Apparently they do. Case in point, "The Browns" who started asking some area-specific questions about Langford, Colwood and Metchosin.
Here's the map:
The boxes are rough approximations of the three municipalities in the West Shore. I know the Westhills development has a 20 year plan to put more people into tighter spaces than Victoria has ever seen, all the while calling those spaces "single family homes." They'll soon overwhelm that blue box. The red box is a mix of old and new. For the most part, that east end of the west shore is the most "affordable," if you call paying $450,000 for an 1800 square foot BC box built in the 1970s and likely painted once between then and now affordable. The new housing units in this area are nice, no question. But I do question the quality of anything built in the last 5-7 years in the Victoria area. I've heard too many horror stories not to question.
I can't say anything bad about Metchosin. If I didn't have to do anything other than get up and work my land, this would be the place I'd do it in Victoria. Back when I was a teenager, we used to have the occasional friend who'd start dating a Metchosin girl. We'd call voyages to pick her up on Friday nights "road trips" and they almost always included a stop for gas at least once. Of course, back then, there weren't such things as "highway overpasses" and "expressways" to "speed up" the traffic flow. Nope, the trip took 45 minutes round trip, not each way like it does these days. At least the cars are more efficient nowadays.
All kidding aside, we city folk like to poke fun at Langfordians. We have to, we pay way more to live. Or do we? Let's look at the numbers for West Shore single family homes shall we?
January 2011
From first glance the numbers look good for Metchosin and not so much for Langford and Colwood. Of course, average and median numbers tend to get skewed by abnormally low sales volumes, so we should dig a bit deeper:
To be generous, and err on the side of caution, let's "assume" the month end listings volume in the three areas was 250 SFHs. Metchosin obviously has a fraction of the other two, the prices listed above seem to point to this as well. I'll give you the data combining all three areas:
Total active listings = 250 (questionable assumption)
Total sales = 35
Months of Inventory = 7.15
Sales to active listings = 14%
As far as neighbourhoods go, I'll admit bias. I grew up on the other side of Victoria and have been taught to avoid Westshore living and it's inherent commute to get anywhere lifestyle. Every time we visit Costco, which I'll admit is getting less and less because of the traffic volume, I question why so many people choose to live in an area that hasn't had too many non-strata homes built in the last decade. I'd wager few "choose" to move from the east side of town to the west. I'll bet household finances dictate the move for locals heading west. And I'll bet that a good portion of people coming from away buy homes in the Westshore because it reminds them of what they're used to back home.
If you've lived in Edmonton or Calgary, outside of the core, you'll feel right at home in Langford, with it's box stores, chain restaurants and houses built with five feet between them. But you'll soon come to loathe the drive into town, wondering why the heck there's traffic lights in the middle of what feels like the Crowfoot or the Whitemud. Yes, it really is like that.
Here's the map:
I can't say anything bad about Metchosin. If I didn't have to do anything other than get up and work my land, this would be the place I'd do it in Victoria. Back when I was a teenager, we used to have the occasional friend who'd start dating a Metchosin girl. We'd call voyages to pick her up on Friday nights "road trips" and they almost always included a stop for gas at least once. Of course, back then, there weren't such things as "highway overpasses" and "expressways" to "speed up" the traffic flow. Nope, the trip took 45 minutes round trip, not each way like it does these days. At least the cars are more efficient nowadays.
All kidding aside, we city folk like to poke fun at Langfordians. We have to, we pay way more to live. Or do we? Let's look at the numbers for West Shore single family homes shall we?
January 2011
| Average Price | 6 month avg | Median price | |
| Langford | $489,956 | $516,134 | $447,500 |
| Colwood | $433,813 | $525,669 | $416,250 |
| Metchosin | $798,475 | $604,608 | $677,000 |
From first glance the numbers look good for Metchosin and not so much for Langford and Colwood. Of course, average and median numbers tend to get skewed by abnormally low sales volumes, so we should dig a bit deeper:
- 4 single family homes sold in Metchosin in January 2011
- 1 was "luxury" priced somewhere in between $1.25M and $1.5M
- 1 sold for a "good deal" at under $600,000
- 1 was exceptionally fire-sold at under $450,000
- Colwood doubled up on Metchosin and moved 8 SFH properties
- The highest priced Colwood home sold for less than $700,000
- The other 7 SFHs sold for under $500,000
- 1 sold for under $350,000, talk about a value!
- Langford smacked its Westshore neighbours in the sales ring: 23 SFHs sold in January
- 15 of those sold for less than $500,000, but more than $350,000
- 6 of the rest sold between $500,000 and $650,000
- And the last 2, tried as they might, couldn't get more than $800,000 when they changed owners
To be generous, and err on the side of caution, let's "assume" the month end listings volume in the three areas was 250 SFHs. Metchosin obviously has a fraction of the other two, the prices listed above seem to point to this as well. I'll give you the data combining all three areas:
Total active listings = 250 (questionable assumption)
Total sales = 35
Months of Inventory = 7.15
Sales to active listings = 14%
As far as neighbourhoods go, I'll admit bias. I grew up on the other side of Victoria and have been taught to avoid Westshore living and it's inherent commute to get anywhere lifestyle. Every time we visit Costco, which I'll admit is getting less and less because of the traffic volume, I question why so many people choose to live in an area that hasn't had too many non-strata homes built in the last decade. I'd wager few "choose" to move from the east side of town to the west. I'll bet household finances dictate the move for locals heading west. And I'll bet that a good portion of people coming from away buy homes in the Westshore because it reminds them of what they're used to back home.
