MLS numbers courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.
Month-to-date May 2011 (last week's numbers in brackets)
Net Unconditional Sales: 254 (128) +126
New Listings: 771 (396) +375
Active Listings: 4,543 (4,417) +126
Sales to new listings ratio: 33% (32%)
Sales to active listings ratio: 9.2 (11.5% or 11 MOI) [estimated]
May 2010 totals
Net Unconditional Sales: 695
New Listings: 1,621
Active Listings: 4,521
Sales to new listings ratio: 42.8%
Sales to active listings ratio: 15% or 6.5 MOI
If current trends continue, and this coming long weekend plays out like most with a dearth of sales activity, Victoria is going to be hard pressed to break 525 sales in May. With inventory approaching all time highs (have we ever broken 5000 listings?) and sales nearing 15 year lows, I just don't see how prices can remain as sticky as they have been thus far in 2011. But hey, I've been wrong before and I'll very likely be wrong again in the future.
One thing is for certain, if spring 2011 was to be a good market in Victoria, it played itself out long before now. Sales volume is low, listings are high and any claim of a "balanced market" by the real estate
46 comments:
Dreamer of the week: 1509 Camosun St. For a measly $425,000 you get to own this 1000sqft cottage on, wait for, a whole 1600 sqft of land. Great alternative to condo living!
Condos at 1615 Bay Street are selling like hot cakes! Not even completed. A 2 bed 2 bath 854 sq/ft went today for $399,900. I guess people want to live in Fernwood..
An Asian Invasion? http://bit.ly/k3E3dI
Just wait. Once the HAM is tired of Vancouver, Victoria is only a short ferry ride away. Just ask Marko, he's gearing up for it right now.
How much can you rely on the Bay street condos listing information.
How can you have a 2 bedroom and 2 bathroom suite when its 642 square feet in size? The listing shows the living room at 63 square feet and the kitchen at 36 square feet?
How much reliance can you put on any of the data including the reported sale prices.
I'm genuinely shocked by how little the 2 bedroom places are in the 834 and Nova. Clearly developers are deciding to make teeny tiny places so that they can sell them at "affordable" prices.
"How can you have a 2 bedroom and 2 bathroom suite when its 642 square feet in size?"
Well, the building must have been designed by an architect (anything over 6,000 sq/ft has to be).
On their website they have the floor plans for the 642 square foot unit. Typically the firm that designs the building provides these for marketing purposes....
You can find the PDF for the 642 sq/ft plan at
http://www.novavictoria.com/pdf/202-302BW.pdf
So I would say I believe the information unless the architect is smoking something.
From the Globe and Mail:
New Mortgage Rules Crimp Home Sales
"I'm genuinely shocked by how little the 2 bedroom places are in the 834 and Nova. Clearly developers are deciding to make teeny tiny places so that they can sell them at "affordable" prices."
I would argue that the market is deciding on what they want and a successful developer responds to the market. The 834 is 90% sold - pretty amazing in this market.
The two bedrooms at the 834 are small at 720-740 sq/ft but they are one bath, corner units and pretty much all glass. I don't think it is as ridiculous as the sq/ft would indicate.
Now, 642 sq/ft 2 bed 2 baths is getting tight.
That 642 sqft floor plan looks like many of the lower end hotel suites I have stayed in. Minimalist living to say the least.
Yes, Marco, I'd agree with you -- the market is clearly supporting these tiny 2 bedroom units and developers are responding to demand. People don't seem to be able to pay $450,000+ for a large-ish 2 bedroom around here anymore, but I guess they're paying $300,000+ for a small one.
I guess I still, after all these years in this crazy market, just can't believe that condos/houses sell for what they sell for.
The developers advertise them as 2 bedrooms, 2 bathrooms because they know most people do not have an understanding of 642 square feet. A normal 2 bed, two suites in around 1,000 square feet or more. So these suites are between half to three-quarters the size of a typical two bedroom.
In the mid 1990's a contractor from Vancouver built condominiums on North Park and Wark Streets. He built and advertised them as two bedrooms when they were the size of one bedrooms. It actually worked for awhile as people compared his two bedrooms with other two bedrooms and on that basis his complex was a steal of a price.
But when the public could actually walk through the suites, the sales fell off and the developer went broke and stiffed a lot of the trades. The developer packed up his bags and went to Phoenix.
To give you an understanding of what 642 square feet is, go stand in a double garage - thats about 450 square feet. Add another space for a car and you have a triple garage of around 650 square feet. Now TRY to pace out 2 bedrooms, 2 bathrooms, dining, living and kitchen in that space.
