Monday, June 6, 2011

Monday market update

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 June 2011
Net Unconditional Sales: 93
New Listings: 263
Active Listings: 4,651
Sales to new listings ratio: 35%

June 2010 totals
Net Unconditional Sales: 625
New Listings: 1,503
Active Listings: 4,730
Sales to new listings ratio: 41.5%
Sales to active listings ratio: 13% or 7.5 MOI

137 comments:

a simple man said...

thanks Marko. Listings are down a bunch from the end of May - lots of people must have had listings expire. I wonder if they will relist or wait for what they think will be a better selling environment?

JustWaiting said...

simple man,

Here are the stats for the period May 29 - June 5:

- 259 Price changes
- 128 Pending sales
- 73 Canceled listings
- 163 Expired listings
- 362 New listings
- 17 Back on Market

You can see that the number of expired listings was high but so was the new listings. The old "relisting scam" is alive and well.

a simple man said...

Thanks JustWaiting - I appreciate your in-depth stats a lot.

JustWaiting said...

What is happening with single family homes (SFH) in Greater Victoria?

The average price of all single family homes in May 2011 was 628K. In May 2010 it was 646K. However this stat, that VREB releases every month, includes all categories of SFH: typical, waterfront and acreage. Here is an analysis of all three segments:

SFH stats - click here

Readers will note that the average price of a typical SFH has dropped to 589K from 609K a year earlier and the MOI is around 5 months. An interesting stat is the days-on-market (DOM) which has increased to 53 days vs. 33 a year earlier.

I believe the DOM stat is why we are seeing so many price changes and a decrease in average price. When a market starts to cool sellers are faced with a longer wait before they see an offer. Agents and sellers find this shift in market dynamics very uncomfortable and some react by lowering the price. This starts a snowball effect and down we go.

Historically 53 days on the market and 5 months of inventory would be considered a balanced market and we would not see all these price reductions. But we live in a "want it now" society and when you are too impatient to wait for an offer lowering the price is the reaction. You can see from my earlier post that for every sale there are two price reductions. About 1/3 of all the active listings have had one or more price reductions.

happy renter said...

From today's G&M:

Couple saves thousands by selling their own home

Alexandrahere said...

Morning all: here are my state for the week of May 30-June 5th.

SFH: Min 2 beds 2 baths, priced between $375 & $575K in the core municipalities of Victoria, Oak Bay, Esquimalt, Saanich East and Saanich West:

NEW: 38
SOLD: 24
P/C: 33
OM: 33

Avg selling price: $567K
Med selling price: $568K

Out of the 24 sales, 8 properties went for under BC assessment. So that is 1/3 of the total. Last year that was unheard of.
Also, 8 of the sales had secondary suites.

Condo's & Townhouses:
Min 2 beds & 2 baths, priced between $250K & $580K in most areas of Victoria (not downtown),all areas of Oak Bay & Esquimalt, most areas of Saanich East & Gorge, Tillicum & Interurban in Saanich West.

NEW: 25
SOLD: 10 condos & 2 townhouses
P/C: 30
OM: 18

Avg. condo selling price: $330K
Med. condo selling price: $308K

The townhouses went for $562K & $518K.

One of the townhouses sold for below assessment and 2 of the condos.

EagerBuyer(Not) said...

Alexandrahere - Thanks for taking the time to post. The selling under assessment numbers you gave were interesting. I hope you keep giving them in your weekly updates.

Alexandrahere said...

Hi .... an error in my stats i.e. SFH from $375K - $775K.

omc said...

Just waiting,

I don't think that having your home on the market for 5 weeks is a "want it now" reaction causing you to prematurely lower the price. I have heard several realtors now say that you have 3 weeks to sell your house, after that it becomes stale. Either the house gets an accepted offer right away, or it lingers on the market. They then have to start the process of price corrections, or eventually take it off the market. Also, most sales, even if there is no there 2nd house to sell, take at least a week to remove reasonable conditions. So it is actually houses that linger on the market, and then price correct before selling that drag the DOM up.

The higher the DOM shows that prices are having to correct. I would use the listing on Byng as an example; they got really stale trying to stick to thier guns for 70 days before starting to price correct.

a simple man said...

cough, St Anne, cough.

a simple man said...

Waiting - are you going to see 2221 Kinross?

JustWaiting said...