If you've lived in Edmonton or Calgary, outside of the core, you'll feel right at home in Langford, with it's box stores, chain restaurants and houses built with five feet between them. But you'll soon come to loathe the drive into town, wondering why the heck there's traffic lights in the middle of what feels like the Crowfoot or the Whitemud. Yes, it really is like that.
80 comments:
Great post. One pattern starting this year that I wouldn’t underestimate is where do thousands of Victorian babyboomers decide to retire. Many will stay put, but I believe many will also trade outward from the core to save money (afford to retire), escape congestion/noise/pollution/crime, have chickens/gardens like they did in childhood and/or move closer to their children/grandchildren. Let’s face it, if you only have to commute once a month to an Elton John concert why wouldn’t you say sell Fairfield and live in Sooke, Cochrane, et al and with your 800 big ones buy an incredible winter getaway in Florida for 100,000 that is still nicer than you had in Victoria.
That was a big trend in Vancouver after Expo 86. The elderly were living in homes that zoomed in value and so did the property taxes. They chose to sell and move out to Aldergrove. The trend may have started as Oak Bay, Sidney and Brentwood Bay (traditionally areas of the elderly) are seeing the lowest growth in population.
In Vancouver, the Asians were buying the older homes, crushing them and constructing large Vancouver Specials. It was bad Feng Shui to live in home that was lived in by someone else.
Something that never happened in Victoria, because Victoria did not have good Feng Shui and has poor night time entertainment. There was never any industry in Victoria that could pay their lifestyle and less places to spend it in.
Victoria is a good place to come if you are old and have money and don't want to keep it for long. Its a lousy town if you're young and have money, because it gets boring quickly. How many times can you go to the Colwood Casino?
Great, informative post HHV.
Brown Family: I've lived in Victoria for 40+ years and own my own home (well, at least 80% of it). I spent my youth growing up on 10 Mile Point, and have lived almost exclusively in Saanich since then. I've seen many neighbourhoods in Greater Victoria grow and change over the years. Given the choice to live in Metchosin, Colwood or Langford - and considering schools and recreation centres for children - I would choose Colwood. Metchosin is rural and lovely, but the amenities are far and few between. I believe that Langford is suffering from the results of too rapid growth over the past 15 years. It is no fun to commute either to or from Langford. Colwood will give you the proximity to your family in Metchosin while keeping you closer to schools and amenities.
However, I wouldn't recommend to anyone to buy at this time. I would choose to rent. Let's say that you can afford $600K for a house. Even a 20% drop in the market translates into $120K. This translates into the first 7 years of paying off a 30-year mortgage. In other words, you would be better off renting (for about $2300/month) for a few years while the market undergoes an inevitable correction.
Some will argue that prices will remain stable (or even go up). I've lived here long enough to see a number of rapid growth and crash cycles in the real estate market. If I hadn't already purchased my home in 2002 for about 40% of its current resale value, I would be renting at this point too.
David L. Thanks for your insight. I'm thinking that we will not be buying a place until later in the year (August at the earliest) until we can see what happens with house prices. In Northern AB where we live the market doesn't really move until May (It's too cold to go outside until then). Luckily we are in a position to sit on the sidelines for as long as a year or more to see what happens with the market.
2056 Swanson Pl for 60k over asking? What da?
Always irrational behaviour before the bubble bursts.
The Swanson folks may be done like dinner in a year's time.
VREB stats for the last few months show more sales in East Saanich than the West Shore. Interesting.
I guess many would call me an paranoid, alarmist, fear-mongering, tin-foil hat wearer, etc. but I've been wanting to bring this topic up on HHV for awhile now. I know many of you are able to see what is on the horizon in terms of the housing bubble so perhaps this thought isn't too far-fetched for you to agree with, or at least take into consideration.
I think one of the most important considerations for first-time homebuyers, and those already in the market, is to find a property that has a cultivatable land mass great enough to grow a large portion of your own food. I'm not talking acreage either, you'd be amazed at how much you can grow on a sub-acre lot (1/4 acre is good enough).
WHY choose land over house? Well along with the real estate bubble there are also other potentials on the horizon (as many of you already likely know) - peak oil being one, upcoming food shortages/huge price increases for food on Vancouver Island and elsewhere (we'd be hit even harder). Peak oil alone means price increases on EVERYTHING.
I don't know, if I were going to be making a huge 'investment' into a home, I'd want to have the security of knowing I had more than a tiny strip of shaded lawn to work with.
It's something to think about anyway.
I was just watching the ‘broadening top’ play out in silver, and it got me wondering if the same psychological pattern is playing out in Canadian real estate. If you are interested, here is a quick and sufficient Wikipedia explanation of the ‘broadening top’ (or megaphone).
What is it?
If you think of it as speaking into a megaphone ( < ), the mouthpiece for Vancouver starts mid 2007.
Vancouver broadening top
I had heard that there was a lot of activity around swanson, based purely on the price range and lack of inventory at that price range.
I would say those folks on swanson will regret thier purchase within just a few months. There is nothing to indicate price rises this year, and this was a truly irrational bidding war.
I grow a garden and by the time my strawberries and veggies are ready the price at the local markets is at its lowest. So the costs of my small garden can actually be higher than at the grocery store. I still grow a garden, because its something for my daughter and I to do together and its something I want her to experience.
So its just not gardens.
Everyone would be better off to can and freeze fruits and veggies when prices are low. I'm also thinking of getting an apple press to make my own cider and sauce. The food is cheaper and tastes better than what you get at the grocery stores in the winter.
So, you don't need land, just a pressure cooker.
