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
Net Unconditional Sales: 572
New Listings: 1,524
Active Listings: 4,857
Sales to new listings ratio: 37.5%
Sales to active listings ratio: 11.7%
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
It's a funny market right now. All signs point to declining prices, but average prices are being forced flat, or up, by more sales volume of higher priced listings (from VREB):
As an aside, it seems odd to me that a city with over 4800 homes for sale has so few quality listings. There really are a lot of crappy product offerings these days. Sign of the times? Or do people just not give up on good homes?
Month-to-date May 2011
Net Unconditional Sales: 572
New Listings: 1,524
Active Listings: 4,857
Sales to new listings ratio: 37.5%
Sales to active listings ratio: 11.7%
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
It's a funny market right now. All signs point to declining prices, but average prices are being forced flat, or up, by more sales volume of higher priced listings (from VREB):
The average price for single-family homes sold in Greater Victoria last month was $628,462, up from $615,533 in April. The median price, however, declined slightly to $553,000 while the six-month average also declined slightly to $620,488. There were 26 single family home sales of over $1 million in May including one on the Gulf Islands. There were three sales in Oak Bay and one sale in Saanich West of over $2 million. The overall average price for condominiums last month was $328,345, down from $353,858 in April. The average for the last six months declined to $327,757. The median price for condominiums in May declined to $294,000. The average price of all townhomes sold last month declined to $466,845 from $480,621 in April. The median price also declined to $432,332 while the six month average rose to $447,581.I suspect the winds of change to blow stronger as the year progresses from here on in and we'll start to see a slight shift towards declining prices as June rolls into July, August and September. By the end of the summer, the total active listings will likely start a steady decline until next spring, perhaps slowing the negative price momentum that may build in the next quarter.
As an aside, it seems odd to me that a city with over 4800 homes for sale has so few quality listings. There really are a lot of crappy product offerings these days. Sign of the times? Or do people just not give up on good homes?
108 comments:
People do not give up good homes. But at some point ripping the crap stuff down and building a brand new one makes more sense.
People with money will always be able to afford the better qualify homes. Given the supply of better qualify homes is limited, that segment of the housing market in Victoria may continue to rise, thus skewing the average house price. So the median house price is a better gauge.
Oops - Posted this in last topic by mistake...
Average Prices with last month in ()
SFH - 628,462 (615,533)
Condos - 328,345 (353,858)
Townhouse - 466,845 (480,621)
Median Prices with last month in ()
SFH - 553,000 (556,000)
Condos - 294,000 (301,000)
Townhouse - 432,332 (460,000)
Median and average prices fell in every category but SFH average sales price. The only reason this was higher was due to the sale of 26 homes over 1 million.
VREB confirmed my press release predictions...
"There is plenty of choice now on the market for buyers with 4,857 properties available for sale at the end of May"
"It’s important to remember, however, that the first six months of last year were very active and sales activity subsequently slowed considerably over the summer and into the fall."
"Fimrite noted that while overall market conditions remain balanced, it’s important for sellers to price their homes realistically to attract attention from buyers. "
The slow, slow, slow--did I mention slow?--deflation of the Victoria housing bubble.
It only seems like a slow deflation in prices if you are trying to buy a house in town.
If you're trying to sell your house in Sooke your opinion would be a lot different. Or if you're living on Salt Spring Island, population 10,500. Where there are 229 properties for sale and only 13 sold last month. Where $500,000 gets you a home on six acres and not a "fixer upper" near the detox centre in Victoria.
Given the supply of better qualify homes is limited
Limited by what?
I don't think that Victoria is significantly any more different in the quality makeup of housing than any other city in Canada. To say that our prices are higher because we have a lot more crappy housing doesn't make much sense. Our quality of housing is just as shitty as Vancouver or just as wonderful as Windsor.
It's true that for a long time the selection of housing has been low in relation to demand. But that seems to be changing quickly now as homes stay on the market longer and the months of inventory build.
The problem we have today, is not finding a home to buy - its getting a buyer for our current one. Or I should say finding a buyer that will pay what we think our home is worth - otherwise we'll just find a renter who will keep it in as good condition as we have so that in a year, we can boot them out and sell the home for more. NOT
Oh, by the way the people that want to rent my friends house are demanding a three (3) year lease or they walk.
Things that make you go hmmmmmm.
You see several other people in his neighborhood have slashed their price by $25,000. So two months ago he looked like a bargain, today he looks like he's trying to gouge buyers.
Pride goeth before the fall.
It's a bitch following a market down.
The slow, slow, slow...deflation of the Victoria housing bubble" is about to pick up speed 'big time'. 2008 part II is coming soon to a municipality near you. The difference this time is, there are no white horses left to ride to the protagonist's rescue.