OMC,

Of course the realtors are going to tell them that the listing is getting stale after 3 weeks. These guys are used to seeing an offer within a couple of weeks and not having to do much work in order to get their commission. Now it takes more open houses, networking and more advertising in order to get a sale. In summary more time, more expenses and with sales falling less commission income compared to previous years.

Anyone that bought in the last 10 years is also conditioned to expect a sale within a couple of weeks. After all that is what happened when they were buying - the early bird gets the worm so to speak.

Having been around during several real estate cycles I can tell you that the last 10 years has been unusual. We are now back to the "normal" sales volumes and typical days-on-market last seen in the 90's. However, patience is a thing of the past and price reductions after a few weeks seems like the solution in today's market. Once this ball gets rolling it starts to snowball.

This is all happening before we get big increases in interest rates. Imagine what happens when Carney starts tightening.

JustWaiting said...

Here is some more historical data for days-on-market in Greater Victoria for typical single family homes. Previous year in ()

January - 71 (48)
February - 51 (34)
March - 44 (33)
April - 53 (33)

As you can see this is not a one month phenomena. Expect DOM to increase in the summer months as sales get seasonally lower.

Mindset said...

Having been around during several real estate cycles I can tell you that the last 10 years has been unusual.

The last 10 years were an unprecedented experiment in laisez-faire economics that ended quite badly... I think everyone would agree that the only reason the world isn't in in a depression is staggering interventions and bail-outs in the USA and the Euro zone (well, and somewhat here in Canada) ...and all this happened just in time for the largest (number) and longest (life expectancy) retirement wave in recorded history.

I've only been through 2 cycles myself. But I agree, this one does have some interesting differences.

pod_x said...

The last 10 years were an unprecedented experiment in laisez-faire economics that ended quite badly

What exactly was laisez-faire about the last 10 years? Was it the low rates? The easy credit? The corporatist government? The moral hazard? Tomes of new laws and regulations?

Craig said...

There's been nothing laissez-faire about the last decade. The CMHC has guaranteed hundreds of billions worth of mortgages, Fannie/Freddie did the same for trillions in the US, both central banks have kept rates very low and the banking industry is heavily regulated.

Unfortunately, to this the govts have responded with even more intervention in the markets, with massive deficit spending, nationalized companies and bailouts, outrageous printing of money and thousands of pages of more regulations which in the US are said to cost the economy over $1.7 trillion each and every year.

Waiting said...

@ a simple man - I will probably wander through if they do an open house.

Mindset said...

What exactly was laisez-faire about the last 10 years?

Before the meltdown financial institutions did pretty much whatever they wanted, whenever they wanted, while pretty much policing themselves.

The government just kept relaxing the rules, removing the restrictions, and stepping back. The fact that the financial institution leaders made a killing and the government was stuck with the bill shows clearly who's interests were being served before the collapse.

If the point is that the government played an important role in all of this, they did. But it wasn't a 'market-restricting' role.

AandJ said...

I keep trying to find the difference between this... http://flippersintrouble.blogspot.com/ and the Victoria market but I can't come up with any reason why we could not find ourselves in the same place.

Except that "it is different here"®.

*For the record when prices were 30% down I thought that was the end of the slide -- who knew it would get worse.

dave said...

Dean Baker from that G&M article should have checked his theory. “My theory is that home prices in places like Canada are acting like bonds,...”

Precisely the opposite Dean! Falling interest rates (rising bonds) have equalled falling home prices past few years, and vice versa. Canadian bond yields plunged latter half of 2008, fell hard again from April 2010 to November 2010, and hoocoodanode are diving once again. Anyone know why interest rates and house prices are falling in concert? My 9 year old could probably figure it out ...much to Dean’s chagrin.

Mindset said...
This comment has been removed by the author.
Mindset said...

Precisely the opposite Dean! Falling interest rates (rising bonds) have equalled falling home prices past few years, and vice versa

Care to share your data source(s) with the rest of us?

I believe Dean was referring to housing prices and interest rates being negatively correlated (which is the 'bond theory'), but he wasn't talking about bonds specifically. He was using a metaphor to make his point more quickly to financial types.

It seems pretty obvious to me that housing prices and interest rates are negatively correlated. Do you have sources that show that they aren't?

Of course, with human emotion, the market will still swing a bit under it's own momentum when interest rates stay flat depending on what it was doing at the time when the rates stopped moving.

dave said...

