Stuck in the middle: the Victoria townhouse experience

I've often thought that townhouses have the potential to be Victoria's perfect property for a fair number of people. As time goes on, I'd think more people would be attracted to townhome living. No shared hallways, very little yard work, affordable "full size" homes without the need to suite your house out, certainly these are a few advantages for busy working couples/families and early retirees?

The trouble with Victoria townhomes, especially at the entry level price point, is they're typically old, typically on busy streets or near busy highways, typically have high maintenance/strata fees and typically have restrictive strata councils that make them less appealing than buying an entry-level duplex or house with a suite. Oh, and they're almost always extremely overpriced--I'd say more so than any other product on the market today.

I checked out a couple of open houses the other weekend. The house had a 1 bedroom suite in it, and a smallish 3 bedroom 1 bathroom main living area for the owner to occupy. It will likely fetch around $450,000 when it sells, assuming no structural or significant cosmetic work is necessary (I didn't see evidence of either). I also looked at a townhouse listed for close to $350,000. Both neighbourhoods were comparable, but the townhouse actually had the location advantage.

Let me do a little first time buyer comparison here: assuming a 5% down, 30 year amortization mortgage at 3.49% for a 5 year term.

House
Price = $450,000
Mortgage = $422,500
Monthly payment = $1889
Suite rental income = $800
Taxes + maintenance/month = $300
Total cost to own = $1400/month estimated

Townhouse
Price = $350,000
Mortgage = $332,500
Monthly payment = $1487
Taxes + maintenance = $400 (est $125 tax, $275 strata)
Total cost to own = $1887 estimated

Currently, townhouse owners, and the few people buying them at the entry level, believe you should pay a premium to own a place with no direct claim to land and little ability to influence financial decisions directly affecting your monthly budget (for example, increases in maintenance fees, special assessments for parking lots, siding, roofs etc). It's no wonder then why those townhouse owners trying to sell are having an especially hard time right now.

Here's January's townhouse market snapshot:

Total sales: 38
New listings: 132
Total active listings: 297
Sales to new listings ratio: 29%
Sales to active listings ratio: 13%
Days to sell: 80 (up 116% from January 2010)
Average price: $445,628
Median price: $418,050
Price change year over year: -2%
Price change month over month: flat
Months of inventory: 7.8

• 42% of all townhomes sold for under $400,000
• Victoria/Vic West recorded 10 townhome sales (current listings volume make this 5 MOI)
• Saanich East, Sidney and Central Saanich were the townhouse buying municipalities of 2nd choice, with 6 each
• SE MOI is about 7, Sidney MOI is about 3.5 and CS MOI is about 3.
• Saanich West is a different story altogether, recording only 2 sales and having around 20 properties listed making the MOI about 10
• Langford and Colwood combined had 2 sales, with almost 80 properties on the market right now, they're showing a bare-mountainous MOI of 40. And they're still building out there!

It's a strange market for sure, these Victoria town homes. I desperately want you available listings to be more appealing, but your insane asking prices relative to your demand and your entry level duplex and SFH competition I just can't get past. Lucky for you, all you have to do to make yourself more appealing is recognize that dropping your asking price by 20% or more will bring the buyers shopping for condos and entry level single family homes straight into your empty open houses.