I am looking for a place to rent and the quality of places out there are shite. I am sick of being in a basement suite...oh wait, sorry "ground level" suite. The rent prices are ridiculous and so are the set up of many of the suites. How many people/tenants can we jam into one house seems to a common theme.Rezone for more condo's -- would that help?I dunno, all I know is that Alberta advantage gets +1 for the renting issue
I wonder if all of the 'crappy' houses out there are just buyers getting picky... mainly because they can be now that the shine is coming off RE.
A crappy house a year ago was just one painless HGTV makeover away from a dream house (and a guarenteed price increase). Today, stand in front of big aging house with single pane windows, an old roof, an oil furnace, and a bunch of square feet you don't need and do you see possibilities? or a money pit? Would putting a new kitchen in it change your impression?
Or how about a tiny condo with no storage, no views, in a building full of rentals with granite counter-tops?
In either case, you can put some high end rims or a new coat of paint on a Lada, but it's still a Lada.
Nothing new here though, not sure if anyone here remembers the 90's, but back then, you'd put a new kitchen in knowing full well you'd lose half your money by doing it. You did it for your own reasons, and only reckless people would use credit to do it. Speculation? That was for developers with deep pockets.
My guts say the '90s are upon us again. People are going to buy housing mostly for what it 'is', not for what it might 'become'.
Just finished a quick cut and paste job on the VREB press release. You can read this in-depth article by clicking here
If you are over the 20 article free viewing limit you will need to subscribe to online access for only $9.95 a month.
Advertisers don't want reader opinions or feeback so comments have been turned off for this article.
Ride the Vancouver Real Estate bubble roller coaster ride from 1975-2010!
http://vimeo.com/groups/114/videos/11211712
Priceless! We need one of these for Victoria. You can make one here: http://www.nolimitscoaster.com/
Roller Coaster ride based on this graph
That video has been posted like 10 times on this blog.
Lets take a look at year-over -year prices for May.
Average Sales Prices with May 2010 in ()
SFH - 628,462 (646,483)
Condos - 328,345 (324,005)
Townhouse - 466,845 (430,047)
Median Sales Prices with May 2010 in ()
SFH - 553,000 (594,500)
Condos - 294,000 (290,050)
Townhouse - 432,332 (417,750)
B.C. growth to slip slightly: BMO report
Lots of new listings piling up, but wow are they poorly priced. So may of them are actually re-lists, but I can't really keep track there are so many.
2245 McNeil is now on MLS, but at a probable $170k over market value. Small 2 bed, 1 bath house on a small lot/busier road. They are probably hoping for that "one buyer" who has no knowledge of the local market.
And 981 Tulip breaks through the $544,900 barrier and reduces by another $5k. This is at least their third time listing and keep seesawing on the price. Spring is almost over, time to get agressive on that price if you don't want that house sitting empty for another year.
Acreage near the interurban campus - Spring Rd. (3800 sq. Feet and 3 acres) vs. Brooke @ St. Charles (3100 sq. Ft. And an 8700 sq.ft lot) $950,000 vs. $890,000 asking prices....
Which is the better value?
I think many homes in Victoria were poorly built in the 60s, 70s and 80s. I wonder what these homes are going to look like in another 30 years unless major renovations are done.
We just found out our 20 year old house has "fireplace rot". Apparently all the homes built in Broadmead at that time are having the same problem.
I look at our house as a 20 year old money pit.
A house that cost $25,000 to build in the 1960's is still around today. That's not bad construction.
I doubt that many of the homes built today will be able to make it to 50 years. Today's homes cost ten times that amount and the man made materials will just disintegrate. Vinyl windows will fall out, plumbing pipes will leak and the staples will pull out of the $40,000 particle board cabinets.
God may have created the world, on time and on budget in 6 days, but its the maintenance that's really costly.
Just took a drive along Beach Dr. Wow - lots of high end homes and condo's up for sale. Where are all these people planning to move to?
I am not sure about today's construction but my house was built in 1971. It has copper plumbing and wiring. It is bolted to the foundation. The lumber that I have seen (joists and rafters) is knot-free first growth fir. Sure the exterior walls are 2X4 construction with tar paper but I am not living in a sweaty plastic bag full of particle board fumes. Oops did I say that? Sour grapes perhaps.
@Phil - these folks that are selling mansions on Beach Drive know a thing or two about money and about markets. They are getting out as they know the time is right. They will rent a big condo or house and let someone else absorb the loss only to reinvest when the market has bottomed out.