A bond rate chart going back to 2008 would show the positive correlation with house prices. I’ll try to find one before bed.

House prices and rates are certainly usually negatively correlated, but not in the past 3 or so years. There are several reasons (ok, theories). Annoys me when people in the supposed know, spout off their theories to the media without even checking the data. In a way, seems Dean is theorising Canadians are taking cover in real estate as well as the typical bond hideout during economic fear episodes. The data disprove that possible theory... if that‘s indeed one of his theories. I shouldn't assume.

dave said...

Ok, Bloomberg has one that goes back 3 years. http://www.bloomberg.com/apps/quote?ticker=GCAN5YR:IND
You can click 3Y at the bottom. Recall what house prices have done since 2008, hopefully you agree it‘s a similar path. I have my guesses how much longer this counter-intuitiveness lasts. In the meantime if interest rates are falling, it’s a good indicator that house prices are too. Too tired for my theories, besides yours are likely better than mine.

jesse said...

house prices and interest rates -ve correlation? Tell that to the Americans and the Japanese. It looks negative corr at the outset until people start realizing rents track inflation.

Dean was making the point that people are treating houses as bonds when they're more akin to a real return bond with a risk premium.

patriotz said...

A bond rate chart going back to 2008 would show the positive correlation with house prices.

Using a 3 year period is entirely inadequate for showing a correlation between economic parameters, particularly the last 3 which were anything but typical.

One particular problem is the short term lag between interest rate changes and their effect on house prices.

Try using the last 30. The strong negative correlation between interest rates and house prices is obvious.

Mindset said...

Jesse Said: house prices and interest rates -ve correlation? Tell that to the Americans and the Japanese. It looks negative corr at the outset until people start realizing rents track inflation

I think you are adding a third factor, which is economic stagnation. I mention things like our strong dollar (which is generally bad for us), our global competitiveness, our economic growth, productivity, retirement cycle, etc. as these is very important to the bigger picture.

I still find it very interesting that the USA has 30 year locked-in mortgages and the ability write off the interest, while Canadians have 5 or less year mortgages and higher sensitivity to interest rates.

I believe that in a generally healthy market, interest rates and house prices are negatively correlated. Saying that, I also agree that the severity of the current global crisis and massive government interventions in some of the world’s biggest economies (USA/EuroZone) does make the interest rate argument a bit simplistic.

All things considered, I can't see housing in Canada going anywhere but down. But I'm still optimistic we will only see a 20-30% correction here in Victoria… mainly due to the desirability of the area for retirement.

Mindset said...

Jesse, I just had another thought.

If Interest rates do not seem to effect US or Japanese housing, try a thought experiment of raising them there. Would their housing markets implode? Or be unaffected?

Are the USA and Japanese long-term locked-in mortgages an important factor to this discussion? Does interest there only effect new housing purchases not existing mortgages? Haven't both economies had a huge decrease in the purchase of housing?

In Canada, wouldn't the RE effect be more immediate because it effects existing mortgages not just new purchases? And wouldn't this tighten the correlation between interest rate changes and housing price changes here in Canada? (like bond theory)

jesse said...

Well there will be some -ve correlation but I think the effect is lower than people think. Purchasing an asset with decades-long amortization needs to look at history more closely. Do permanently low rates mean permanently high prices? I don't think it justifies 2x overvaluation.

Often RE takes a front seat when investors lose their creativity. When they find their muse again rates will rise.

Mindset said...

Do permanently low rates mean permanently high prices? I don't think it justifies 2x overvaluation.

Agreed. The 2x overvaluation was caused by a lot of factors, including the purely emotional fact that our entire nation started seeing RE as a guarenteed growth investment.

Good discussion points here patriotz, dave and Jesse. Keep the contributions coming.

a simple man said...

Rent fell precipitously in some of Canada's major shopping neighbourhoods this year, a global real estate firm said Tuesday.

cbc.ca

Just Jack said...

Intuitively one would guess that any increase in interest rates would have a downward pressure on home prices.

But not always.

It depends on how prospective purchasers are viewing appreciation and their ability to finance the monthly payments. When prospective purchasers are not maxed out on monthly payments an increase in interest rates will cause prices to rise as the fence sitters and speculators jump into the market. If buyers had convinced themselves that prices will rise they will take on unaffordable debt loads for a short period of time while prices increase to compensate them for their monthly losses.