Looking at the margins again, how about those luxuary penthouses that at one time were being bought up by Americans.
Well a 2,298 square foot penthouse on Montreal Street just sold for $1,375,000. Sounds impressive.
But, that unit was bought in 1997 for $950,000. So in 13 years that property has gone up only 44 percent. A GIC would have had a better rate of return. So much for the rich and famous having anymore real estate psychic ability than the rest of us.
Just Jack, canning supplies are definitely a great start (more than great actually), as are purchasing cheaper in-season local fruits/veggies to preserve ... but I think you are missing my point. Do you know what life could be like when oil prices skyrocket? What will happen to local food demand then? (as a result of insane grocery store prices) And prices of that local food? My point was made based on peak oil, not current times. I say start now, as there is a learning curve, and fruit can be established now for later (it takes time).
From what you wrote, I can see that you have a lot more to discover about growing food!
Food can be grown year round on Vancouver Island (simply cover winter crops with poly/mulch) and seeds started indoors and then planted in ground will give a much earlier start.
I understand the majority of folks don't want to do the work, but I'm just sayin' ... there WILL come a time when food prices skyrocket, demand for local food increases, and personal land/backyard grown food will be a goldmine. When I hear people talk about how land is not necessary ... I think much like you do when you hear people talk about buying homes in this inflated market.
But hey, if you don't believe in what I have to say, then that's okay too ; ) You can depend on the grocery stores and local farmers if that works for you. I just see Once Harmony giving all these warnings on KIV about real estate so thought I'd come on here and give my own warning. I promise I won't say I told you so ; )
Every little bit helps. However, history shows us what happens when the masses start starving. A back yard garden isn't going to protect you from that.
In Fernwood, several people plant communal boulevard gardens. I think its a fantastic idea. Because I won't be shooting anyone for taking carrots out of my garden. If you're hungry - help yourself.
But, I think you should do something to educate your neighborhood. So, the next block party you should put up an information stand. Bring a bushel or two of apples and show us how its done. What to plant and when to plant.
With half the properties in Victoria proper now being condominiums, it's one thing to say that you should buy land and the other to be practical.
Very good post HHV. Thanks for spending the time and energy on it. Hope the "Browns" now have a little more understanding of the areas.
thisbeautifullife
I can remember “peak oil production” “edge of the cliff” being used as far back as the 70’s to stoke public fear for individual and corporate gain. I won’t get into all the reasons on a RE blog, but you needn’t be concerned. However, I will let you know where WTI will trade exactly 3 years from today - $59.98 a barrel, lol. One clue that makes you go hmmm, shale natural gas selling for 3.90 today (HINT: technological advancement), another is almost EVERYone believes it will keep going up this decade. (Reminder to self - it likely surges past $100 by this summer then plummets, leaving hopefullynotme, holding the bag - I mean barrel)
Well now you're going to the extremes, when that wasn't what I was talking about at all - there's a process that will go on, it doesn't begin and end with starving and riots/killing. I'm talking about expensive groceries, and increasing prices (let alone food safety) due to shortage/demand/oil prices, etc.
I know, I know, I get what you're saying. The world will just keep going on perfectly and even better than it is right now with the advancements of technology. In fact pollution doesn't exist, neither does global warming, our resources will just keep sustaining the increasing demand forever. I get your thinking. It's a nice warm bubble to live in ; ) Nothing to think about nor plan for just in case, right? Kind of the same mentality as not being prepared for a natural disaster on the off-chance it happens.
*sigh*
Carry on.
I think we should all be growing veggies (or directly supporting those who do) and minimizing our use of any fossil fuels as much as possible but not for economic reasons, yet. No need to throw your hands up - I am sure you have a lot of supporters here, but you can't change Rome in a day - bring us along gently and teach us how to better care for the earth and ourselves.
plus, if we all had large plots of land we would soon resemble Calgary with the sprawl and there would simply not be enough land on the peninsula for all of us. And we would, on average, need to use more fossil fuels to get anywhere as our distances to travel would have to be larger. I always thought densification was one of the best things to do for the earth.
A Simple Man, you are totally right. I get frustrated a little too easily/quickly whenever I encounter those who don't see the whole picture and try to dismiss it all so quickly. I guess I just assumed that the same belief of what is going on with real estate/economics would be on par with the rest of it. It's all a big tangled web. I know how the Bears feel when others are quick to dismiss what they have to say about real estate/debt, etc. Thought we might have something in common.
But, that unit was bought in 1997 for $950,000. So in 13 years that property has gone up only 44 percent. A GIC would have had a better rate of return. So much for the rich and famous having anymore real estate psychic ability than the rest of us.
This comment is a fabulous illstration of how the bears like to talk out of both sides of their mouths. On the one hand, RE prices are unsustainably high relative to incomes, but on the other hand "look how little that rich b**tard made on his penthouse." Well, chew on this: 44% in 13 years is 2.84% compounded annually, and that is tax free assuming it's a principal residence. That's actually a fairly sensible long-term return for a fixed asset, and in line with RE in general. People (bulls or bears) who focus on short-term volatility are deluding themselves if they think thay are seeing the real picture.
"People (bulls or bears) who focus on short-term volatility are deluding themselves if they think thay are seeing the real picture"
You have to recognize that this blog is written by someone who doesn't currently own, nor has ever owned. Buying in today's market at today's interest rates is a life sentence to the poor house for a great many Victorian average income earning first time home buyers.
Anyone who thinks that group of people shouldn't be focused on understanding short term price volatility relative to long term real estate returns when determining if and when to enter the market is, well, "fill-in-the-blank."