Took a look at the floor plans. The furniture is not to scale. A Queen size bed will fill up a lot more of the bedroom area. Same with the representation of the living room furniture, its all under scaled to give you a sense of a larger space.
Note, there are no measurements on the length of the walls and the listings DO NOT say that you can fit a double bed in the rooms. You just assumed that they could.
Interesting stats JustWaiting. Thanks for sharing.
I'd say that the price drops indicated in your graphs are reflective of most of our observations.
With CMHC recuing the market in 2008, I guess I am always wondering if some type of govt 'intervention' will be coming if things get too dire. I hope not for all of our sake as taxpayers, and I also hope that the market just comes off 20-25% from the peak like it did in the 80's and then returns to balance so that our entire country is not creamed (RE crashes are catastrophic). The big wildcard this time I think is the boomer retirement wave and very tough times for the USA.
Me, I'm still optimistic that we will only see a 20-25% correction here, and I would say that today, we might already be 7-10% off the peak. I know that some places in the US have dropped to pre-1999 price levels, but I do think that although we have a bubble, it's not quite a severe as the US was.
In our basement, we have a 750 sq. ft/ suite where my father-in-law lives. The suite has one bedroom, one 3-piece bathroom, laundry facilities and a larger room that serves as kitchen and living room. A minimum 150 sq. ft. would be needed to add another small bedroom and ensuite bathroom.
I would suggest that 900 sq. ft. would be the minimum to have a some kind of comfort in a 2 bedroom + 2 bathroom suite.
Even Camden Green, the two bedroom condos start at 827 sq. ft.
"Don't build what they need, build what they can afford"
Its just not practical to stuff a 2 bed/bath into 642 st/ft. I remember when I was looking at pre sales a few years ago the latest scam was including the uncovered balcony space in the square footage.
But ever higher prices cover it all up until it doesn't. And then its the lawyers turn to get rich!
I am sure most have seen this Market place episode from 2008 but I consider it must-view for anyone considering a pre-sale:
http://www.cbc.ca/marketplace/condo_crunch/
Well, I see us going into a "foreclosure" type market, where the majority of properties are under duress. People who don't have to sell - won't, so that's the end of the move up market. New construction will come almost to a halt.
And house prices will fall to the level that an investor will have positive cash flow and receive a respectable return on the equity he or she has invested. Prices for a short period of time will over correct, simply because most real estate investors will be cash poor to take advantage of buying opportunities and lenders will be very reluctant to lend.
So, you do the math. Given todays rents, at what price would real estate have to fall so that you could get a 5 percent return on the amount of your down payment?
Ouch....... And that's not including the over correction in prices.
When you look at new condos in town you have to do a price/square foot calculation to determine value.
Using Marko's example above, you have to question why someone thinks $470 a square foot is a good deal when you can by new elsewhere for significantly less (under $300 per SF)
The real estate market is not rationale. Last year a 1004 sq/ft 5th floor, 2 bed, 2 baths, 2 parking spots, sold at the Falls for $404,000! Corner unit too!
They had units at the Bayview last year starting at $320 sq.ft. Only problem is people can't afford 1500 sq/ft x $320.
"The developers advertise them..."
Well, if I was the developer I would do the same thing. The unit has 2 bedrooms and 2 bathrooms so I don't see any fault in what he or she is doing.
It is up to the buyers' REALTOR® to educate their client and explain that 642 sq/ft is going to be tight and not the same as 2 bed 2 bath 900 sq/ft.
Jack, I agree with you regarding the furniture. When I bought my unit at the834 I noticed that it wasn't quite to scale.
The developer and agent are being factual in their listing.
It's the buyer who is assuming. Just because the floor plan shows a bed with two pillows doesn't make it a Queen size bed - there just two small pillows.
The real estate market is rational. It's the individual sale that can be irrational and that's almost always because the individual over bought - or under bought.
What someone pays for a property is Market Price what properties like it are selling for is Market Value. You can choose to pay more than Market Value for a property, but that doesn't mean that when it comes time to re-sell your home, the next buyer will pay over Market Value again.
But, most of the time Market Price is equivalent to Market Value.
I wonder how this question would fly with the agent selling those condos.
How many of the suites were bought by your company to get the exclusive rights to sell the remaining units? And will those suites be put up for sale again, once the developers suites are sold?
Of course, the agent does not have to answer those questions. When an agent has their home up for sale, it has to be disclosed that the owner is an agent. But if the agency has three condos in a pre-built they don't have to disclose that information to you.
Why not?
