sold in early 2009 were sold at these values.

But many hopeful owners are still listing high at 15%-30+% over assessed. I imagine they generate little interest.

Here is one Oak Bay house listed at $798,500(assessed $788,000, 2532 Orchard). Looks like a good house in a nice area.

If that price holds and assuming there is nothing seriously wrong with this house then we are back to early 2009 prices. With lower prices to follow.

It seems inevitable.

HouseHuntVictoria said...

Introvert, Why is that you so quickly jump to conclusions and take what I write out of context?

My analysis was not:

"So your analysis is basically: Victorians are more gullible than other folks. Sorry, HHV, but that's as flimsy an argument as anyone has ever put forth."

I'm simply saying that it's not the "from-aways" that are driving up prices, it's the locals. There are not enough sales attributable to people moving into this market to apply significant enough pressure on the market to be responsible for the price increases we've seen.

Look at the data. The data doesn't lie.

Here's another take on it based on the YVR market.

HouseHuntVictoria said...

Furthermore Introvert, you can't make statements that aren't based in fact like it's owners versus renters here.

There are many "owners" who post here. Reid is an owner and has consistently made reference to interest rates and availability of credit as being the major factors that have led to current prices. His thesis is that when interest rates rise, availability of credit will drop and therefore prices will also be under negative pressure.

You keep saying things that are not true. You are welcome to make your opinions be known, but as long as you keep trying to present them as fact, or evidence of some kind of inherent bias here, or evidence of imbalance, or evidence of whatever, I will keep pointing out to readers that you are making it up.

omc said...

Al,

You came out defending that there were still out of town buyers in the market, when in fact you had entered the Victoria market in 2004. I asked you if you would truly buy today, without the windfall of selling your Victoria house. It is a very valid point as the prices are so much higher here than the rest of the country. Most cannot afford to sell else where and buy here anymore. Let alone it is very risky.

It is you that is arrogant to personally attack like a coward on the net.

Just Jack said...

The perception of home owners doesn't affect market prices, unless they are selling their home. Likewise, renters do not affect the market, unless they are active in the market.

So, basically what 98 percent of the population think about real estate - does not influence prices and really doesn't matter.

So last month 43 people in the City of Victoria put their homes up for sale and 29 people bought a house. The population of Victoria is around 83,000 who live in about 10,500 single family homes and 10,500 condominium and townhomes.

The default rate on mortgages in BC is 0.45%. Half the properties in Victoria may have mortgages.

.0045 X 10,500 is 47 properties that have missed three or more payments in a row.

Our sale volumes are so low, that court ordered sales may become the market. How many vacant houses have you seen in the last few months? How many of the homes that you have looked at, did not have signed disclosure statements? How many condo complexes will be going into receivership in the next few months?

How about renters, with the interest rate so low, most renters will have bought by now. Raise the interest rate by 1 percent and that could stop the first time buyers market altogether. Can Victoria really sustain $580,000 prices with only a dozen sales a month?

Real estate is a commodity when more people have to sell than have to buy. Then real estate becomes a market just like used cars.

omc said...

vawr,


That house on Orchard does not have an accurate assessment; it's original listing described it as a cottage. It is only 1400sqft in total, with a good portion of that being finished attic space; you can only walk straight in and out. It has only 800sqft on the main floor, which is the only truly usable space it has.

There have been quite a few houses selling under assessment in this neighborhood for the same reason. 2481 Plumer was assessed at just over $600k, but sold at $550k.

DavidL said...

I'm an owner who checks out this blog daily. Until a couple of weeks ago, I was regularly posting - but recently I've been too busy.

Would I choose to be a first-time buyer in todays market. Absolutely not! I am fortunate that my mortgage obligation is only about $2000/month. If I were to buy a $600K house with 10% down, a 5-year fixed rate mortgage at 3.79% and 25-year amortization would result in monthly payments of $2779. That extra $800 per month is significant. I am fortunate that I have excess income that I am able to spend in a variety of ways in the local Victoria economy.

For every dollar that is spent servicing a mortgage, one less dollar is spent buying goods or services. If everyone is "maxed out" paying their mortgage - then how is the economy going to survive?

Al said...

omc,

Below is part of a post from HHV

"OMC,
I'm reading a bit of a contradiction re out of town buyers in your last two posts."

So I don't think I am the only one feel contradictions in your posts.

I didn't try to defend anything, just we are from out of town and try to contribute with our story in the blog, that we bought on vacation in 2004 and bought again in 2009 with our house sale funds in Ottawa.

I think I have given lots personal info in this blog to make valid posts. If you think I am a "coward on the net", then what does that make you, another "coward on the net"? LOL

a simple man said...

my pcs is quiet, quiet fo rsales...a few reductions, delists and relists but very few sales.

Oak Bay is quiet...

Al said...

Note: Al is my real name in life or on net :-)

vawr said...

omc,

Interesting. The agent lists the orchard house as 1857 sq ft. with 2baths and four bedrooms. If what you say is correct not only is the owner paying more in taxes with his excessive assessment but he has engaged a realtor who is misrepresenting the facts.

Someone has it wrong.

omc said...

I know the house, but never bothered to view it. I can't imagine that it would be high enough in the attic to put rooms up there. This house is extremely small. My PCS lists it as 600sqft in the attic and 800sqft on the main floor with no basement. There is an enclosed balcony which they include, but it appears that they are also including the garage and a storage shed.

omc said...

I should say that it I have found a good # of realtors out here who are highly mis-representative. I have been to a fair number of houses with 8' basements, only to find unfinished rock crawl spaces. Maybe you could measure from a crevice in a rock in the highest corner to the floor board (not the floor joist though) in a spot.