I have owned a number of houses, including a 5000+ sq ft house on 80 acres, so I am not afraid to own a home and know all the advantages and disadvantages of doing so. I would not put myself into a pigeonhole to call myself a bear, but when it comes to Victoria real estate today I definitely would say that I have more common sense than to buy right now - it simply has too much downside risk. Even the most optimistic predictions say the market will be flat for some time, so there is no rush to buy.
I kind of find it funny; that we are not supposed to question real estate when it is in such uncharted waters. Who in their right mind wouldn't be scared, given what has happened all over the world. I wonder if the people who bought at the British peak feel the same as B&F.
Forgot to mention the monthly assessment on the condo were $820 per month and the property taxes were $10,666 per year.
I guess, you might want to re-calculate that 2.84% annual return.
I believe we are in the first weeks of a serious meltdown in real estate prices. Obviously, those market segments were demand is weakest will be the first to fall. And that's the high end, outlying districts, investment properties, and retirement sectors. That the amount are so startling in these sectors does not bode well for the mainstream mom and pop markets.
"The bigger they are - the harder they fall"
But, that unit was bought in 1997 for $950,000. So in 13 years that property has gone up only 44 percent. A GIC would have had a better rate of return.
That's comparing apples with... well I won't even say oranges. It's a comparison of capital gain (on the RE) with yield (on the GIC). The GIC of course has a capital gain of zero but RE has both a capital gain/loss and yield.
Have to use total return to make a fair comparison.
Forgot to mention the monthly assessment on the condo were $820 per month and the property taxes were $10,666 per year.
That's $1,700 a month, but of course you're living in the unit, so you could have either (a) put the $950,000 into GICs and rented the place--perhaps for around $1,700 per month, or (b) bought the place with your $950,000 and paid the $1,700 per month in taxes and condo fees. Either way, in the end you have either what $950,000 in GICs grew to (after taxes) or the $1,375,000 (no tax due). I'm not convinced there would be much of a difference, so your implication that the "rich and famous" owner is somehow stupid really doesn't fly.
I only claimed that their psychic abilities were not any better than someone else.
You have to recognize that this blog is written by someone who doesn't currently own, nor has ever owned. Buying in today's market at today's interest rates is a life sentence to the poor house for a great many Victorian average income earning first time home buyers.
And there's the rub. Much as you wish is wasn't true, the price of RE in Victoria--at least in the nice areas-- is being heavily influenced by people with lots of money who aren't all that sensitive to interest rates. Average-income earners in Victoria don't buy houses in the core areas--they rent or buy small condos, and that's not likely to change. Oak Bay and Fairfield are full of (soon to be retired) public servants who bought 30 years ago when there was far less demand (numerically) and hence relatively lower prices. You won't find any young, average-income public servants buying houses in Fairfield or Oak Bay now (unless they came into a large inheritance)--they are in Colwood and Langford. That's just the way it is--get used to it.
Hi thisbeautifullife,
We are with you totally wrt GYO (grow your own). Our yard is over 9000ft filled with mature Gary Oak trees. We love the trees, but don't have enough sunlight to grow much fruits/vegs. Last year we went with like-mind neighbors and tried to propose a new community garden in a park nearby. Got lots support, especially from people in the condo buildings. But the neighborhood association wants a tennis court in the park, they shut us down thus their plan wouldn't be disturbed.
So we are of minority right now. But time will come, sooner or later, possibly sooner than some would like or believe ...
Reilly, much as i would love to see a megaphone in Vancouver, I think the best you can say is that we might be working towards point c. Only when point d comes in at lower than point b will I believe it is happening.
Which isn't to say that there won't be a crash before then, just not a broadening top one. Hopefully point d will happen and the line will keep on going down, down, down!
"the price of RE in Victoria--at least in the nice areas-- is being heavily influenced by people with lots of money who aren't all that sensitive to interest rates."
Where's your proof this is true? Let me save you some trouble, there's little proof this is true.
-80% of home buyers in Victoria last month had to have a mortgage
-55% of those were mortgages with more than 20% down (normal in any "already in the market" type home transactions, not a sign of real wealth or non-interest rate sensitivity BTW)
-26% of them were high ratio buyers, almost exactly the same percentage of FTBers entering the market last month
-down-sizers outnumbered move-ups 2-1
-less than 10% of sales last month were attributable to "investors"
Furthermore, from the number of sales in high priced neighbourhoods I'd say this is far from true. The vast majority of sales in Victoria are under $650K:
-70% of all SFH sales last month were under $650K; 12 SFH sold for >$1M, the other 16% between $650K-$1M, not really "luxury" in the Victoria SFH market, and certainly sensitive to interest rates.
-82% of condos sold for less than $400K; 1 condo sold for >$1M and 4 for more than $600K, not really a "robust" luxury market here
-88% of town homes sold went for less than $600K; only 5 sales were so-called "luxury" units and none for over $850K
High price sales don't drag prices up BTW. It's the floor of the market that allows the pyramid to continue building. Reduce the number of FTBers in any market and you'll soon see price erosion.
Did I not just show you that those people who over spend on real estate receive a lower rate of return than others?
While Oak Bay and Fairfield may have higher prices, that doesn't mean that these areas performed better over any other area.
Those people who bought 30 years ago are going to be faced with the challenge of selling their homes to tomorrow's public servant. Who may no longer want to live their because of the lack of amenities such as schools.
Oak Bay has a problem, its losing young families, being congested with basement suites and the infrastructure needs a massive injection of money. There is also a shift as the young families of today may not want "character" homes as much as the baby boomers.