@ a simple man - I disagree. If they were so smart they would have sold a couple of years back when it was still a sellers market. I think they are selling because they are getting financially squeezed. Retired folks can't safely make 5 or more percent on their savings anymore and the stock market is pretty scary for anyone with a short time horizon.
And if the wealthy are so bright, then why are there so many $1-2 million home being bought right now? Someone or other will buy what the folks on Beach Dr. are eager to get rid of. Whoever has that kind of money and is buying right now isn't necessarily all that wise...
Good point, Anton. Maybe a bit of both?
I agree, Happy renter - those buying the mansions right now are not that bright.
If you look at Seattle, the high end houses actually did better over time, it was the low and mid that took the biggest hits percentage wise.
Also, if I recall right, Thomas Sowell did a study on RE investment using a diverse sizeable long-term RE sample and determined that it’s the private large properties in development-restrictive areas (like Uplands, maybe Brentwood Bay, 10 mile, etc), that are the best places to park money in RE. He also noted that they perform quite a bit better over time.
If these sources are relevant, owning two 700K houses in Oak bay is more dangerous than owning a single 1.4M home with the right characteristics.
No real point here, just food for thought....
@Mindset
Interesting observation about private properties in development-restrictive areas. In 1968, my father bought Ten Mile Point home ... I have observed how its' value has fluctuated since then. Basically, the value has the same changes as with with the Greater Victoria housing market - but the highs and lows are not as extreme. Whereas the value of my West Saanich home increased 250% between 2000 and 2010, his home increased by about 175%. Between 1981 and 1985, the average house in Victoria dropped by 25% from $127K to $94K. His house only dropped in value by 10%. Perhaps these old houses on huge lots can better withstand the current bubble? Time will tell ...
Good personal example DavidL
I'm sure that 'exclusive' properties are not only less available to speculators in a bubble, but are also less likely to be sold because of financial duress in a correction.
Now, the more 'commodity'-like RE of middle-class Joes and Janes? Unfortunately that's where most of the speculation was focussed over the past decade, where the buyers 'choice' is the most abundant, where the highest amount of personal debt lives, and where a reversing trend is going to be the greatest.
Lot prices are at all times highs despite the soft market.
Land in the core will always be at a premium.
Now we just have to figure out where the core is?
I just heard that the HAM (hot asian money) is slowly moving into Victoria.
Hope so - then I can sell my house. Moldy chimney and all.
"Land in the core will always be at a premium."
Absolutely!
http://i.imgur.com/x2NEK.png
couldn't resist
Well I don't know if the HAM money is moving here, at least not directly. I have it from a few very reliable sources that a fair # of those high end homes are actually going to displaced Vancouver money. I don't know if this is just a flash in the pan, or yet another crazy trend.
Hmmm..No answers for that bomb I just dropped. I have been holding it for a while.
HAM is on its way. I heard that earthquake prone waterfront is especially in demand.
Marko Said: Land in the core will always be at a premium.
...I think you forgot to add 'compared side by side with non-core prices at the same point in time' to that statement. Then I'll buy that for a dollar.
Prices everywhere go up, and everywhere go down. In some bubbles, the core is actually where all of the speculation is focussed and the risk is the greatest (i.e. Vancouver, or maybe Vegas?). It's also important to note that some entire cities decline heavily because they lose their competitive edge or desirability in a downturn (i.e. Detroit, Florida).
Not sure if any of this is relevant here in Victoria, just some added thoughts.
Marko - I just drove by your new listing on McNeil - good for you. You are becoming the first choice of the Oak Bay FSBO crowd.
You know the real estate market in market in Victoria is tanking when the folks on KIV start discussing foreclosure properties.
Click here for KIV discussion
I doubt there is much HAM making its way to Victoria. A lot of the Chinese population in Victoria has been here for generations. Victoria doesn't have the same attraction as Vancouver for the nouveax riche Asian immigrant community.
On the other hand, I gather than Canada is an excellent place for foreigners to purchase real estate due to the competitively lax tax and residency requirements.
Banks try to goose the market with another .1% drop in rates. This is the 3rd in the last three weeks.
Click here for story
I suspect it is too late to have much effect - we are past the peak spring sales season.
I think our two week sales surge is cooked. Back to normal or even slower levels on my PCS accounts.
Yes...very slow on my pcs.
From Garth Turner's website:
"Hmmm. Looks like Victoria may provide a model. The same number of houses just sold in that city as way back in 2000. But the average SFH now costs $628,462. The average household income? $76,625. It too, screwed."
@EagerBuyer(Not)
The banks seems to be working overtime, finding new ways to indebt people. I was just signing into my PC Financial site and was offered the following:
Whether you’re looking to renovate, travel, invest or buy a cottage - it’s perfect for you ... Get a low variable interest rate based on CIBC prime, currently at 3%. Allows you to borrow anywhere from $25,000 up to 80% of the value of your home.