Reid said...

Introvert, as HHV stated above I am a home owner and feel strongly that house prices are overvalued here and right across Canada. I have chosen not to sell our house even though I suspect it will drop in value for personal reasons. We have paid our house off and a price drop is not going to force me to sell or impact my lifestyle. My focus in terms of wealth if 100% directly toward my liquid assets and I do not even count my house equity in my personal net worth.

My purpose for posting here is that I want to share my knowledge of real estate with potential buyers especially regarding the risks of taking on a massive mortgage. I have paid off a mortgage on three different occasions and I can tell you it is really hard and requires a lot of sacrifices and I never took on a mortgage today exceeded two times our household income. There is no way the average family can take on five or six time their income and expect to fully invest in RRSP’s, TFSA and other liquid investments required to support a healthy retirement. Saving for retirement to me is far more important than owning a house.

Introvert said...

Reid, I see that you and HHV are on the same page, in many ways. That's fabulous.

In my last post, I wasn't intending to put words in your mouth. It's my fault; I probably wasn't being clear. What I was trying to get across was that, as homeowners, we want the value of our house to increase. Reid, I realize that your house's value is somewhat less important to you because, as you admit, you don't even count your house as part of your net worth. Good on you. However, as a homeowner, given the choice between your home's value going up or going down, you (and all other homeowners) would choose the former.*

*Unless, of course, one were feeling extremely altruistic and therefore actually wanted one's own house value to decrease for the greater good of the community or something like that. But it's kind of a crazy thought: to not want the value of something you have to increase.

So, to reiterate, GENERALLY SPEAKING homeowners want their own house price to go up (for all kinds of reasons ranging from sheer desperation to "I could tolerate it," in Reid's case), while renters GENERALLY SPEAKING want house prices to go down (for all kinds of reasons).

bc-troll said...

I have lurked for several months, never posted. I want to concur with Reid. The downside risk of buying now at the 7 or more multiples of family income is that people are making a hugely leveraged single investment with borrowed money. In five years when the mortgage comes for renewal they will have to reborrow at rates that in all likelihood will be closer to historical norms, nearly twice current rates. Reid says if you are in too deep trying to finance your real estate gamble you may not be able to take advantage of the sensible wealth building tools like RRSPs, TFSAs and RESPs. These investments can be made less risky by steady, continuous investing (dollar cost averaging) and diversification of investments. Buying a house with borrowed money is the opposite of that. Lots of people got lucky buying at a low point in the cycle, myself included, but it was pure luck. It was not luck that with down payment I only borrowed two or three times my family income. I could have bought a more expensive home but now ten years later I own my home and have investments equal to the value of my home. I think that people buying into this market right now, at their maximum qualified borrowing and 35 year amortizations are making a wildly optimistic gamble that could easily result in being financially hamstrung for decades. I guess that puts me in the bear camp though not as a sour grapes renter. Thanks for the blog. It makes great bedtime reading from the smartphone!

omc said...

introvert,

My family won't buy because the housing market is very likely to correct strongly as interest rates rise. We can easily afford to buy and pay a mortgage even at the rates to come. If the market stayed still for 10 years, oh well. Price increases don't matter to us.

Al said...

An interesting article from G&M for your bedtime/leisure reading:

http://www.theglobeandmail.com/report-on-business/rob-magazine/is-vancouver-in-a-real-estate-bubble/article1808967/

DavidL said...

@Introvert wrote: So, to reiterate, GENERALLY SPEAKING homeowners want their own house price to go up ...

I suspect that most people who purchased their home as an investment during the past 5 years DO want to see the value of their real estate grow. Alas, I am convinced that in time - values will drop to at least 2005 levels, and perhaps lower.

I purchased my house in 2002 for about twice my wife's and my combined annual income. I have no intention of selling, and thus the resale value does not matter to me. I expect to be mortgage-free within about 3 years, after which $650/month will be needed for taxes, insurance and basic maintenance. Factor in modest improvements and the cost will be about $1000/month for my adequate 2400 sq. ft. home.

Yes, I could upgrade to something bigger, fancier with "granite and stainless" in place of my current "formica and enamel" - but then be indebted for another 15 years. I don't like being poor and having to endure the inevitable financial stress that goes along with buying some oversized home in a new development with neighbours who try to outdo each other with their conspicuous consumption. I have no time for "keeping up with the Jones's" ...

HouseHuntVictoria said...

Al,

The link I posted above debunks much of the points made in that G&M piece for the urban myth making that it is. Yes, there are buyers from "China" active in the Vancouver market. Landcor released a study that showed there are only 977 "foreign" owners in Metro Van from Asia. If they all bought in 2009, they would have made up 2.7% of the 35,669 total sales.

The author of the Financial Insights blog also goes on to account for immigration based sales, which account for much less than 5000, which aggregated makes the "from-away" market in Vancouver around 7% of the total sales.

Here's the best quote from the post:

"At best, the Vancouver real estate market is relying on the continued influx of a relatively small group of wealthy immigrants to purchase their massively overpriced real estate. At worst, it’s relying on the continued perpetuation of a tired old story to keep its own residents piling on unservicable debts. Either way, I’m far from convinced of the sustainability of this present dynamic."

Emphasis mine. Which fits much of what I've been saying here. It's locals who are driving the prices. Reid points to cheap and massive easily obtained credit as the main culprit. I agree.