A key ingredient in real estate investment is demographics with young families being heavy spenders. Heavy spenders create economic activity. It may be nice to live in an area of retired millionaires, but its painful waiting for them to dig out that penny at the grocery store.
House A was bought for $500K with a $475K mortgage by a family with $100K income.
House B was bought for $700K with a $450K mortgage by a family with $100K income.
House C was bought for $1M with a $450K mortgage by a family with $100K income.
Q: Which house isn't subject to interest rate sensitivity?
A: They all are.
House A will likely be sold at first signs of cash flow pain before the family is underwater in their mortgage with no way out.
House B will have to be sold as soon as the family feels the cash flow pain. Fortunately for the family, if they get out before prices fall far, they'll still have some savings.
House C will have to be sold as soon as the family feels the cash flow pain, but there's a lot less people who can buy homes in this price range and history shows their market values perform worse with more volatility. This family will likely lose a lot more of their paper wealth than the family owning House A. Ouch, the market sure does have a vicious habit of smacking the smart money harder don't she?
Catherine
Actually point ‘d’ would be the late 2008/early 2009 swoon. Toronto’s broadening top is easier to see the ‘a’ to ‘e’ pattern.. at least with the Teranet index.
click Toronto
It is more of an upward tilted megaphone, but equally bearish. I liken the price action of the broadening top to the enraged undulations of the penned up bull. I know price patterns may seem theoretical, but they divulge insight into the price action of any asset class.. besides, the psychology behind them is intriguing. The broadening top is certainly one of the more common topping formations.
HHV: Re the luxury buyers driving the market.
I wouldn't call $650k normal for an average person considering that's 10x their annual income.
Reilly: Re broadening top.
Interesting, but "One can't be sure of the trend unless price breaks down the lower of the two points (b & d) and keeps on falling." You can see it clearer for Vancouver via the Teranet page than your first link, but both Van and Tor show that d is higher than b.
All:
Has anyone been reading Michael Lewis' Disaster Tourism pieces for Vanity Fair? I read his latest on Ireland and to sum up, investors dumped lots of money into countries around the world in the early 2000's. Iceland's inner Vikings emerged and the banks bought up foreign companies that turned out to be poor investments. Crash.
Greece's gov't spent way too much on social services and the citizens avoided paying their taxes. Crash.
Ireland's fetish with Ireland prompted the Irish to develop and buy Ireland. From themselves. Crash.
He paints a profile of the Irish economy from a more psychological point of view. It made me wonder about Canada. Of course we're not the US, but our prices (in general) have continued to climb after the US crash.
Thinking about why from a psychological point of view, 1) Canadians hate being confused with Americans and 2) are very proud of how great our country is.
My question is are we just being stubborn in terms of real estate? We think Canada is too good to crash?
There must be some reason why people continue to believe that the difference between buying and renting as it continues to widen is fine (thanks Frannie for the Seattle link).
I have no numbers to back anything up of course, but it was interesting to try and think about why prices are so high from a bit of a different perspective.
Dave3
"I wouldn't call $650k normal for an average person considering that's 10x their annual income."
Would you call a mortgage of $300K on a $650K property normal? I would.
We can't assume that $650K homes are being bought by people using 5% down mortgages. Many people who bought in the late 90s and early 2000s could well find themselves in this equity position. I know several people who's home buying experience mirrors this.
They can comfortably afford $300K debt, but they bought back when average house prices were $400K less, just 8 short years ago.
$650K homes are hardly luxury. You're very lucky if you find a well done update in Saanich East for that price.
@Just Jack
You raise an interesting point about houses in expensive neighbourhoods. My father's house on Ten Mile Point was purchased in 1969 for $32K. Just over 11 years later, it was put on the market for $239K - an increase of 7.5 times. Due to crashing real estate, in 1982 it was taken off the market. By 1985, the house had dropped in value by more than 25% and was worth $175K. Now more than 25 years later, it's worth about $800K (a 4.5 fold increase).
So let's compare this to my house in a Glanford (Saanich West) neighborhood. Originally purchased in 1979 for 69K (about one third of my father's house value at that time). By 1985 it was worth about 80K, and this year was assessed at $510K (more than a 6 fold increase in 25 years).
While the Ten Mile Point house lost significant value during the early 1980's, the Glanford house never dropped in value (although the assessments were "flat" for quite a few years). If the value of my "cheap" home drops 25%, I would expect my father's "expensive" home would drop 40%. Time will tell...
Bubble's handwaving argument falls apart with real data. Here is a visual of listing price distributions for the last two years for SFH East of the Westshore and out to somewhere around Brentwood:
Percentile listing price distributions
What one can see is that prices have gone up relatively more at the low end, and that the 75th percentile houses have been dropping in price since Sept. 2009. However, starting in around June or July of 2010, lower end houses have dropped in listing price.
The 90th percentile was removed from the graph to show changes at the lower end. Suffice to say there is a lot of volatility there.
The low end drove this market up. Look out below.
My wife and I are upper earners that will be entering the Oak Bay market. I guess interest rates don`t affect us as much, but to think it doesn`t matter is crazy. If houses in saanich start to fall when the interest rates rise, guess what, I would be looking in saanich. You can`t have just the lower part of the market fall.
The opposite is happening any way, the upper end of the market is falling. I can buy more at the over $800k level in the good areas than I could of for quite a while.
Sorry, just jack, lots of families would like to move Oak Bay. Crappy 40s houses or not.
there with you, omc....with my large young family. Love it in Oak Bay. But you do have to accept a slower way of life, which is what we wanted anyway.