Just what I need ...a 400K line of credit! Hmmm ... I wonder if I should put stainless and granite in the kids bedroom ...
For the past week, new listings and price changes are picking up on my PCS (SFH, 3 beds, 2 baths - minimum) in the $350K to $650K range.
HAM investors aren't here. If they were here, we'd see them swarm over presale condos, newer condos, and well-maintained luxury SFH. They buy them quickly but rarely move in. That hasn't happened. Look at stock we have on the market that isn't moving.
While HAM isn't here, I have seen mainland Chinese (new immigrants) in Victoria. They tend to be students attending post-secondary or families living in the Uplands area.
While HAM isn't here directly, they still have an effect. A lot of Boomers are getting paid off big time by HAM in West and North Van right now. Victoria is a good option for them to retire or semi-retire and still be close to Vancouver.
Do those high end homes hold value better than the Gordon Head box?
Nope.
Like the recent sale of a home in the 9000 block on Lockside with 65 secluded feet of waterfront. Bought in November 2006 for $710,000. Then updated with wood floors, bathrooms, paint, etc.
And just sold for $760,000
Then it must be location that is important - right?
Nope
Like a condo in Fairfield on Rockland Avenue. Bought in October 2007 for $318,000.
And today sold for $309,500.
Today there are 131 homes for sale in Victoria and in Oak Bay (one quarter the population of Victoria) there is 107 listed for sale.
The difference in prices for homes in Fernwood, Fairfield, North Oak Bay and Henderson is close to none. This is not a good thing. There is a price ceiling to what the general public can and will pay for a property. As each of the neighborhoods reaches that ceiling inventory builds and builds while buyers are pushed out to areas like Hillside and Mayfair. At some point, the majority of prospective buyers just say no - and the agent's phones stop ringing.
Rhino, has a point. Has Victoria become a suburb of Vancouver?
The airline industry is a nice example of how you can live in Victoria and work out of Vancouver. Pilots can travel free from Victoria to Vancouver airports that's a 30 minute commute to work a couple times a week.
Some who work in the oil industry contract out of Victoria to work on the rigs. In this case they travel once every couple of months to and from Victoria.
Others work on the internet and don't have to travel.
But for most of us, it is just not economically feasible to work there and live here.
Just anecdotally, I currently work with 3-4 people that live in Vancouver and work during the week in Victoria. That might be a comment on job availability more than the RE market though.
"Marko - I just drove by your new listing on McNeil - good for you. You are becoming the first choice of the Oak Bay...."
Look for some nice listings in the Uplands coming up!
After 2.5 years on the market, multiple agents and a starting price of $969k 2060 Ayum Rd finally sold for 685k!
Have to keep watching that condominium market, because that is where the fall will start and more specifically in the westshore. It's when seller's start to accept offers less than what they bought, shows the desperation creeping into the market. That's a BIG psychological barrier to cross for most people to sell for less.
For example
The sale of a condo on Brookside in Langford for $252,000. Bought in December 2007 for $264,900
Or a condo on Dunford that just sold for $320,000, but bought June 2007 for $327,000
Sure, its just TWO (2) condos - now.
The housing market is as much about mass psychology as economic factors. Soon even non blog readers will believe that house prices are on the way down. When that happens buyers will stop buying. That is exactly what has happened in the outlying areas (Sooke, Saltspring, etc,). Sure, properties will still sell, but they will be the ones setting the new benchmark for prices on the way down. there's no panic yet (among sellers) but its coming. Its not the end of the world just a natural healthy correction that is a few years overdue.
Just Jack hit one out of the park with his post on condo owners selling for less than they paid. Some owners need to bail and are taking what they can get....
Last month condo sales were down 39% compared to May 2010 and listings are up 10%. The months of inventory was balanced at 5 last May but is now sitting at 9 and will only get worse as sales taper off this summer.
You can see the sad stat story by clicking here.
Average prices have traded around 325K (click here) for several years and I think it is safe to assume that buyers are now getting more square footage and amenities at this price level.
Have condos in the core started selling for less than what was paid for them a few years ago? Or for around the same price? I've heard a few anecdotal accounts of that happening to people who bought in 2007.
It all depends.
One of my clients bought a condo downtown for 300k. The seller paid 324k back in 2006.
However, one of my clients also sold a condo for 332k and paid 275k in 2007.
Sure are lots of condos out there. HAM money is not coming to Victoria, and won't until we get nonstop flights to Asia.
Is the real estate party over?
The tale of one Gordon Head house.