I'm not arguing that prices will fall drastically in the near term. In fact, I'm more inclined to believe that as long as credit conditions stay where they are currently, there will be little movement in prices, up or down, without some kind of event triggering a change. I see little in the way of meaningful interest rate or mortgage credit availability policy to indicate a tightening or loosening of credit, hence why I think current prices are what they are.

Introvert said...

There are many "owners" who post here. Reid is an owner and has consistently made reference to interest rates and availability of credit as being the major factors that have led to current prices. His thesis is that when interest rates rise, availability of credit will drop and therefore prices will also be under negative pressure.

HHV: Yes, Reid is a homeowner whose thesis is that prices will decline. But Reid wants, yes wants, his house price to go up.

Homeowners want their home's value to go up. Reid is a homeowner. Therefore, Reid wants his home's value to go up.

(Yes, Reid's thesis makes a lot of sense; but Reid wants his home's value to go up or else Reid is insane.)

In this way, there are two camps: self-interested owners and self-interested renters. This certainly isn't the only dichotomy that exists among the blog's many commenters, but it is one dichotomy.

Introvert said...

I'm not arguing that prices will fall drastically in the near term. In fact, I'm more inclined to believe that as long as credit conditions stay where they are currently, there will be little movement in prices, up or down, without some kind of event triggering a change. I see little in the way of meaningful interest rate or mortgage credit availability policy to indicate a tightening or loosening of credit, hence why I think current prices are what they are.

HHV, I agree with the above.

a simple man said...

I am a renter and I want prices to go down. Hellya! Owner a number of homes previously but won't put my toe into this market until it corrects.

However, I am willing to pay traditionally reasonable prices (three times median income) plus a bit of a premium for what is Victoria (save the social problems downtown).

a simple man said...

and welcome to all the new posters - new blood is good - and demonstrates that perhaps more than just six of us believe house prices in Victoria are out of touch with incomes earned here.

Reid said...

"(Yes, Reid's thesis makes a lot of sense; but Reid wants his home's value to go up or else Reid is insane.)"

Introvert, I do feel that house prices will decline. By how much and when, I have no idea. My wife and I have decided not to sell for reasons not worth getting into, but I do expect my house will be worth less in 2-3 years than it is today.

I have no plans of selling my house for many years. We bought our house in our target community a couple blocks from the beach and we absolutely love where we live and the house we acquired.

If real estate tanks, then I am buying recreational property in the Okanagan or in the Comox area. My years of savings give me the option to buy more real estate, but only if the price makes sense. If real estate holds up, we will not be buying anything or we may look south.

So I really am not that concerned if my house value increases or not. Call me insane, that is fine. I am totally comfortable with my approach.

Although I cannot predict what the real estate market will do, I can predict that a good percentage of these people that have levered themselves with 5+ times their income in mortgage debt and 35 year amortization will be in financial difficulty in the coming years/decades. That I know and is what I hope I can help educate people on.

HHV and DavidL have it figured out. One owns and the other doesn't, so this is not all about if you already own a house or not.

HouseHuntVictoria said...

The construct of owners versus renters in the sense that one group wants price appreciation while the other wants price depreciation is absolute crap IMO.

Explain that to the home owning parent who wants prices to fall so that they can see their children purchase a decent home in this city so that they won't grow old with their kids living somewhere else.

Tell that to the renting parents, who have rented for the past 20 years, because they have no interest in doing repairs, calling tradespeople or paying "market value" to own something that they can rent for literally pennies on the dollar. Because of the flexibility and cost effectiveness of renting they've built more net worth than most of their home-owning peers through prudent and lucrative long term, more liquid investments.

Tell that to the family that rents in a neighbourhood they can't afford to buy in because they prefer their kids go to the "good schools" rather than enter into the most expensive forced savings plan ever and handcuff themselves to a neighbourhood with socio-economic issues they'd rather not deal with.

There isn't two groups, not here on HHV or out there living in the homes in our city. There are many different viewpoints. All of them valid.

Al said...

Was busy watching proud Danny Williams on cpac (one of us grew up there), a great character.

HHV/Reid,

Agree with what you two said wrt house price and the logic, make good sense. The government/BOC might not be sure about the house bubble size, but it only wants to see some air leak, but not to pop it, thus the sustained low interest rate. But the pop could still happen if there are more/worse job market issues. When people worry about their jobs, they wouldn't buy/trade up houses, regardless the interest rate.

That been said, we are in a similar situation as Reid, house is paid for and no need of its value for daily living or retirement (only 26% of total saving). Even if we care more about it, it is logical thinking/analysis that helps us to see clear/better, not our own personal wishes or wants, be it owner or renter.

But allowing people from either side to express their wishes/wants (fact based or not), even if useless to the other side, it still gives a more complete view of what others think.

Thanks.

NewVicResident said...

Does anyone have any info on 757/767 St. Patrick St in Oak Bay? Looking for assessment and taxes. Any realtors have any idea what the likelihood of this moving quickly is? It seems like it would be a very niche property.

Leo S said...

The construct of owners versus renters in the sense that one group wants price appreciation while the other wants price depreciation is absolute crap IMO.

It's a pretty good generalization actually. Of course there could be the odd exception, but overall it's pretty accurate.

Explain that to the home owning parent who wants prices to fall so that they can see their children purchase a decent home in this city so that they won't grow old with their kids living somewhere else.

I doubt this person exists. Someone so terribly concerned with house prices that they want their own house to fall in value in order to make it cheaper for their kids? Seems incredibly far fetched. Chances are these days kids will move away anyway.