Because the condos are not real estate until legal title is registered at land titles. Since they are not yet real estate they are not under the BC Real Estate Act.
Tricky eh! Buyer beware and get yourself a good agent, like Marko, who is working for you and not the developer.
Mindset,
If you found the excerpt of the VREB stats interesting you might like to download the entire 18 page report. It contains a detailed breakdown of sold properties by price and area.
Complete report as pdf - click here
.
The furniture is not to scale. A Queen size bed will fill up a lot more of the bedroom area.
Which is exactly the complaint we heard from the buyers of the Olympic Village condos. A queen bed taking the whole bedroom so there's no room to go around it.
It's a combination of sleazy advertising, buying realtors not explaining the tricks up front, and buyers believing that they're dealing with professionals instead of salesmen, and thus not doing their own due diligence. No shortage of blame :)
If real estate is so good of an investment, why do developers have to resort to deceptive advertising?
How many of these condos will be sold to people not from Victoria? I wonder if prospective buyers are allowed to view the suite before buying? I wonder if the developer limits the buyer inspection to one time and twenty minutes?
You have more rights when buying a steam kettle from Wall Mart than buying a pre-construction condominium in Victoria.
Perhaps the developer should have to live in the smallest suite for a year to understand. Hard to truly comprehend when they drive home to their 5000 sq foot mansion near Prospect Lake.
Similarly, has anyone else seen that monster house being built on Nottingham Road? It is a monster - I would guess at least 6000 sq ft. Does not fit in. And I heard that only two people will live there. I guess it is their money, though, and they should feel free to spend it as they desire.
Lastly, check out this:
http://viewthehome.ca/blog/thoughts-on-this-market/vacant-homes-theyre-everywhere/
Once again, the developer could care less what she or he is selling - 642 sq/ft or 1642 sq/ft as long as it gets sold.
Look at Chard Development. The first building he built in 2006 had 3 bed units, 2 bed units, and a few 1 bed units.
Then he built the Juliet and had the hardest time selling the larger 2 bed units.
Then he started the834 which is mostly 1 bed, few small 2 bed. There are only 4 units out of 112 that have 2 bath that I am aware of!
90% sold out - not even finished.
I know with my father we have built duplexes from 1800 sq.ft to a custom home over the top 5,200 sq.ft.
We have to build what we think will sell.
"Perhaps the developer should have to live in the smallest suite for a year to understand."
It goes both ways. My father lives in a modest Fernwood bungalow and has built some high-end homes. Should we have our buyers live in my father's home for a year so they understand what it is like to live in a shitty 1950s home? I don't get it.
"You have more rights when buying a steam kettle from Wall Mart than buying a pre-construction condominium in Victoria."
Once again, it goes both ways. I bought a unit at the834 that is worth about 30-35k now then what I paid for it 2 years ago with only $9,800 deposit (that is a pretty huge return). Should the developer be entitled to a bonus if the building turns out nicer than you thought?
As far as not being allowed on site before final completion that is 100% fair. We had a pre-construction client once step on a nail (luckily didn't go all the way through the shoe).
Okay too much time on the blog today...need to get some work done.
@ Marko - I am sure that your father and mother's bungalow is more livable that the micro-suites for sale now.
I took a look at that site and one thing popped up that some home sellers on this blog should know.
Bridge Financing is when you have sold your home and bought another one and there is a conflict of dates where the buyer of your old house will not complete until after you have possession of your new home. You are bridging the gap in dates.
BUT, it is NOT getting financing on your new home without having a firm offer on your old home -that's buying two homes.
In the past, lenders have bent on this point to help you - don't count on this in the future. Properties are not selling like hot cakes anymore.
You may incur additional costs from your lender because of this misunderstanding, such as an appraisal to determine that the original home can be rented for enough money to cover the cost of ownership of two homes, legal fees on two mortgages, title searches, etc. All of these costs should be deducted from the agent's commission for providing bad advice.
And you may not qualify for the mortgages on two homes. Too bad if your offer on the new home was not subject to the sale of your existing residence. You may get out of it by losing your deposit. Or you may be on the hook for the difference in what you offered and what the home you were going to buy sells to someone else if the new price is lower.
As the market keeps cooling, expect more sellers to play hard ball on accepted offers.
I know of one person, that on the first of June may unintentionally own two homes with a combined value of 1.1 million dollars. He has no offer on his last home and takes possession on the first of June on his new home. He is not sleeping very well. The real rub is the agent double ended on the deal and got the listing on his old house. The agent called him a "savvy" buyer.
I agree with Marko - a lot of you are criticizing the developer for simply being smart. They have changed their product to meet the market's current demands.