In May of 2004 a detached house on Oakview in Gordon Head sold for $530,000. Four years later in May 2007 the same house re-sold for $700,000 showing an increase of 32%.
Now four years later again, the same house has sold for $750,000 for an increase of 7%.
Suddenly real estate is no longer a place to make money over the short term in Victoria.
and drove by another Marko (MJM) listing on Lansdowne last night (former FSBO as well).
I think we must be getting close to the collapse. The signs are out there.
Just Jack,
The house increased in market value by 50K or 7% but the owner did not make a profit.
At the time of purchase they paid 12K in property transfer tax and around 1K in legal fees. To sell they paid the realtor 25K and another 1K to their lawyer. That adds up to 38K leaving 12K. Property taxes would have been 12K over 4 years leaving zero profit.
Property taxes would have been 12K over 4 years leaving zero profit.
You forgot 2000*12*4 = $96,000 worth of free rent. That's part of the profit.
Just finished watching "Inside Job"-- (wiki) Inside Job is a 2010 documentary film about the financial crisis of 2007–2010 directed by Charles H. Ferguson. The film was screened at the Cannes Film Festival in May 2010. The film won an Academy Award for Best Documentary Feature in 2011.
It is clear that the housing bubble is just the tip of the financial iceberg.
You can catch it here... http://tinyurl.com/3pk95fy
Inside Job is a political movie. Take this from Wiki:
"A major theme is the pressure from the financial industry on the political process to avoid regulation, and the ways that it is exerted. "
This is completely backwards. Starting with the Community Reinvestment Act and moving through steadily increasing pressure from Fannie and Freddie the banking industry was told to increase risk in order to get the poor into the property market. At the peak, the govt-backed entities Fannie and Freddie held or guaranteed more than half of all sub-prime debt.
The industry was highly regulated. The problem was that the regulators in the SEC and the politicians in Congress -- ie, the regulators -- thought a housing bubble served a worthwhile political end.
Matt Damon's involvement in a movie is really your first clue you're going to get served some left-wing Hollywood mush.
Leo S said:
You forgot 2000*12*4 = $96,000 worth of free rent. That's part of the profit.
There is no profit on this deal!
You forgot to include the 4 years of mortgage interest payments that are lost forever. Assume that they had a mortgage @ 4% which was a good deal four years ago. 4% of 700K is 28K per year times 4 years = 112K. So instead of a profit they lost 16K more than renting! But at least they got to spend a bunch of money painting and landscaping for the new owners.
You forgot to include the 4 years of mortgage interest payments that are lost forever.
Alright, although I think $2000 in rent for a 700k house is being very generous. So it's about a wash between renting and buying that place.
Look at those condo discounts and previous sale dates. If I didn't know any better I would say these sellers needed a certain price to cover their debts, which includes some principal paydown and selling fees. As prices fall more, who will be the marginal seller?
And could it be these sellers wanted at least no paper loss? Buy 330k 20k down, 310k mtg, pay down 30k, 280k outstanding, sales fees 15k, means they need 295k sales price for nonnegative equity. If they want dp back that's 315k.
The stages of compulsive flipper's state of mind:
Up big. I'm brilliant!
Up some. I'm still at decent cash on cash return.
Flat. I can still get out. Oh well.
Lost dp. I better sell now before I lose my car.
Negative equity. F*ck!
Craig Noted: (it was about)getting the poor into the property market ...the politicians in Congress -- ie, the regulators -- thought a housing bubble served a worthwhile political end
Good points there Craig. It is important to question where information comes from. We can't live in a democracy if we believe everything we are told or simply throw on the blinders and hum spoon-fed mantras to ourselves while our interests are being manipulated.
And yup, that goes for us current ‘bears’ here too.
The noble cause of 'creating low down payment long-term mortgages' was sold as an intervention for the working poor.... Every hard working family deserves a home, No? Who got hurt? The working poor. What did they end up with? A bigger set of poverty handcuffs. The interesting question is, who gained?
In Canada, ever asked yourself why if we were so fiscally responsible and in such fantastic shape in Canada in 2007/2008, that our govt relaxed lending to include zero down 40 year mortgages, and created big loopholes for buying second properties?
The interesting question, who gained? For one I would say the Harper govt. They made it 'look' like things are different here and could claim good leadership. Second, I would say the banks. They leveraged people to the highest levels in our history with the risk backed by the taxpayer. Risk is still so low to banks, that they are reducing rates and seeking increased lending during the obvious risky time we are in right now.
The problem is, the whole time, we were borrowing from our future and our children’s future...
...and many of us were happily humming to ourselves 'it’s different here'.
