Thursday, March 17, 2011

Dropping the bomb

In about 3 hours, if you haven't closed on your new home, well, you're literally sh&t out of luck if you can't afford the home you want without using a 35 year amortization and require government-backed mortgage insurance.

You snoozed, you lose-d.

It will soon be March 18th. All the usual pundits claimed that a sales-frenzy would be created by the mortgage rule changes and that spring would come early for the Victoria real estate market.

It didn't. Sales have been ho-hum, averaging about 20% less than this time last year. Sure, we're seeing higher sales volume than in 2009, only marginally so, but that's nothing to be happy about considering 2011 is shaping quickly into the second-lowest sales volume start to a year in the past 10.

If you're left wondering why, you're not alone. Unemployment isn't up. Nor are interest rates. There's no economic calamity. No recession. No impending doom. No riots. No protests. No instability. What could possibly be the issue keeping the Hot Asian Money from buying in Glanford? Why aren't the rich Albertan Oilmen snapping up Bayview and Hudson condos for weekend playgrounds? I thought it was en-vogue for gangsters to buy their goo-mah a Bear Mountain condo so that when they came to golf they never dined alone? And everyone, and by everyone I mean the world's elite wealth who really know what's what and who's up when the rest of us look down, wants to own a prestigious Beach Drive address so they can park their mega yacht in the sheltered bays and snap iPhone shots to tweet out to their legions of adoring fans, don't they?

Oh, wait. It's locals. I forgot. Real estate is always local. It's location, location, location. I guess the locals are exhausted. Or priced out forever. Or maybe they stopped caring. Whatever, they sure have stopped buying. I blame this guy. You should too:

Super Jim made it harder for you to buy a home today. It's too little too late, but damn it Jim, it's still St. Patrick's Day and I'd still like to buy you a beer for the effort. In that short 20 minutes I'll have your ear, I'll convince you to fire them all at the CMHC and privatize that crown corporation to get their gambling off our collective books.


jesse said...

"You snoozed, you lose-d"

The irony is by snoozing and being "priced out" it will likely have saved you a whole lot of problems.

Sudden Valley said...

Dear Van City,

Your marketing team has it all wrong. It should be called the "Van City Pop Champagne T-Pain homeowership Program".

It's guaranteed to attract the right audience.

Sudden Valley said...

.. oh and the link:

Van City Pop Champagne T-Pain homeowership Program

HouseHuntVictoria said...

I was hoping you'd see irony in the whole post.

*goes back to remedial writing for 5th graders textbook*

Leo S said...

@Sudden Valley

Interesting that they will lend you the 20% required for the down payment. So I assume their target market doesn't qualify for CMHC.

Must be a heck of a small market though. Someone paying 650 rent in a housing coop would only get a 100k mortgage. Nothing to buy for that little, and most non-profit housing doesn't charge a lot of rent, so I don't see who this will help (or hurt).

Sweetrealtor said...

Great humour in this piece, HHV. Love the Super JF photo!

Just Jack said...

Like you have said, our sales are near the lowest level in a decade, but that doesn't mean properties will stop selling. As seen in the marketplace today, the drop in sales (more specifically the sales to listings ratio) had an affect on the outlying areas, properties that appeal to a limited market such as waterfront, acreage and retirement.

The low listings to sales ratios that are left have been concentrated in the inner core municipalities and are for homes that meet the minimum physical characteristics for a middle income family. This has driven values for these properties up to a price ceiling for a middle income family. And quite possibly why you are seeing a much smaller difference in prices between areas such as Fernwood and Fairfield for similar style homes.

Today, the typical monthly mortgage payment for a new buyer just went up 7 percent.

Just Jack said...

The rush to beat the new CMHC guideline. What rush?

Just picking on condos in the urban districts we have had roughly 140 sales in the last 30 days. A year ago, in the same time period, we had around 150 sales.

What happened - where is our rush to buy? And how about the median year over year price - nope nothing here 284,000 to $285,000.

So, all the saber rattling was for naught? Or did we actually pull demand forward and if it hadn't been for Jimbo, the sale volume would be drastically lower? And with listings so high, did Jimbo stabilize prices and thereby pull the sellers arse out of the fire this month?

Only the next couple of months will tell the story. If we indeed pull demand forward, I would think that sales will drop off BIG TIME and even Carla Wilson will be saying bye bye instead of buy buy.

Just Jack said...

Wow, has anyone checked out the asking prices for the Oak Bay Beach resort. The non view ones are $933 a square foot. But if you want a top floor view then you go up to over $2,000 per square foot.