But, at the end of a market, the specter of appreciation is gone and people are no longer willing to go to the maximum and beyond in monthly payments, then an increase in interest rates will cause prices to fall.

So, for most of a housing boom rising or even a perception of an rise in interest rates will cause prices to increase. Only at the end of the market do interest rates and prices have an inverse relationship.

And as prices drop, buyers are less likely to commit to high levels of monthly payments. The buyers are not willing to accept 40 percent of their income going to a mortgage, they may only want 20 percent and/or the ability to pay off the mortgage quicker from say 30 years down to 15 years.

The five times income, 8 x's income is just a yard stick that measures the above. A city like Victoria or Vancouver hitting 8 times income doesn't mean prices will fall in the near future. It depends on how strong the specter of appreciation is in that community. And some times it may even be cultural where luck, astrology and superstition are part of all financial decisions.

I think that Vancouver and Victoria buyers today are gamblers and not representative of typical buyers of the past. Nor do they represent the buyers of the future.

I also believe the higher the income multiple the bigger the fall.

I do expect prices to fall to the level where a starter home can be purchased by a single parent.

Or a double income family will be able to afford a Gordon Head box without the need of a suite.

Its getting near closing time in the housing casino. Time to cash in the chips.

dave said...

Good stuff on the rate aberration. I like the +ve correlation between these two asset classes lately.
http://i51.tinypic.com/2r551r5.jpg

Think I found it on garth’s blog, not sure the source. Lots of angles on this with our commodity-centric economy. On a base level: economic concern = risk off commod’s, houses & stocks = flee to bonds (& us dollar) = falling rates. Definitely feel we’re back in ‘economic concern’ again. Sizeable one too.

happy renter said...

Bring it on! I want to see more of this:

From today's G&M:

Vancouver primed for a housing correction

Mindset said...

Just Jack said: I also believe the higher the income multiple the bigger the fall.

Anyone know what the multiples were here before the RE bubble inflated? Say the early 2000's?

a simple man said...

More stories of hardship from the TC. These stories add up over time and paint a picture different from that we are often presented in the media and advertising.

"Nanaimo real estate development company InSight Developments is 'readjusting' its direction on Vancouver Island and that will delay a high-profile waterfront residential project, says president Doug Bromage.

That means there will also be layoffs at the company's Poplar Street office and some ongoing projects in Nanaimo will be placed on the back burner until markets improve."

omc said...

I have observed lot prices climbing in Oak Bay for the past 8 months now, gaining about $50k. But, I am not seeing lower end house prices climb in south Oak Bay due to an apparent loss of love for the 40s war shack by buyers. It's almost like people are a bit smarter, and see there is very little value in these structures. This is a bit more like Vancouver, where our market is behind in knocking down these houses. Better quality houses are climbing in selling price though.

I have mentioned before, that I am seeing stratospheric prices for North Oak Bay and crazy bubble prices for the lesser areas like Landsdowne and Henderson.

So the outlying areas may be dropping, but the core is holding very strong. Strange market.

a simple man said...

I agree OMC. I have been noticing a ceiling price, as has been suggested by JJ, that most people can't actually go above $650-$700K. So the houses that are below that margin get bid up to there - I think this may be part of what we are seeing.

For an interesting experience, go to your favorite online mortgage qualifying calculator, put in $50,000 for a downpayment and the median Victoria household income ($77,810 from 2008 census) and see how much house you can afford.

Craig said...

Mindset, regarding your take on who was fundamentally responsible for the RE bubble in the US I would suggest a new book by NY Times reporter Gretchen Morgenson:
http://www.amazon.com/Reckless-Endangerment-Outsized-Corruption-Armageddon/dp/0805091203/ref=sr_1_1?s=books&ie=UTF8&qid=1307451201&sr=1-1

It is said to be the definitive expose of the nexus of greed and ambition among politicians, Fannie Mae and the banks.

EagerBuyer(Not) said...

Some home buyers like to rationalize their purchase decision to fit their emotional state but these guys take it to new heights.

Globe and Mail article

Catherine, 40, and Ben, 50, Victoria On their fourth home in their six years together, these West Coasters practically have their moving company on speed-dial.

I know it looks bad that we’ve moved so many times. We’re both very smart people, but circumstances just got out of hand.