"Inside Job" clearly displays how the banking industry and government regulators were one and the same. Financial executives moved freely between the two and loyalties were/are apparent. Yes the movie is political in the sense that it deals with the affairs of government, however, there is no political party favoritism shown.
The movies illustrates how mortgage products were sold (to consumers), packaged, insured, rated and resold to investors. In most cases all risk was forwarded to the next level allowing and encouraging more product to be sold without concern for the consumer (i.e. sub-prime loans, AAA rated investment products etc). Was this in the government, industry or consumers best interest? I suppose that depends where you stand - it is clear the IMF didn't think it was a good idea.
What is the take-home? How about relating it to CMHC's $500+ billion dollar insurance of mortgages and mortgage backed securities? $500 billion is over 1/3 of our GDP (twice the GDP of Greece btw). Can you see any parallels? What about tax payer liability for products sold by private industry? To throw some numbers out there the US bank bailout of 2008 was $700 billion. The government takeover of AIG cost $150 billion.
Is the movie leftist? What documentary isn't? Would you prefer a narrator other than Matt Damon -- maybe they could call up Charlton Heston from the grave?
"The movies illustrates how mortgage products were sold (to consumers), packaged, insured, rated and resold to investors."
Banks, like any company, are in business to make a profit. Lending to the poor and uncreditworthy doesn't make you money. But then the govt stepped in and literally hauled bank execs before Congress with accusations of redlining and said relax your risk controls. Then they goosed Fannie and Freddie with billions of taxpayer dollars to take this risky debt off the banks.
If the movie wanted to talk about collusion between govt and industry they could look no further than Chris Dodd, Dem head of the Senate Banking Committee, who took sweetheart mortgage deals from Countrywide even as he happily shaped the industry in favour of Countrywide.
Barney Frank, Dem head of the House Finance Committee, told Fannie at the peak of the bubble to "roll the dice."
Jim Johnson, former head of Fannie, parachuted into the job took home $21 million after fraudulently misstating the books. He was later selected by Obama to vet his VP choices.
The collusion runs deep but not the way Damon and his ilk would have you believe.
A number of large condominium towers are being launched this summer. Bossa is gearing up to launch the new Bayview tower -> http://www.bosaproperties.com/promontory/
I am planning on buying a studio or one bedroom unit pending attractive pre-sale prices. I've narrowed it down to the Jukebox, Mondrian, or the Bossa tower.
What do you guys think - will I lose my shirt?
Hi Marko - if the condo market is currently suffering and there are a substantial number of new buildings being built, with little or none being demolished, how can this end well?
How did the Greater Victoria real estate market do last week?
May 29 - June 5
- 362 New listings
- 259 Price changes
- 128 Pending sales
Previous weeks:
May 23-29
- 280 New listings
- 249 Price changes
- 117 Pending sales
May 16-22
- 315 New listings
- 213 Price changes
- 156 Pending sales
May 8-15
- 391 New listings
- 231 Price changes
- 124 Pending sales
source: local agent
if the condo market is currently suffering and there are a substantial number of new buildings being built, with little or none being demolished, how can this end well?
The possible saving grace here is good pre-sale prices. But if there is a downturn then the risk of those buildings never actually being built is far greater than it has been in the past.
LOL at 365 Arnot Ave
From the description:
ALERTING ALL BUYERS! REDUCED BY $33,000 FROM $ 548,000 TO $ 515,000 THIS NEW PRICE IS VALID ONLY IN EXCHANGE FOR AN UNCONDITIONAL OFFER ACCEPTABLE TO SELLERS BY 05/16/11
All the bravado was for nought, as 2 weeks past their deadline they take an offer for $485k. Assessment at $518k.
JustWaiting - thanks for the stats - what are the total listings now?
From the Globe and Mail:
Why the US housing market will keep falling
Question for fellow renters out there: When you are searching for a new place to live, what websites do you use to find places? I have been searching craiglist, used victoria and kijiji -- are there any others I am missing?
Check out UVic housing and the rental agency sites (although they tend to heavily use the sources you have cited).
from Happy Renters link, near the bottom
Mr. Baker believes it might have something to do with the combination of low interest rates and Canadians’ tendency to take out mortgages with terms of five years or less, unlike the 30 years that is normal in the U.S.
“My theory is that home prices in places like Canada are acting like bonds,” he says. Just as bond prices shoot up when interest rates head down, so Canadian home prices have rocketed on the back of low mortgage rates, because our shorter-term mortgages make us that more interest-rate sensitive than Americans.
The corollary, of course, is that there will be big losses when mortgage rates inevitably head upward. “I would be wary in markets like Canada. In fact, I would be very, very wary,” says the Man Who Called the Last Two Bubbles.