Tell that to the renting parents, who have rented for the past 20 years, because they have no interest in doing repairs, calling tradespeople or paying "market value" to own something that they can rent for literally pennies on the dollar. Because of the flexibility and cost effectiveness of renting they've built more net worth than most of their home-owning peers through prudent and lucrative long term, more liquid investments.

None of that has anything to do with whether they want prices to go up or down. Fine if they're happy renting, but again, those people are few and far between.

Tell that to the family that rents in a neighbourhood they can't afford to buy in because they prefer their kids go to the "good schools" rather than enter into the most expensive forced savings plan ever and handcuff themselves to a neighbourhood with socio-economic issues they'd rather not deal with.

Chances are those people would love prices to come down. Then they could buy in that same neighbourhood without losing their standard of living.

Marko said...

"7 or more multiples of family income is that people are making a hugely leveraged single investment with borrowed money."

This seems to be a favourite of many bloggers on here. I don't think we go back to 3x or 4x multiples for a SFH. Globalization. As I have said before, the Canfor CEO making 4-5 trips a year to China will not make it any cheaper to build new homes here. It is also going to be difficult for the girl in Ontario placing wheels on Ford's to command $35/hr when the same person in Mexico/China, etc. is making a fraction of that.

Therefore, there could be pressures on the ratio multiple from both sides.

I think long term real estate will become similar to what it is in most of Europe - not for the average Joe, children living with parents until 30+, people raising familes in condos, 2000 sq/ft being considered a mansion, etc.

533 sq/ft condo here is considered tiny, in Europe a 50 sq/m is a solid size one bedroom.

Marko said...

NewVicResident: Assessment is $791,000 and the listing expired yesterday. Property is large, but not much you can do with it in Oak Bay as far as development goes. As revenue property would be cash negative for sure.

Marko said...

It will also be interesting to see how long mortgage rates remain this low; it could bail out a lot of people that bought during 2006-2007. One of my friends' just refinanced a house they built in 2006 and mortgage dropped $320/month.

DavidL said...

Marco... you seem to be suggesting that a SFH in Victoria is worth seven times the average household income, because "it's different here".

I can assure you that it is no different here... we are just arriving late to the deflationary reality. Other players, such as the US, England, Germany, etc. have already seen significant market corrections. Ironically, you then compare the worth of local overpriced micro-condos with those found in New York, London, or Berlin.

patriotz said...

As I have said before, the Canfor CEO making 4-5 trips a year to China will not make it any cheaper to build new homes here.

Is is any cheaper to build houses in Halifax than in Victoria? Then why do they only cost 1/2 as much there?

What you have to get through your head is that house prices are determined by what people are able and willing to pay, period. That is the only reason for the difference in house prices between Victoria and other Canadian cities.

When the day comes when people are able and willing to pay the same price for a house in Victoria as in Halifax, prices will be the same. And I have a feeling that means prices in Vic will have to go down.

Marko said...

"Marco... you seem to be suggesting that a SFH in Victoria is worth seven times the average household income, because "it's different here".

No, I am suggesting that due to globalization it just might be similar here to the rest of the world in the long run. I have two close cousins in Nancy, France and one in Frankfurt, Germany. I talk to them regularly and affordability as far as income ratios go is nowhere close to what it is here. Last time I checked, Nancy, France was no New York. I have spent time in both place on a number of occassions.

"Is is any cheaper to build houses in Halifax than in Victoria? Then why do they only cost 1/2 as much there?"

I believe we have had this discussion before. How about we post some MLS numbers comparing comparable properties in Victoria and Halifax minus the land value and then we can how it is really cheaper to build in Halifax. Also, let's compare apples to apples in terms of finishing.

caveat emptor said...

It seems to be an article of faith for many posters that "interest rates are going up".
It is true that current rates are well below historical norms. However that doesn't necessarily mean anything (in the short term). Look at Japan - interest rates there have been below historic norms for a heck of a long time. It's not impossible that Japanese style, slow growth could take hold here for a while.

Real estate prices would likely fall in such a case (even with insanely low interest rates), but it could happen as a slow bleed over many years rather than a sudden pop.

a simple man said...

Perhaps a better question is how long can Canadians keep spending like we have been, collectively? How long until the economic dam bursts?

We are going in the wrong direction fast (going into evermore debt) and despite being at historically low interest rates many are already in trouble.

Many people (not all, easy, Marko, easy - deep breaths, remember your respiratory training) in their early 30's and below seem to have the belief that all that matters is the carrying costs because they will never catch up anyway - live life now seems to be their motto. I am often shocked how often this perception comes out, that they never actually intend to fully pay off their debt.

While this is somewhat tangential from the RE discussion, it will have an impact, I think.

Leo S said...

@Marko

Wait, you were complaining about bears comparing us to Phoenix, and now you've just compared us to Germany? A country that has 67 times the population density of Canada. In a city of more than 2 million people. In a country where building is _very_ strictly controlled to prevent sprawl.

By the way, I was in Copenhagen last year and their real estate prices are similar to ours. Similar climate, 1.1 million people, very dense. Average 2010 detached SFH price? 204CAD/sq ft.

Yes, affordability in Europe is just as bad or worse than here, but we are so wildly different that the comparison is meaningless (I don't know anything about Nancy, so I won't comment).

I do agree that over the extremely long term we will have the same situation as in Europe, but we aren't anywhere near there yet and won't be for probably at least a century.

All cities are different, but it is far more valid to compare to something like Seattle than Frankfurt.

commuter12 said...