We never lost money on a property sale, but we built up about $47,000 in debt from various legal fees, mortgage fees and property transfer taxes.

Just Jack said...

As for Catherine and Ben moving four times in six years, it sounds more like a business than just home ownership to me. They seem to have valid reasons for most of the moves, but eventually someone has to step in and say "Ben and Catherine this is bullshit - pay your taxes".

Just Jack said...

So, how is the professional couple market doing in Victoria. Those interesting lofts and converted warehouses were the beautiful people live.

Well not so good, it seems the professional couples are taking a hit in lifestyle and selling for less than they originally paid the developer.

Such as the property in the Leiser Building on Yates Street, where a 1.5 storey loft just sold for $337,000. Which is less than the $385,000 plus GST they paid the developer four years ago.


Oh, did I mention that the city gave a property tax free exemption on these condos till 2018. Which probably conned a lot of people into overbuying these properties in the first place. The developer makes more money - the taxpayer gets the shaft.

The Mayor and city council that passed that exemption should be made to personally pay those taxes.

Marko said...

Crazy bidding war on 1721 Sprucewood last night. 30k over asking - unconditional offer.

Fiduciary said...

I fit snugly in that "professional young couple" bracket, but I wouldn't touch one of those tiny, expensive downtown lofts with a ten foot pole. Living in a rented 750 sq/ft condo is small enough for us, thank you very much; downsizing is definitely never going to happen.

We're saving our down payment for the "correction".

Sidebar: is it me, or does using the term "correction" in Victoria & Vancouver feel dirty to anyone else? It's like calling layoffs "rightsizing".

EagerBuyer(Not) said...

Marko,

Hard to fault the buyer. The house was listed at 529K and sold for 560K which is close to the 553K assessment.

What a deal! The house is beautiful and ready for immediate occupancy!

1721 Sprucewood on MLS

omc said...

simple man,

I am not seing the price ceiling as such any more in Oak Bay. The $1.5M range is again becoming quite active. I see that the below $600 and $700k, heck even $800k ranges have no value what so ever in Oak Bay. I would expect a huge jump in the assessments next year for the Henderson and Landsdowne.

Too may people want to live in Oak Bay. It doesn't matter if the location is crap; it's still Oak Bay. We were planning on eventually buying a 50s bungalow to renovate, but I think we are going to give up on that one. With fixed up Landsdowne shacks in the flats approaching $700k, they can keep them. I personally don't see the difference between Landsdowne flats and Fernwood.

MD80 said...

We're with Feduciary in the "professional young couple" category. One of us owned a small condo a few years ago but not going back that route ever again. Renting in Cook St. Village and loving it. Saving our down payment for after the "correction" and it doesn't sound dirty to me at all!! Has a nice ring to it actually :-)

EagerBuyer(Not) said...

If you are feeling like you missed the boat on the Sprucewood house its not too late to buy on the same street. These two are still available for those willing to do a few renos...

More Sprucewood deals

If you took both you could probably snap them up for 800K and blow the other competing bids out of the water.

Just Jack said...

I wouldn't say that too many people want to live in Oak Bay is the reason for the million plus homes that are selling there today.

29 homes sold in Oak Bay last month and there have been consistently over a hundred homes for sale every day for the last three months. And half the number of million dollar plus homes did not sell in Oak Bay last month with the most expensive home selling around Elk Lake in Saanich West.

The neighborhood where most people want to live is actually Saanich East. More people buy there than any other area of Greater Victoria, in fact more than twice as many people bought there last month than in Oak Bay. Mostly because in Saanich East there is better value for the money, the streets are not as congested and there are more schools than in Oak Bay. The homes tend to be newer, the lots larger and the beaches are sand rather than rock, and your not as heavily taxed as in Oak Bay.

Your paying for the name Oak Bay. The name Oak Bay is one that conjures up thoughts of wealth and prestige. Mostly because of the history of the area. But every time new neighborhoods are created, like Broadmead and Bear Mountain, Oak Bay slips a little in prestige.
One look at the neglected streets and congested parking shows me that the best days of Oak Bay are long past.

Yet, to some (29 to be exact) that address is worth the money just to say "We live in Oak Bay" So five out of the ten most expensive homes ever to sell in greater Victoria have been in Oak Bay.

a simple man said...