I'm right there with you. Oak Bay is the only area that our family is looking. Partly due to school choice but mostly because I do not like what houses chopped into suites does to a neighbourhood and I have no interest in having a suite in my house.
Oak Bay has a problem, its losing young families...
Nonsense. Buying a home in Oak Bay is a "dream come true" for young families--good schools, quiet tree-lined streets, parks, kids walk/bike to school/friends, no thru traffic (no one travels somewhere else via Oak Bay).
... being congested with basement suites ...
Baloney.
... and the infrastructure needs a massive injection of money.
With the exception of the sewer pipes in Uplands, the infrastructure is just fine, thank you.
There is also a shift as the young families of today may not want "character" homes as much as the baby boomers.
See above--the facts don't support this.
^ It's funny when B&F presents "facts"
Re. Oak Bay. I remember reading somewhere (perhaps on this blog via Marko) that suites are not legal in OB. Are there many illegal suites? If so, are illegal suites still being put in, or are they all from 10-20 years ago?
Suites aren't legal in lots of areas of the CRD, that hasn't stopped people putting them in though.
Plenty of new illegal suites in Okay Bay. I have a friend who works as a driver at Sleggs and at lot of drywall deliveries to Oak Bay are made on Saturdays.
Fairfield is prime if you want a legal suite, especially if you can find a lot that is 6000+ sq/ft, you can apply for 600 sq/ft loft style suite - basically a brand new condo unit in your back yard for about $70,000 - $80,000.
If you finished it with granite etc, could probably rent for $1,100to $1,300? Easily would pay for itself and you don't have someone living in your basement, plus legal and conforming.
I live in Fernwood on a street where most homes have a suite and yes parking is tight and sometimes your neighbours have stange renters. Doesn't really bother me and it makes the street a little more vibrant. I can't stand the Broadmead style drive into your garage and never see anyone.
I realize that OB has lots of illegal suites, but from what I understand they are quick to close them down when they are reported. And yes, I will be the first one to rat out my neighbours! With two small kids, I want to know who is living around me and not have a trasient population with new people in and out every 6-12 months! I live surrounded by suites currently (Gordon Head) and I hate it. It is noisy, busy, houses/yards are not well maintained and there is nothing I can do about it.
The suite thing is what drives us away from many areas also. I grew up in an area that was full of suites, and there wasn't much learning going on at the schools because of it. Kids with problems starting and leaving at all times of the year. No thanks. Suited out houses tend to be rented out top and bottom leading to poorly kept up places with cars every where.
Estimates of Population Growth
Source: CRD
2007 2008 2009
17,449 17,474 17,463 Esquimalt
18,435 18,459 18,466 Oak Bay
112,071 113,117 113,566 Saanich
80,915 82,656 83,003 Victoria
9,117 9,393 9,461 View Royal
There is a difference between wanting and what actual is occurring.
Now let's see where the people are really moving to:
2007 2008 2009
24,582 26,671 27,970 Langford
In Langford you have a choice between a home of less than 10 years or an older home of 30 plus years. Newer home sales vastly outnumber 30 plus year old homes.
Now, I like older character style homes. But, I also know they are costly to maintain and energy hogs. They have style, but you have to make a major trade off.
The next generation of home buyers are being raised in new homes with high speed wired internet, heated garages, and multi-line phones it is unlikely they will want to go back to the days of single glazed windows, dry rot, road pot holes, and difficulty in finding a space to park in front of your home.
What should have happened in Oak Bay, but didn't because of the sewer extension was what happened to Vancouver in the late 1980's.
The bulldozers basically started at one end of the street and went to the other end. Crushing the character homes and building Vancouver Specials.
This has happened in the states, once prestigious areas of housing have been let go, and the buyers have moved on to modern neighborhoods.
I know, I know, it can't happen here because Oak Bay is where all of us want to live. It may be your age group that is wanting the nostalgia of a character home. However, the kids of today - will not have that. Their nostalgia will be Lady Ga Ga and granite counter tops.
So, you can throw away your Saturday Night Fever mirrors - the next generation don't want them.
Just Jack - I agree regarding the character homes in Oak Bay. we are hoping to get a 50s or 60s bungalow or build a new home. From my experience character homes are massive money pits that you are always compromising on. They feel like homes on life support.
Don't read me wrong. I like Oak Bay and Fairfield. In fact, I even liked it better 20 years ago. I bike and jog through South Oak Bay all the time. I enjoy the beaches (except Foul Bay- its called that for a reason!) because there mostly empty and I can lock up the bike and stroll along the rocks. The old timers are generally nice and are talkative when you say Hi. The newbies to the city, look at you strange but they also walk around with their thumbs on the 911 speed dial. You can actually walk through Uplands without seeing another sole - just don't stop or someone will call the cops. The cyclists generally wave at each other, but where too much spandex.
Fernwood is funky. The public schools are way better than Oak Bay (dig). The women are prettier (not a dig). People like to walk their dogs and the SPCA likes to hide in the parks and give out tickets to people that like to walk their dogs. They tried to do that once in Esquimalt, but someone bit them.
Quadra, Central Park, Downtown and some parts of Hillside can be spooky, especially if you have a flat bike tire and you're wearing way too much spandex. But you can always stop in at the detox centre for help, just don't wake the people in the parks.
James Bay - well its James Bay and you can never wear too much spandex in James Bay - Not that there is anything wrong with that.
So, I can see the appeal of Oak Bay. Its not that the homes are better, or the sun shines more, or the people are friendlier - its simply because ... its not Victoria.