Interesting. I didn't know US mortgages were longer term than ours (which creates market stability). I wonder if they can hold 'open' mortgages down in the USA like so many here have?
@ Mindset - yes, the Americans have it pretty when they can lock in at the lowest rates for 30 years. And they still got clobbered. Another reason why Canada RE will fall.
The other way to look at that article is that prices won't tank until interest rates rise. Most people in the know don't see a significant rise for the next 5 years due to the US economy.
But the buyers who got clobbered in the US weren't the ones who had the conventional long term fixed rate amortizations.
Rather it's the ones who went for zero-down, neg-am, teaser rates, etc. But since prices are determined at the margin... you know the rest.
And of course everyone buying today in Canada is effectively getting a teaser rate because rates have nowhere to go but up.
Will Marko lose his shirt? Who knows. I do know you would be far better off with a SFH with a suite than 2 condos any day.
@MC, check out Padmapper.com -- it catches a few sites other than the big three you mention. In the end though, I was happiest with an RSS feed of Craigslist and Used Victoria; that was enough.
omc said: The other way to look at that article is that prices won't tank until interest rates rise
That seems logical, but without the ability to keep decreasing interest rates, the market would run out of steam, no? And if our RE markets did gather too much momentum and 'overshoot' because of human emotion and speculation, wouldn't the markets naturally correct when the rates just start to hold steady and human emotion and speculation cannot be maintained?
I had another thought, since you can write of your interest payments on a mortgage in the USA, their system has a interest rate change buffer built right in. The more interest rates go up in the USA, the more you can write off, reducing the actual impact of interest rate increases on discretionary income and the economy. In Canada, with shorter mortgage lock-in terms, and no interest right-offs, we not only feel interest rates effects more quickly, but feel the full brunt of them.
If both of these points make sense, I predict that we will have a two-phase correction. The first will be a return-to-baseline correction of human emotion and speculation when CMHC lending and rates flat line (likely happening right now), and a second (and likely more serious) correction will occur when the interest rates start to go up.
I know a number of people over the past year who have sold their house and are now renting. Most of these people were not opting to "cash out" at the height of the market, but instead were already finding the base variable interest rate hike(s) from 2.25 to 3.00 percent were making them financially uncomfortable. As one fellow put it, after paying for the mortgage, utilities, food and gas for his car - there was nothing left over for savings, retirement or even for contingencies.
So what happens when interest rates climb to 4 or 5 percent? I guess we'll find out soon...
DavidL... The interest rate for a preferred customer is about 2.1% on a variable these days.
Mindset,
We might have to accept that there might be a third method of correction, which is a long flat market until inflation catches up.
I believe that some parts of the market have already corrected significantly. Houses that need work in the +$800k range in prime locations (Fairfield to Queenswood) have dropped. Other parts of the market are probably at an all time high; Fernwood, Landsdowne slope, north Oak Bay and Henderson.
We still have monied people looking to buy; we have 4 people on this board looking for the same Oak Bay house. We still have outside influence in this market, just now it`s a bit different. I have been seeing people that sold out of Vancouver at the open houses now. I have heard that they are responsible for the +1M part of the market that is in the upswing.
This one isn`t done yet. The market has dropped a bit and many sellers are in denial. Some parts will drop (Westshore and all condos), while some parts are actually going up.
Sorry to sound pessimistic, but as a longtime bear I have heard the sky falling many times.
omc - thanks for your insights - they help to understand all the issues. I agree that a long, slow flatline into inflation is possible, but I cannot see rates holding as they are for more than a year. But then, I can't understand how the people steering the ship allowed us to get here in the first place.
I can see up to a 1% rise in interest rates in the next 18 months. That's it. The US economy, heck the world economy, is in shambles and won't tolerate more. If Canada unilaterally raises rates we inflate the dollar. The housing market is also already where the gov't wants it; not rising.
How long have we been saying interest rates are going up? Rate increases are just around the corner, yet again.
omc - I agree with the 1% increase or so in the next 12-18 months, but I think this may be enough to seriously stress a lot of people when combined with everything else that has gone up.
You are right about us saying that interest rates would go up for a long time - but we were right in the last yr in that it rose 0.75%.
Who knows what the future holds? I just know that I won't buy into Oak Bay at these prices. Instead, plunge into the other side - creating capital.
If things are beginning to tank what are the chances the BOC actually LOWERS the rate aka '08? They could make several .25 drops and try to extend the party a few more years.
@ Phil - I think the BOC is uncomfortable being as low as we are now and are just champing at the bit to go higher, not lower.
However, as I intimated before, I am not sure of anything when it comes to national monetary policy. Kind of get the sense that you and I don't matter much in their decision-making.