Hi omc;

Sorry, my price ceiling did not apply to the millionaires club - just to normal people with decent jobs that would want to live in these houses (millionaires - not a chance). There becomes a point where a person just says I am not willing to take on that amount of debt for a house that is that old - too many compromises. I think that in Oak Bay that number is around $650K - and it has to be a pretty nice house at $650. Always exceptions, but that seems the trend.

In my in-laws hamlet the price for a 40s or 50s era bungalow is 10-20K. With a double lot. Pay a lot for Victoria, pay a lot more for Oak Bay.

I agree that there are few houses that are truly worth anything in this neighbourhood - you are buying a lifetime of headaches and repairs. Anything older than the 40s is an automatic exclusion for me. A lot need to come down and be replaced by quality tradespeople doing custom plans (NOT spec housing).

a simple man said...

oh - and the heritage houses? Take a picture, make a plaque, get a 3D rendering for a hologram - but bulldoze it when it is tired.

Honour people, not houses.

Just Jack said...

I'm a little surprised to find that the bulldozers haven't started at one end of Oak Bay and travelled through to the end of the street. With the value of the improvements being such a small fraction of the total value of the land and improvements, you would think that most of Oak Bay would be torn down by now. But noooo. Some Oak Bay city council in the future will see the need to seriously ease up on building restrictions in order for the developers to pay for much needed new services and repairs to the sanitary and road systems. I mean, if the city council continue to do the minimum, Oak Bay will go the way of the older sections of Detroit that were once affluent neighborhoods too.

Take a step back and look again at Oak Bay - it is a little bit dumpy. When there were a lot of displaced English living in Oak Bay it was quaint with a cottage feel. Now, I look at these character homes as energy hogs that should be demolished.

omc said...

I can' t see the similarities between Oak Bay and Detroit. One is an area you would get out of as soon as you could, the other is some where retirees flock to. Other, similar neighborhoods in Vancouver developed pretty much the same way. A sense of neighborhood was maintained, and property values stayed in the stratosphere.

I wouldn,t fool yourself by believing that a 40s war shack is some how a better buy than an old timer. The was no building code in the 40s. From experience, you don't want to open up them walls; there isn't anything nice in there. I personally find the 40s houses the worst of all vintages.

a simple man said...

omc - thanks for the tip on 40's houses - I hadn't much first had experience with them. Go to know these tidbits.

Rhino said...

omc,
What vintage of house is best in your experience?

Just Jack said...

Comparing Oak Bay to parts of Detroit like Grosse Pointe is stretching things too far.

It's highly unlikely that Oak Bay will remain the same, fifty years from now, as it is today.

Eventually, the housing stock will have to be replaced as wood frame construction was never meant to last 150 years. Its just the cycle of real estate cities are born, mature, and decay.

This happened in Vancouver in the mid 1980's as the older homes on the West Side were crushed and the Vancouver Specials were built. Maybe the new subdivisions of luxury homes in Bear Mountain and other areas kept Oak Bay away from going under the treads of the bulldozers and being reborn. All that has happened is that the affluent neighborhoods are now more spread out than ever before as new retirees to the city have more choices where to live. Maybe that's another reason why the population of Oak Bay is not growing but starting to shrink.

30 years ago, there was little choice, Oak Bay was the "it" place to live. Not so today.

I don't see any changes happening in Oak Bay today that will change the trend of deferred maintenance. No new infrastructure, no new art galleries, recreation centers or schools. Eventually the carpenter ants and post beetle bugs will win.

omc said...

Oak Bay isn't shrinking. not in size or popularity. I would actually say the opposite.

I always tell people that there is no magic vintage. You have to be aware of how houses were made in comparison to today's expectations. The majotrity of 40s houses have no insulation, plaster and lathing inner walls, under sized electrical systems, under sized plumbing and low height basement that are mostly under ground. they are, mostly, very small and often poorly built. it is much more difficult and expensive to any work on a house with plaster and lathing walls. Every thing is usually in need of replacement, plumbing, wiring, DRAIN TILES! That thing with the under ground basements makes this a bit comical. We rent a small one of these and pay well over 3k a year in oil alone.

there are good and bad houses of all vintages. If I could choose, I would build new. I can not afford this though.

Alexandrahere said...