Sounds like Oak Bay is where people who like to rat out their neighbours live :-). luckily we are one street away from there. Note: no offense intended.
Just Jack - funny - I walk through the Uplands on many nights and rarely see another person. One night I stopped to change some music on my player and a cop came by and had the spotlight on me. Hilarious. I had nothing to hide, so no worries, but I can imagine many people may spook with that experience.
Fine-tuned the stats report from yesterday to show the 3 month rolling median vreb SFH price.
Updated Listing Price Distribution
Quite an interesting result. For the 2009 year, the SFH median sales was basically the same as the 25% percentile listing price, but then in 2010, median sales price was around 50K higher than 25 pc listing. For the last few months, this has gone up to around 65-70 K higher.
Four scenarios come to mind:
1 - the average buyer is buying more house with more money
2 - fewer low end buyers are buying, but higher end ones still are
3 - there is relative more value in listings above the 40th percentile than below.
4 - some combo of the above.
The data tells me that the high end listings are dropping in price quickly, that some are selling and that lower end houses aren't selling near as quick, giving a lot of short-term downside on prices.
OMC, Reid or some other data hound, could you look at the graph and tell me what you see?
Thanks
The nice thing about Langford is that new stores, recreation facilities, movie theaters, bowling alleys, soccer fields etc etc etc are all being built out here. Elsewhere in Victoria.... not so much. So yeah some of us have to commute into town to work but other than that we never go into Victoria because... it sucks. Way more recreation and parks out here on the west shore. I do hate all you Victoria people coming out here to shop on the weekends so I've had to move my shopping to after work during the week but it just frees up more time for fun on the weekends.
Nice job animal spirit. That pretty much sums up what I have been seeing. This would be family type homes, in need of renovation.
Lately there is a bit of a surge as there is nothing on the market, and it appears that there is a desperation from those taking monster mortgages. There is a listing on 2936 eastdowne at the bottom of the landsdowne slope. Based on recent sales (3 on larkdown) I would give it a max value of $635k. There seems to be some desperate people at this range (remember the house that just sold on swanson), I will predict that it will sell for $675. This house is in need of renovation, at the very bottom of the slope and beside a 3 story church/daycare center (dark and busy, no view).
I agree, omc. Some desperation in the air. I went to the Eastdowne open house yesterday and there were quite a few people there and there was a feel of competition in the air - was different from many open houses I have been to recently.
The house needed a lot of updating and there was something funny going on with the floor, but I am sure it will not last too long. The basement was nice in that there was little development and 8' ceilings. I could gut the basement over a weekend by myself, so it was an open palette - but needed some more windows cut into the basement.
The church on the south side of the house shielded a lot of light, so it was a no-go for us from the start. Just good to see houses in the 'hood and what to expect. Always educating.
So far not the surge in listings in was expecting.
One thing to keep in mind...just because houses are selling doesn't mean there is a monster mortgage involved. Two of the more recent sales on the Landsdowne slope (Middowne a few months ago and one of the Larkedowns) sold to people I know. Middowne was a retired couple who downsized from their uplands home and had no mortgage at all and Larkdowne ($770) was friends of mind who did not require a monster mortgage. They had a significant downpayment. There are lots of people out there buying who have big downpayments ($300K +) who are looking to buy a 3 bedroom family home in a quiet neighbourhood.
Animal Spirt, looks good. It aligns with what I see, but keep in mind that the top 10% in open to more volatility in the data given the wide range of prices.
Waiting,
I think you misunderstood what I was saying. The Larkedown houses can be used to set a market vale for the lesser house on middowne. The house on Middown is benefiting from a rush of 35 yr mort maniacs. It will sell for more than it is worth. The seller was actually not accepting offers until after the open house.
@HHV
Would you call a mortgage of $300K on a $650K property normal? I would.
I don't get it HHV, is a $650k Gordon Head box normal or not? If it's normal then why are we here?
Do you think the people who bought ten years ago have been driving the market? Interesting theory I guess, they drive the market up and force the ftb's to buy less than what those market drivers bought 10 years ago for the same amount of money. And so on until the ftb's stop buying those condos in Langford.
As a Mike and Molly kind of family I'm looking at the house my parents bought in Gordon Head 1999 for sub $300k and how it's 'worth' more than $600k now. We can spend that $275k for a 800sq ft outdated condo. Good times.
We can only dream about the luxury of having to decide between $800k homes in Oak Bay :)
Dave,
No, I don't think $650K for a GH box is normal. But it's relatively normal when you have FTBers willing to spend $400K plus on tear-downs in less desirable neighbourhoods.
IMO, the bottom of the market, that dominated by FTBers, has to fall in order to create the momentum necessary for a significant correction. If the FTBers continue to leverage themselves at 4.5 to 5 times income for crappy properties in the $400K-$500K range then reasonably livable homes in nicer neighbourhoods will continue to sell for $600K plus.
Real estate is built on a pyramid. The top can't crumble under its own weight until the cracks in the foundation cause something to break.
Agreed.
Dave3
HHV and Dave3,
I would suggest that the FTB has propped up the 400-500K houses, but the support at the level is dropping. With 35 year amortizations soon gone and higher mortgage rates, this level of support will be a thing of the past. The stats I presented yesterday could show this support already dropping.
Has anyone done an analysis of the cumulative impact of the higher interest rates, the change to 30 year amortizations and the new CREA rules on prices?
We are seeing the rush right now of not only the new mortgage laws, but rising rates them selves. In a month or so, the entry level buyer will be able to qualify for 10% less mortgage than they could today. 7% from the new laws and 2.5% with the 5 year rate going up .25%. What will this cause?