A simple man,
The posted variable rate may have raised, but now the banks are offering higher discounts. There hasn't been much of a change in reality. Fixed rates are now decreasing again too. I don't think we are done with the low rates any time soon. I have also read a few papers that question if we are ever again to see what we used to call normal rates.
I certainly wouldn't buy in Oak Bay now as most areas have no value what so ever. North Oak bay used to be at least $100k lower than south; it just isn't as nice. Now it is every bit as high, if not higher. In Landsdowne at the 2007 peak you could buy a decent, larger 50s bungalow in a good location, in need of updating for the low $500k range. That same house would be in the mid $700k range now. South Oak bay has actually gone down in the same period. Henderson has just gone bizare for prices. I see bubbles in these locations.
If you look at landsdowne and Henderson, they just aren't that nice of locations. You aren't in walking distance to shops, you aren't close to the water. Heck you are surrounded by busy roads. I compare these places to not-so-nice areas of Gordon Head.
If you go to just the other side of the university (this is not a long way) things get much better. You have better walking neighborhoods, close to the water, newer nicer houses and gasp-lower prices. But it doesn't say Oak Bay in the Arbutus neighborhood.
but as a longtime bear I have heard the sky falling many times
I don't see the sky falling... never have. I see a 20-30% correction, which based on the climb, isn't a collapse. But it is a correction.
The bears might be wrong, but there is a lot of evidence against the current prices staying where they are. These include:
- CMHC tightening
- Interest rate increases
- Canadian debt levels
- Decreasing global perception of Canadian housing as an investment (other than HAM)
- Good alternatives to Canadian RE investment (USA, well, and everywhere else. Want to retire on the Greek Islands?)
- Our general global competitiveness
- Our strong Canadian dollar (which is very hard on export countries)
- The income to RE ratios in some of the 'hotter' markets
- Investment income to RE ratios in some of the 'hotter' markets.
Things that could make Victoria RE hold steady?
- Other cities cashing out and moving here (Vancouver seems likely)
- Some sort of banking or government intervention.
Feel free to add your thoughts if I have missed anything.
@ omc - I agree that pricing in Oak Bay makes me scratch my head at times and I also agree that there are few houses around here that really should be left standing. Buying a 80-110 year old house in a moist environment is a recipe for disaster. A lot of the houses here are tired and need to be replaced. Or you can suffer a thousand repairs.
Monday, June 6, 2011 8:15am:
MTD June
2011 2010
Net Unconditional Sales: 93 625
New Listings: 263 1,503
Active Listings: 4,651 4,730
Please Note
•Left Column: stats so far this month
•Right Column: stats for the entire month from last year
Bidding war on 1960 Cochrane St - Looks like an unconditional offer yesterday for 490k.
simple man,
I don't just question the prices based upon the structure for Oak Bay, I also question the prices baased upon location. If it just has to be Oak Bay, and you are looking in North Oak Bay, LAndsdowne or Henderson, I have to ask you why.
Mindset,
Vancouver, and as a result Victoria,avoided a bigger correction in the 90s when the national market fell considerably because of Asian money.
omc - I totally agree that the land-locked neighbourhoods of Oak Bay with limited walking amenities should not hold the premium that the neighbourhoods close to the water and with villages do.
Arbutus is really nice. Unfortunately, my kids love their schools here and I can't move them again, so I am very committed to OB. Not willing to commute.
@omc wrote: The posted variable rate may have raised, but now the banks are offering higher discounts. There hasn't been much of a change in reality. Fixed rates are now decreasing again too.
Discounts on the variable rates have ranges from 0.4% to 0.9% over the past few years. When the bond rates increase, the variable rate discount decreases.
In 2005, I negotiated prime - 0.8%, such that in June 2010 I was till paying 1.45%. Alas in July 2010, the best rate I could find was prime - 0.6%, such that I'm now paying 2.4%.
If I were overextended, that 1% difference would make a difference!
omc said: Vancouver, and as a result Victoria,avoided a bigger correction in the 90s when the national market fell considerably because of Asian money
It was Hot Asian Money back then? That's interesting, Hawaii completely crashed with the Asian crisis. And I've seen statistics that this is the whitest city in Canada, I wonder where did all the HAM go? Did they cash out? Do they still own here? I don't know of a single HAM house here.
Even if the historical round of HAM is true, the last correction did see a 27% peak-to-trough correction in Victoria (when a lot of other places dropped 50+%.)
...So, a 20% to 30% correction seems likely, but I don't expect a end-of-days collapse.
But for those that find housing here expensive right now and are looking to buy in places like Oak Bay or Fairfield, a 20-30% correction probably represents a substantial amount of money.
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