Whether those demands are reasonable or not is up for debate, but if people want to buy a 650sqft 2 bed/2 bath then that's their loss.
"You have more rights when buying a steam kettle from Wall Mart than buying a pre-construction condominium in Victoria."
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I wasn't alluding to price. You pay your money - you take your chances.
But when what is implied is not delivered, that's a different story. That listing is factual in all respects and I doubt if any buyer would have a successful argument in the courts. That's contract law, you get what's written in the contract - not whats implied.
But, as a layman, I perceive this as misleading. If an advertisement for a steam kettle said it could boil enough water for 5 cups but in reality it could only provide 4.5 cups you can take it back for a money return.
The listing implies bedroom sizes for queen or double sized beds with enough free room to walk around. Would I get my money back?
As for not being allowed to preview the property before my deposit became non refundable. If I give 48 hours notice to the developer. I don't expect to show up at anytime and be allowed to wander through the site, but I do expect to see what I am buying.
Which brings up a good point if your buying a pre-built. You should be able to preview the suite several times, to allow for changes. There should be mutally acceptable times to view the suite between both parties. This should be in your offer to purchase. And at any time during the viewing of the suite, you find the property unacceptable you should be entitled to withdraw your offer at no cost to yourself.
And the courts would agree with you. Unless the floor plan layout constituted part of the contract to purchase - then that's different. Because the floor plan layout shows a spacious suite, not one that you have to climb over the bed to open a window.
FatJay, I agree, you can't criticize someone for just being smart. However, if you are a developer and you are providing "furnished" floor plans showing a "double bed" in the drawing where only a single bed could actually fit....then in my opinion, they are purposely being dishonest. I know if that were to have happened to me and then I found out after being given the true measurements that furnishings wouldn't fit, I would go to a lawyer if the developer didn't agree to return my deposit. I think I would have a good case. Their advertising was false.
I would disagree with you Fatjay, the contractor isn't being smart by changing his product to meet demand.
He's just changing his advertising.
To me it's an attempt to attract the higher priced two-bedroom market and all he's doing is splitting an average sized one-bedroom into two small bedrooms. His cost is only minor over building a one bedroom suite, yet he's going for a two bedroom price.
He understands that the market wants two-bedrooms and he's betting that the buyers won't notice the smaller size?
Really!
You won't notice that you have to open a window to flip your pancakes in the morning!
That you can't use your TV remote without hitting the TV set!
That the cat's litter box takes up the second bedroom.
That you have to lift the toilet seat from the hallway.
I give this complex a thumbs down rating on the re-sale market.
@Marco
I took a look at the floor plans you linked to. The ensuite bathroom is 5 ft x 7 ft. - the same size as the ensuite off my master bedroom in my house. However, my bathroom does not have a tub or shower - just a toilet and a 42" vanity.
How a 5 ft. tub can be stuffed into that space and still have a comfortable bathroom is beyond me!
For 12 years I lived with my parents on one floor of a bungalow, 2 bed, 1 bath, 810 sq/ft. Basement rented.
For 2 years I lived in a 10' x 8' dorm at TRU even had a hotplate, sink, and bar fridge.
When I worked at BC Childrens for 6 months I lived in a 410 sq/ft condo in Yaletown.
I bought a 533 sq/ft place at the 834. Moving in with my girlfriend and we are pretty damn excited to buy some furniture and make it our own.
I would have no issues living in 642 sq/ft.
YES, it is extremely small for a 2 bed 2 bath. However, it all depends on where you are coming from.
Sure you can live in that space. A lot of people live in a lot less and for a lot longer, like at Wilkinson.
You can't really say that the complex on Bay gets a premium for location. As for the size similar two bedrooms on North Park sell for around $230,000. One of the things this complex has going for it, is that its new. So you're paying an extra hundred thousand dollars over a 15 year old complex. Which is a lot of money for a premium that's going to disappear upon re-sale.
The marketing as two-bedrooms has a lot to do with getting those prices. And like the condo complex on North Park, once their built and people can walk through them, these condos will lose the premium. Heck buy a one-bedroom and put up a partition wall.
If real estate is so good of an investment, why do developers have to resort to deceptive advertising?
If real estate is such a good investment, why does a developer need to sell 90% of the units 3 years before they're built? Wouldn't they just sell the minimum, and hold the rest for later for easy mega profits?
People who buy places that small have a lifestyle that doesn't involve actually spending any time in them - no pets, no kids....the sad thing is, that at those prices will they have enough money left over to actually not spend any time at home?
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