Monday, February 21, 2011 7:30am:
MTD February
2011 2010
Net Unconditional Sales: 315 621
New Listings: 919 1,460
Active Listings: 3,526 3,280
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
Thanks Marko,
I am a little shocked at the #s, my impression was that it was a bit busier out there. I guess it is just the well priced, quality homes I am watching that are in demand.
the flip insanity continues. Today listed for $899,999 was a house that sold for $605,000 last May (2596 Dunlevy St). Total reno done, but come on - it is 1045 sq ft on the main and 681 below. St Anne has competition now! I sure hope this isn't the same flipper.
Help us all is a 1050 sq ft wartime bungalow is worth $100K short of a million.
The increased assessments buoyed prices a bit in the new year... Otherwise nothing too exciting to report in the under 550k SFHs in the core areas..
Price, Price/Assessment, and Price/Interior Sqft
That is a graph of the 10 sale moving average.
Oak Bay is a tough market to crack into if you haven't been playing the property game for the last few years.
The typical home to judge all others by is the one on St. Patrick that just sold for around $710K or the median price since the beginning of the year.
This home's agent was gaming the days on market to show that it sold in 8 days, but she actually had it for sale a year ago.
The home was bought 3 years ago for $685K which is about the typical ownership time buyers have held properties over the last decade. So, not much gross profit over the 3 years.
At these prices, people have difficulty paying the taxes. So, I'm wondering where are they moving to?
.........Langford?
Last year 226 homes were bought in Oak Bay (median price $772,000) compared to 382 in Langford (median price was $525,000)
That's a massive savings for a retired person or young family, on average to put into their bank accounts or not to spend.
Between 2001 to 2009, Langford's population grew by 9,130 hearts. While Oak Bay added 668 pace makers to the city's roll in those 9 years.
So, you wonder why, why are the prices so astronomical in a place few people move to?
Back in 2001 the number of homes sold in Oak Bay and Langford each year were about the same 292 to 317. Since then prices in Oak Bay have gone up (median was $323,750) by 138 percent while Langford has moved from $212,000 or up 147 percent. And that's with all the new construction, which should have moderated prices downwards in Langford.
To me, the trend is clear. People are choosing Langford over Oak Bay. The tweed curtain has become tattered and frayed. It will be interesting to see what Oak Bay will be like and look like, 20 years from now. Will Oak Bay be restored to its glory days or will North Oak Bay be re-zoned for affordable housing? Will Willows or Monterey be closed down and the kids bused to Victoria? Will Oak Bay have enough players for a hockey league in a city where more Depends are bought than Pampers?
Only time will tell.
Yup. Oak Bay really sucks. Nothing to offer here. Don't even consider buying in this 'hood. Move along, nothing to see.
For what they are worth, here are my stats for the week of Feb 14-20:
SFH: Min 2 beds & 2 baths, priced between $385K & $775K. In the core municipalities of Victoria, Oak Bay, Esquimalt, Saanich East and Saanich West.
NEW: 40
SOLD: 22
P/C: 17
OM: 9
Avg. Selling Price: 603K
Med. Selling Price: 597K
Only a couple went for under BC assessment.
Condos: Min 2 beds, priced between $260K & $675K, in most areas of Victoria & Saanich East, all areas of Oak Bay & Esquimalt, and Gorge, Tillicum & Interurban in Saanich West.
NEW: 19
SOLD: 13 Apts & 3 townhouses
P/C: 13
OM: 3
Avg Selling price apts: $321K
Med. Selling price apts: $306K
Avg Selling price T/H's $462K
Med Selling price T/H's $499K
The three townhouses all went for under BC assessment & 4 out of the 13 apts went for under assessment.
Alexandrahere;
Do you know what the two townhouses on Caddy Bay Rd beside Pure Vanilla went for? One sold last week and the other a couple months ago, I think.
thanks.
A Simple Man: It went for $534K
Just Jack: That St. Patrick House you were talking about:
Lets do a break down of that:
Purchased 3 yrs ago: $685K
Costs:
PPT: ll,700
Move: 1,000
Lawyer: 1,000
Misc. such as new fridge, stove, paint, garden stuff --- you name it. a modest $3,000.
Total Cost: $701,700
Selling Price: $710,000
Selling Costs:
Realtor6&3: $24,300
HST: $2,916
Lawyer: $1,000
Move: $1,000
Total Cost: 29,216
Actual Proceeds from sale: $680,784
So he is out of pocket by (701,700 - 680,784)= $20,916.
Also this does not include any mortgage costs or interest if he had any. And he probably spent more than the $3,000 on purchases, upgrades & reno's.
It's not a bad place - for Oak Bay.
Actually I see better homes for better prices for sale in Oak Bay than in Fairfield. So, look out simple man, I could be your neighbor. And my hobby is collecting old cast iron bath tubs and truck parts.
We went through an open house in Fairfield listed in the mid $800,000 neighborhood last weekend. But there wasn't enough room to park the Prevost, so we had to strike that one off the list.
I just find the houses too small, but like the agent told us, we could always add on to the main floor, raise the house to get a full basement and dormer the attic for more space. And like she said, basement suites are legal in Fairfield so we could rent the 2 bedrooms out for $1,600 a month to cover most of the mortgage payments. I'm thinking meth lab myself. So its easily doable. I thought of putting life insurance on the agent just in case we ran into financial trouble in the future. Seems the insurance companies won't let you do that.
I'm starting to think our only option is to build. There's a lot of 1950's shacks in Uplands, but none are for sale right now. At least I'll get a grease pit for the semi.
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