So bears I think you all kind of agree that pricing of houses is set by what peoplea are willing to pay. As a nation we have pretty much the same interest rates everywhere. Incomes vary by region but the variance is not super huge. House prices on the other hand vary a lot by region. So in the unified bear theory of house pricing this implies that people in Victoria and Vancouver willing to pay more for housing than other people in this country. Anyone have any theories on why this is?

a simple man said...

commuter12...people are willing to pay a bit of a premium for the location here...but that being said, when I moved from a large prairie city my house sold for an amount that would buy a nicer house in Langford. But the commute was unacceptable to me and my wife as our time was more valuable than the relative premium charged in the city.

Further, good work here is scarce and getting more scarce. If things slow down much more in construction I would expect large scale emigration from here to where there is work.

Victoria is not a simple market.

Introvert said...
This comment has been removed by the author.
Introvert said...

There are many different viewpoints. All of them valid.

HHV, judging by your some of your responses to my posts, you don't appear to regard my views as valid. Just saying.

---------------------

So in the unified bear theory of house pricing this implies that people in Victoria and Vancouver willing to pay more for housing than other people in this country. Anyone have any theories on why this is?

This is basically what I asked in a comment I posted in the previous blog entry titled "Demand?":

"So, I ask rhetorically, are Victorians, as a group, different? Does our collective mentality fundamentally differ from that of other urban centres, such that we act in certain ways to drive up our local real estate market to bubble level? I'm just asking, are we different?"

What's very interesting is that many of our discussions seem to arrive at a central question: Is Victoria different? And a variation of this question is: Are the people comprising Victoria's real estate market different?

These are insoluble questions, really, but they are nevertheless worth debating! It's just interesting that so many discussions eventually reach an impasse right here.

a simple man said...

Price change #3?

2407 Estevan Ave - started at $940K, now $798K - assessed at $595K.

HouseHuntVictoria said...

"HHV, judging by your some of your responses to my posts, you don't appear to regard my views as valid. Just saying."

Please go back and re-read them then, because something is getting lost in translation...

Your views are valid, however, this doesn't mean they need be taken as fact. When a commentator is corrected by the use of factual data and analysis, this doesn't mean their views are unwelcome, or invalid, it just means they're opinions. That's all. You're welcome to express your opinions here, and anyone is welcome to respectfully rebut opinions here too.

Just Jack said...

"So, I ask rhetorically, are Victorians, as a group, different? Does our collective mentality fundamentally differ from that of other urban centres, such that we act in certain ways to drive up our local real estate market to bubble level? I'm just asking, are we different?"

-------------

We can't be different, unless there is something in our drinking water or local food that has transformed us into the elite of home owners. And if that is so, we should be selling water not houses.

There have been a series of events in BC and Canada, that began the real estate build up
and sustained it for the last decade.

When the Campbell government wase elected they wanted to retire the highly paid long term government employees and in there place hire two new employees. For Victoria, this scarred the poop out of the long term government workers. They took their cash settlements, paid down the mortgage and did not list their properties for sale.

Listings in Victoria crashed!

Then two planes demolished the twin towers and the stock market crashed. George Bush rallied the people around the flag and smashed the interest rate, thereby stimulating consumer demand for housing.

But Victoria was short on supply.
BOOM, prices went up. Sewers were installed and construction began. Jobs to buy these new homes created by new workers. Double digit annual increases lead to massive speculation, more jobs, more homes. We were on our way up the price ladder before the rest of Canada.

Then CMHC decided to get in on the deal and save a Prime Minister's job. Dropped the lending standards and opened the doors to American banks. It was like dropping a can of jet fuel onto the fire. BC exploded on cheap credit.

And the Olympics brought more workers to BC which meant more jobs and more houses and more speculation.

The reason why prices are so high in BC is not because we are smarter than the rest of Canada or more fortunate for having rain coats rather than snow shovels. Its because a series of events has allowed us to maximize our greed at a higher level than Toronto or Ottawa. Our prices are mostly dependent on the construction and speculation remaining strong.

patriotz said...

Yes, affordability in Europe is just as bad or worse than here

That is untrue, except for countries where the bubble is still holding out such as the UK - or should I say London, the rest of the UK is cheap compared to BC.

As far as Germany goes, its housing is undervalued according to most surveys. How can that be in a small country of 80 million people?

1. Very strict controls on mortgage lending.
2. Taxation of RE speculation

That's all it takes to prevent bubbles.

Take a look at this

And remember, what matters is not prices in one city or country compared to another, but prices versus rents and incomes in the same city.

patriotz said...

When a commentator is corrected by the use of factual data and analysis, this doesn't mean their views are unwelcome, or invalid, it just means they're opinions.

Opinions cannot be corrected because they're subjective. Only claims of fact can be corrected, and if they have been corrected, that means that they were invalid.

Introvert said...

Yeah, HHV, I'd appreciate it if you would stop trying to "correct" my opinions.

Marko said...

As far as the Germany example....

I just pulled this out of a 2009 article....

"The average price of owner-occupied flats in Germany in 2008 was €2,257 per sq. m., an increase of 1.2% on a year earlier."

So about $300 per sq/ft depending on how the Euro is trading against the CND. Remember this is the average in Germany. I am sure that it is higher in Berlin.

Victoria so far this month for condos - $338 sq/ft, I am sure it is much lower for all of Canada.

Now compare some professions, for example how much does a GP make in Germany, how much does a GP make here? Having relatives that live and work there you would be surprised!

Problem with a lot of comparisons is they compare SFH across the world as if they are the same, the problem is the average size of a home in Germany is not similar to here.

Once you start doing per sq/ft calculations you really get a solid gauge.

Just Jack said...