Just Jack: Well, its not surprising that only 21 homes sold in Oak Bay last month and say 42 homes sold in Saanich East. The population of Saanich East is approximately 102,000 and the population of Oak Bay is approximately 18,000. So given the population of Saanich East is 5-1/2 times the size of Oak Bay, it would be reasonable to assume that more people buy in Saanich east because there are more homes to choose from. As far as Broadmead is concerned, it has lost its luster for many. And give it a break? Bear Mountain? Sure the houses are nice.....but where can you WALK to? Just my two cents. Fairfield is my favorite.

Watching and waiting said...

Sprucewood is a tired rental home for the past 25 years. Lots of shoddy finishing and hokey wiring probably done by the landlord.Good price at 529k to get in to a 5BR/3 bath though so can see how it went 30k over asking but still below assessed.Livable yes,but would you let your newborn crawl on the carpet there - likely not:)

Watching and waiting said...

sorry in last post meant to say slightly above assessed

Watching and waiting said...

I wonder, had Sprucewood priced at 560k would it have garnered the action and bidding it got? Probably not. It's a lesson that we have seen on this blog with other low priced homes. Price it low, below what has sold/selling and the buyers come out of the woodwork and will bid. Too bad people aren't getting the message. I shudder when I see these meager $5k relisted-priced-reduced homes hoping this will respark interest in a languishing homes.

AandJ said...

Now, I look at these character homes as energy hogs that should be demolished.

I will second that. We rented a 2500 sq/ft century old Oak Bay home for 31 months. I just checked the oil bills and over that time we paid a little over $8100 for heating oil. That is an average of $260/month... every month! (In the winter we were hitting $500/mo)

The owners paid just shy of 750k for it. The agreement to purchase got the electrical upgraded to a basic 100 amp service with two plugs per room. The windows, doors, plumbing, drain tile, and roof needed replacing (I had never seen wooden gutters before). The kitchen had a reno in the 80's and the last homeowner did a DIY on the bathroom (poorly). BTW after the first winter we did the leg work for the owners regarding rebates and they had the attic and walls insulated --- that cut the winter bills by nearly $200/month.

Granted the floors were awesome 1" strips of oak and it had two fireplaces. And someone had splashed on some nice paint (ok crappy CIL brand paint but good colors). But come on people... 3/4 of million dollars? Do you know what you could build for 3/4 of a million dollars???

By comparison our current 80 year old rental is 2200 sq/ft and has been upgraded with full insulation double pane windows, and modern doors. The last 13 months here has seen us pay $1700 in heating or $130/mo average. I would also say that this house is in a colder, windier location as well (closer to the water and in the prevailing wind). That is a full 50% reduction in monthly heating costs!

BTW - the dirty little secret in Oak Bay is that there are rats. Big f*&n rats with long f*&n tails. Roof rats to be exact. They call them roof rats for a reason but you could just as well call them atic rats and you will know it when you have one there!

Animal Spirit said...

So Marko,

Have you managed to bust our MOI and sales statistics single-handedly by offering listing only services? A lot more FSBO are showing up on MLS, possibly skewing our previous listing and sales numbers.

Anyone else have a comment on this?

SuperBob said...

Oak Bay may never be rejuvenated if some enthusiastic owners get their way. These owners are trying hard to get heritage status granted for much of south Oak Bay houses. They are doing this to protect the pristine Oak Bay way of life but this would be a bad move for property values there.

All renovations would be subject to vigorous reviews. Owners would be forced to maintain the exterior look of the homes, thus limiting upgrade options. Sales of homes subject to inspection clauses could fall through due to costly repairs. Bungalows built 100 years ago weren't built to last forever. In short, maintaining a heritage Oak Bay house would cost an arm and a leg.

Heritage status: blessing or a curse?

More info on the cause:
http://www.heritageoakbay.ca/

JMJ said...
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JMJ said...
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Marko said...

Tomorrow I am doing another flat fee listing which will be the 7th in 15 days so not really enough to skew the stats.

Marko

Just Jack said...

There are rats, rats as big as alley cats in the ....

Just last year I was around a new development of homes off Fairfield road and the front end loader uprooted a tree. And a thousand rats ran out and blackened the ground like a carpet.

Even 225 lbs men with tattoos can scream like little girls.

a simple man said...