Damn, that's an expensive place to put your Costco waste paper basket.

But of course, who can say that someone will not pay full price for the suites. BUT, I want to meet these buyers. I am curious as hell to find out who and what they are. I also would like to find out, want bank lends the money to make sure I don't have any deposits with that lender.

patriotz said...

"Like you have said, our sales are near the lowest level in a decade, but that doesn't mean properties will stop selling."

Properties never stop selling because....

Somebody always has to sell.

What changes is what somebody else is willing and able to pay.

Watching and waiting said...

Is it me or did anyone else notice the jump in the pending sales today on their PCS accounts? The flurry to buy now or be priced out forever reminds me of the US Government's cash for cars initiative followed by MSM touting that auto sales have rebounded and we are out of the woods. Even the builder on 1514 westall Ave (MLS® 286400) was able to sell one of his two side by side homes (other one MLS® 286549). Initially the ad read to the effect of getting in before the Mar 18, 2011 deadline (since changed for obvious reasons). Be interesting to see the sales numbers on Monday. Dead cat bounce?

Leo S said...

Actually I'm starting to see the average sale price/assessment dip below 100% which is rare for our market segment (SFH under 550k in the core areas). Last time that happened was in the dead months last fall.

SFH under $550k. Chart 3 graphs the running 15 sale averages of Price/Assessment, and price per lot or interior sqft (very volatile)

happy renter said...

Brace for 8% Higher Food Prices: TD

a simple man said...

I was just talking with my wife about this on a walk with our kids - gas up 16 cents in the past weeks, food predicted up 8%, electricity rates rising rapidly, etc.

These things, as much as changes in mortgage rules and interest rates, will push many over the edge of affordability.

My wife was also remarking that she now likes renting, with the freedom it affords us and the quality of life. Finally, my logic to her has really sunk in. Now I am really comfortable to wait until it makes sense to own.

Right now, it doesn't.

Just Wondering said...

Ä Simple Man", she now likes renting.

Although it was my wife who first extolled the value of renting versus owning, I find I have come around now and very much enjoy renting. We have the money to buy but realize it is not the time. But more importantly, the decision not to buy is being buttressed by the higher costs you mention. I believe people are realizing that the price increases in gas, food, utilities, etc. and the increased tax burden from government debt are inevitable and this realization is a big part of the slowing house sales. It's certainly not the biggest reason but it's part of the tipping point.

jesse said...

@hhv the irony of this post was well done.

Animal Spirit said...

Did anyone get out to open houses this weekend? I'd be interested to know how high the traffic was relative to the last few weeks.

Watching and waiting said...

the house on Sierra Place in Gordon Head had 2 vehicles in 2 hours according to my neighbourhood source.
I attended an open house on Alexander in Esquimalt.- nice location for Esquimalt, good bones to the house, very clean - I surmise by the colours and wood paneling, wallpaper, pink and beige carpets (in mint condition I might add) that a senior has downsized (the place was empty. But 649K - seems a bit of a stretch for a 50's bungalow in Esquimalt. Be interesting to see what it goes for in the end as it does back on to a golf course.

Marko said...

Monday, March 21, 2011 8:00am:

MTD March
2011 2010
Net Unconditional Sales: 438 789
New Listings: 987 1,719
Active Listings: 3,855 3,712

Please Note

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

a simple man said...

Doubtful we will reach last March's sales levels even with the dreaded mortgage rule changes pulling buyers from the future.

However, I am mostly shocked at the new listings and how low they are. This surprises me.

Perhaps stagnancy will settle for a while.

wally said...

US February home sales

Sales of previously owned homes fell sharply in February, setting the stage for steep discounting in the spring market.

The National Association of Realtors reported Monday that existing home sales dropped 9.6%, and the median price, $156,100, was the lowest since February 2002.

KateandJosh said...

@ Leo S: I'd love to see that data for core area SFH from $550K to 800K

Leo S said...

3993 Resolute Pl.
Assessed at $589,000, it was listed 49 days ago at $565,000, and has now dropped all the way to $499,000.

Definitely seeing more and more of these. The lower end of the SFH market already seems quite sick.. Wonder what, if any effect the changes will have.

I have the same data for 550-900k, unfortunately I don't have very much of it (only back to December) so it isn't nearly as interesting. I can publish what I got though.

Watching and waiting said...

LeoS. : re: 3993 Resolute Pl.

Perhaps it is not selling because it's not mapped out (those red dots on the street) on the MLS system and it did not show on my PCS account either. I've noticed a few homes that aren't mapped out on the MLS- is this just a slip of a key or is there a business reason for this?