As long as you compare up. Like Victoria to Frankfurt or London or Paris.

No one wants to be compared down to Hope, Yak or Cranbrook.

Would Frankfurt, London and Paris compare themselves to Victoria?

When Victoria gets a thousand years of history and the same population density as London you might do some comparison analysis.

And just for giggles, the population of Greater Victoria today is about the same as London in the year 1650.

As for exchange rates, look what has happened in the last 2 years between Canada and the US. How the dollar trades is meaningless.

I prefer to use beer. How long does it take the average Canadian to earn enough money to buy a pint of beer, as compared to a Brit, Yank or Aussi. All homes should be valued on the Indian Pale Ale scale. Cars and washing machines on the peanut and pretzel scales. You should never pay more for a clothes dryer than what you and your buddies can drink at a Sunday BBQ. The amount of time your wife takes to get her hair done should be equal to the cost of the number of beer you can drink at Montys. Import cars should always use the import beer scale. American cars would use draught beer.

a simple man said...

ok comparison, except a house in Europe may be habitable for centuries.

Here, well, lets really hope for 50 years with modern construction materials and average trade skill levels...

Like they always say for quality jobs - "we have this old European guy..."

patriotz said...

Once you start doing per sq/ft calculations you really get a solid gauge.

How about doing price/rent? No, can't do that, because that would immediately how have overpriced RE in Victoria and Vancouver is.

Keep beating around the bush.

a simple man said...

If you keep talking about price:rent you are going to wake up ChrisA, who is repainting the walls of his newly purchased home.

Just Jack said...

Well it all depends on who does the price to rent ratios and who decides what is right and what is the wrong price to rent ratio.

I suppose we would have to let some government body like CMHC tells us what the right ratio is for our city, province, street, renovations, garages and view amenity.

But, I opt for the free market to determine value of course lately, the government has been greasing the tracks, but they would do that with price/rent ratios too.

Sure you can say that we are double historical ratios, but interest rates are half of what they were then too drop interest rates one month and it becomes cheaper in monthly bank payments to own than to rent raise the rate the next month and its better to rent than to buy.

There is a housing market and there is a rental market just like there is a condominium market and a single family home market do condominium sale prices affect house prices yeah, in an indirect manner but can you say that houses should be X times more than a condominium can condo prices fall and house prices increase at the same time can rents go down and house prices go up and the same time are rents high in Fort McMurry because the transient work force rather rent than own are home prices higher in Qualicum because people rather own than rent?

Sorry about intentionally leaving out periods, but it makes it difficult to take my response out of context.

a simple man said...

Swallow hard...and if you bought a condo on Bear Mountain a year ago, puke a little.

Go to price list and compare original asking to now...some units more than 65% OFF!

patriotz said...

Well it all depends on who does the price to rent ratios and who decides what is right and what is the wrong price to rent ratio.

A given property has a single price and a single rent, and thus a single price/rent.

Not too complicated.

Higher property taxes mean a property should have a lower price/rent all other things being equal, and so should condos, but it's not hard to factor in.

A right price/rent ratio is one is which the rental value covers the cost of ownership or better. That's Finance 001.

omc said...

Marko,

I am afraid you are 180 degrees out on that one. Professional incomes are much lower here. GPs incomes are rated very different between the 2. Here "income" does not have 40% overhead deducted.

Marko said...

"German doctors leave Germany and go to Britain - because doctors in Britain get paid more."

"50,000 surgeries closed as GPs threaten to desert Germany and head for Britain, reports our correspondent"

"“It’s no longer bearable,” Andreas Dahmen, a 31-year-old orthopaedic surgeon, said. “I earn €2,800 [£1,920] a month here after taxes. I’m moving to England where I can earn double that amount for much less work.”

What kind of orthopaedic surgeon makes $4,000/month after tax in Canada?

I have family that are doctors in Germany, it sucks. They were shocked when they came out here and I told them they could easily afford a brand new 3000 sq/ft home on two physician incomes (one specailist).

First cousin in France, auto mechanic. Makes $1,100 euros per month, rent is $700. Good luck.

Marko said...

PS. Salaried phyisicans at VIHA make about 250k/year with no overhead - list of all salaried 1,300 or so employees who make over 75k is available on the VIHA website.

Non-salaried physicians make more on average.

Marko said...

I shouldn't say no overhead, I am sure they need insurance, etc. What I meant by no overhead is no office costs.

a simple man said...

article from 2010 on doctors in Germany:

On the same day as the protest, the Central Association of Statutory Health Insurers published current data on doctor compensation. The approximately 150,000 doctors and psychotherapists in Germany are to receive an average of 164,000 euros per year in fees from public insurance agencies, a 22,000 euro increase since 2007.

However, general practitioners indeed earned less than that figure - an average of 116,000 euros in 2007 - while orthopedic surgeons earned 186,000 euros and radiologists earned 264,000 euros in the same year.

Nevertheless, Thomas Ballast, head of the Association of Health Insurance Companies, said the protesting doctors were harming their own reputations.

"General practitioners earned an average gross monthly income of 8,300 euros in 2009, in addition to private revenue," he said. "That's a salary that will give you a very good life."

a simple man said...

full article:

http://www.dw-world.de/dw/article/0,,6008266,00.html

Marko said...

http://www.spiegel.de/img/0,1020,575805,00.jpg

Leo S said...

Regardless of which stat is correct about GPs, average income in Germany is basically the same as Canada, just slightly higher.

http://www.unicef.org/infobycountry/germany_statistics.html

http://www.unicef.org/infobycountry/canada_statistics.html

In other words, incomes aren't less there than here, so there goes that theory.

Marko said...

The graph I posted above is purchasing power adjusted.

$80,000/year means two different things when you are paying $2/L gas versus $1.15/L gas. Similar with other cars and household goods, strangely enough German built BMWs are way cheaper in Canada and in the US compared with Germany.

In other news, multiple offers on 4334 Northridge Cres.

Leo S said...

The graph I posted above is purchasing power adjusted.

For one profession which somehow you're stretching to the entire economy. Give it up man. Your argument that Germans are worse off than us is ridiculous. They have one of the strongest economies in the EU and are basically holding that whole zone afloat.

Using your argument based on GP salaries, real estate in the US should be sky high. After all their GPs are incredibly well paid!

$80,000/year means two different things when you are paying $2/L gas versus $1.15/L gas.

And driving far less. We drive 600km to visit my parents, and 900 to visit the inlaws. Unheard of over there. They have higher taxes, but better social supports. Diff culture doesn't mean we're better off.

Marko said...
This comment has been removed by the author.
Marko said...

"For one profession which somehow you're stretching to the entire economy. Give it up man. Your argument that Germans are worse off than us is ridiculous. They have one of the strongest economies in the EU and are basically holding that whole zone afloat."

And their real estate is more expensive then ours ;) I don't think you get the overall point of my argument.

"And driving far less. We drive 600km to visit my parents, and 900 to visit the inlaws. Unheard of over there. They have higher taxes, but better social supports. Diff culture doesn't mean we're better off."

Isn't this like saying, yes their homes are cheaper but the average home if half the size?

By no means did I imply Canadian culture was better due to differences.

What I am trying to get at, is you have one of the strongest economies in the world (Germany) and incomes are let's say for argument sakes, on par with Canada, real estate is significantly more expensive per sq/ft on average, and so are house hold goods.

My point - Victoria/Canada are not the only places on earth as far as over priced real estate goes.

As far as density claims, yes Canada is a big country, but no one wants to live in up North.

patriotz said...

And their (Germany's) real estate is more expensive then ours

Think so? Take a look.

5 bedroom detached house for sale in Oberwangen, Germany £90,238

a simple man said...

so...what about that 65% off sale on bear mountain for the Finlayson reach condos?

How does that change the market, or does it?

If I was in the market for a condo and saw one that was $2.6 million marked down to $899K that would change my view of the market for sure...

Leo S said...

And their real estate is more expensive then ours ;)

I don't see the evidence. All you've done is compare averages, which isn't particularly useful. A place like Munich is more expensive than Victoria, but it is far bigger and denser so the comparison is moot. You haven't given any evidence that a small German town of 350k people will have higher prices than Victoria.

Anyway, this argument is pointless. I don't know why you're fixated on comparing the farthest possible countries where there are a million differences, but you reject comparisons to more similar places close to us like Seattle.

Let's look at Ethiopia next.

Isn't this like saying, yes their homes are cheaper but the average home if half the size?

Size is irrelevant if you're comparing price/sq foot.

Ownership rate in Germany is 42% by the way. Another huge difference that will get in the way of sensible comparisons

What I am trying to get at, is you have one of the strongest economies in the world (Germany) and incomes are let's say for argument sakes, on par with Canada, real estate is significantly more expensive per sq/ft on average

As it should be, given the better construction quality, extremely higher density, history, city infrastructure, diverse economy, etc etc etc.

, and so are house hold goods.

Because of taxes, not because of any underlying price difference.

My point - Victoria/Canada are not the only places on earth as far as over priced real estate goes.


Real estate in Germany is not necessarily over priced as we saw from patriotz's data.

Rhino said...

Simple Man, I have seen all those penthouse units at Bear Mountain that are apparently 65% off. There is no way those 1 bedrooms where seriously listed at a million dollars. The layout is awful, it doesn't even look like you could fit a bed in the bedroom. Finishes are nice though...But seriously they are not 65% off, even in the glory days of the market they would not have gone for over 400K IMHO

omc said...

Marko,

You are way wrong on the physician thing here in Canada. It is true some (only some) specialists make over $250 and pay minimal overhead. they are few and far between. The others incomes are reported by MSP payments, but that none of the overhead is taken into account in that number. Almost all other specialists have offices to run also and they specialized equipment isn't cheap. The average family doc (who you quoted as high paid) bills MSP $160k per year. The average office overhead for a family doc(staff, building, insurance etc) is 40%.

Ever notice how you can't get a family doc out here, even though you claim they are all rich? If you are trying to justify the irrational market because professional incomes are high, you are dead wrong.

I can't get data on Engineers here in Victoria, but I would guess they only earn $60k on average here. High prices are due to interest rates only.

patriotz said...

More on Germany.

Here are some SFH in the state of North Rhine-Westphalia, aka Rhine-Ruhr. State population is 18 million - talk about running out of land.

SFH starting at 95K euros

a simple man said...

Thanks Rhino (BTW, that's what my kids call me - Rhino - I feel a kinship);

The penthouses are bigger and were just released I believe - one is 2600 sq ft on two levels - perhaps you are thinking of the normal suites?

Still, a lot of markdown even if you take 75% of list...

Marko said...
This comment has been removed by the author.
Marko said...

"The average family doc (who you quoted as high paid) bills MSP $160k per year."

Where did you get the 160k number?

"The latest report compiled by the Canadian Institute for Health Information is based on 2007/2008 data. Average, gross, fee for service payments to family doctors is $225,521 nationally, while in B.C., the figure is $232,683."

Secondly, the reason for not being able to find a family GP is multifactorial, financial compensation is only a very small factor. Enrolment issues, new demographics of doctors (>50% women of who choose to raise families and work less, population demographics, lifestyle (why be tied down to a practice when you can do something like anaesthesiology).

Marko said...

As far as the Bear Mountain penthouses, 65% off is a joke. You can buy a Condo in the Bayview for similar price per sq/ft so.....if anything the prices on BM now are closer to market value.

Sure, the penthouses are nice, but when you are spending that kind of cash on Vancouver Island you would expect to have a glimpse of the ocean, or be close to the ocean not in-between two hills.

a simple man said...

Marko - I agree - but the question is does that kind of markdown bleed into the downtown?

And then into SFH as boomers see their chance to escape while condo prices seem like a deal and their homes at a near peak?

Renter said...

Where are work, there are a lot of software engineers married to other software engineers or doctors.

Many of them have bought the ~$900,000 houses, and then whine about how they don't have enough money. Especially the couple where both of them work under 40 hours a week and frequently travel overseas.

Am I a little envious? Oh, yes. Do I manage my money better? Oh hell, yes. But I still get clawed by the green-eyed monster when I hear about their latest trip. It recedes a bit though when I hear about what a fixer-upper the $900,000 house is.

Marko said...

I think it already did in the high-end condos. Earlier this year we saw a 2 bedroom, 2 bath 1004 sq/ft corner unit condo at the Falls sell for 399k, have seen some good deals at the Bayview, and now most recently Dockside green has seen some decent discounts.

As far as lower end condos, especially the 2 bed, 2 bath fewer than 300k with current interest rates, things are selling.

I think way of the future for developers is really small condos at ridiculous per sq/ft prices, but small absolute price.

The woodframe condo going up across from the General Hospital there is selling well at per sq/ft prices higher than Bayview! But the condos start at 400 sq/ft.

I think the name of the game right now is more so affordability than value.

Leo S said...

3687 BLENKINSOP RD. After 168 days on the market the listing is cancelled.
Meanwhile, the sign in front of that house has a big SOLD sticker on it.
Good to see the old sleazy tricks are alive and well.

a simple man said...

is it time to resurrect the "Weasy" award for the biggest weasel moves each week?

Dave said...

High prices are due to interest rates only.

If that were true then Vic and Van would be line with the rest of Canada.


Reading this thread prior to the Germany talk pointed out a fair number of commenters' households on this blog seem to be well above the $70k annual income average with fairly large downpayments. This made me wonder about Victoria in general. Are there are more households on the 'average household income curve' above the average than normal Coinciding with more below the average than normal? Put another way is the distribution of incomes in Victoria not a nice bell curve, but more flattened? Lots of professionals and public sector workers on the high end and lots of tourism / seasonal workers on the low.

As has been mentioned who would want to take out a mortgage for 5-6x their annual income? Perhaps the high income earners are driving this market more than they are in 'balanced' markets.

Dave3

Marko said...

"3687 BLENKINSOP RD. After 168 days on the market the listing is cancelled."

and then it was relisted:

MLS: 285613

Leo S said...

Indeed. Heck I even had the relisting on my favourites. Wonder why that Sold sticker was there.

Leo S said...

Ok now it's marked as sold in the pcs. I take it all back. Mea culpa.

Marko said...

Monday, November 29, 2010 8:00am:

MTD November
2010 2009
Net Unconditional Sales: 435 604
New Listings: 665
796
Active Listings: 3,658 2,973

Please Note

Left Column: stats so far this month
Right Column: stats for the entire month from last year

Marko said...

SFH

Price Original: $702,228
Price List: $686,545
Price Sold: $659,336

Condo

Price Original: $338,580
Price List: $330,954
Price Sold: $320,191

a simple man said...

As usual, thanks Marko.

What I note is the 20% discount from original to eventual selling price.

a simple man said...

sorry - fat fingers in excel - 6% decrease in price...my apologies.

a simple man said...

hey Marko, since you have all the raw sales data would it be possible for you to make a frequency distribution histogram? Something like sales by $50K categories, so $300K-350K, >350K-$400K...etc...

A monthly graph like that would tell us a lot about the distribution of sales - you could also add the mean and median to the graph.

Alexandrahere said...

Morning all: Here are my stats for the week of 22 Nov - 28 Nov.

SFH: Minimum 2 beds & 2 baths priced between $375K and $775K in the areas of Victoria, Oak Bay, Esquimalt, Saanich East and Saanich West.

NEW: 17
SOLD: 15
P/C: 15
OM: 9

Avg selling price: $534,800
Median selling price: $520,000

SFH in these areas within the above criteria sold for 96% of the original asking price.

No homes sold for under assessment last week.

CONDOS'

Min 2 beds in the price range of $260K - $675K, in the areas of:

Victoria: Most areas (not downtown)
Oak Bay: All areas
Esquimalt: All areas
Saanich East: Most areas
Saanich West: Gorge, Tillicum and Interurban.

NEW: 3
SOLD: 4 APT'S AND 4 TOWNHOUSES
P/C: 10
OM: 7

Avg condo selling price: $355K
Avg t/h selling price: $344K

2 apartment style condos sold in the Songhees/Vic West areas under the BC assessement.

patriotz said...

"High prices are due to interest rates only."

If that were true then Vic and Van would be line with the rest of Canada.

Absolutely right. And Ireland and Spain would have stayed in line with Germany. And Florida with Alabama, etc.

High prices are due to interest rates, stupid government policies, stupid banks, and stupid people.