We have had roof rats in all the houses we have lived in in Oak Bay. They get in the attic and they make a lot of noise in the night. Hard to sleep hearing them gnawing above your bed. They are brutal here - people should know that before they move to Oak Bay. They are relentless and will chew or push the screens out in roof vents and go on in and have babies.

I say increase our property taxes by $250 per house and then start a mass trapping program with outside bait boxes in every yard.

a simple man said...

and when caught in the traps I am always a bit stunned how big they are - foot long without the tail often.

We have over a dozen traps in our attic right now.

kelly said...

April New Housing Price Index released this morning.

The Canadian Press

The most significant monthly price declines were in Victoria (down 0.8 per cent) and Saint John, Fredericton and Moncton, N.B. (down 0.5).

If this pace continues that is -10% annualised.

commuter12 said...

Just to give you guys a comparison between a modern house and an ancient energy hog here I have a brand new house with a geothermal furnace. This winter I paid $200 a month in hydro and I have a suite with a separate electric hot water heater / washer dryer / fridge stove and electric baseboards in the suite. The place is 2000 sq ft and the suite is 600 sq ft.

I used to own a 1950s place that was just over 1200 sq ft with electric baseboard heat and I paid $400 a month in the winter for hydro.

BTW I turned off the heat in my place back in April. I could never do that before.

a simple man said...

commuter12 - air-to-air heat pump or in-ground water-to-air or water-to-water?

a simple man said...

SELLER MOTIVATED, in all caps at the start of the MLS listing. So motivated that the house is priced a little over $100K above assessment.

The description didn't indicate what level of motivation. Perhaps SELLER minimally MOTIVATED is more appropriate?

Leo S said...

Seller motivated by buyer with large wheelbarrows of cash. Heck I could be motivated into all sorts of things by that.

kelly said...

Cmhc’s vacancy rates are also out. Surprising to see the yearly vacancy rate almost double in the other nearly dead cities of BC. As Clark and the Harper majority begin slicing n dicing the freeloaders in Victoria, our vacancy rate will swell further.

JustWaiting said...

Today VREB released their official real estate phrase dictionary...

seller motivated - seller anxiously waiting for a greater fool

proudly offered - hope somebody bites at this crazy price

original owners - nothing has been done to the place in 25 years

seller wants it sold - only a few days left before the listing contract runs out

price reduced - seller now willing to follow market down

bring your decorating ideas - this dump should be torn down

priced to sell - overpriced but price reduction soon

charming - nothing done in years - needs renovating

nothing to do but move in - been repainted to cover all the defects

call now, won't last long hope they don't know it has been relisted

Craig said...

This is a bit odd:

1137 Damelart - $424,700
- MLS# 291399
4 Bedroom, 2 Bathroom, House in Central Saanich

Price Change History
Date Old Price New Price
Apr 18, 2011 $470,000 $450,000
Apr 27, 2011 $450,000 $442,000
May 4, 2011 $442,000 $441,900
May 18, 2011 $441,900 $424,900
May 30, 2011 $424,900 $424,800
Jun 9, 2011 $424,800 $424,700

What's with the $100 reductions?

Just Jack said...

The hundred dollar drops just makes sure that it always shows up in the daily "hot sheets"

Just Jack said...

There are various sub markets within the marketplace. Like waterfront properties, farms, detached houses and condominiums.

Detached houses and condominiums including townhomes have been the most heavily speculated properties and hence their prices have gone as ballistic as a Sunday morning launch of the space shuttle.

But some sub markets were never really touched by the speculator or flipper. And that submarket has been manufactured homes.

Like the recent sale of a double wide manufactured home on Craigflower that just sold for $112,000. This same home was bought in February 1999 for $78,000. An increase of 44% over 12 years or basically the rate of inflation.

At the same time house prices went up 160 percent. That would mean we would need a 45% correction in our current detached home prices to match the appreciation in manufactured homes.

Naaaah, that can't happen.

AandJ said...

45% drop? Never. We are the jewel of Canada. Heck, the whole world wants to live here. 45% could never, ever, ever, ever happen. We are different because, well because we just are. We will it to be!

We can't fail, our weather is nothing like Ireland (wait a minute they suffered a 35% loss). Besides that who would want to live on an island eh?

Ok, we are more like Greece, a tourist mecca in the summer (wait a minute their market tanked AND their currency is about to look worse than a Mexican Peso at a New York drug buy).

Maybe we are more like Japan right? There is no more room to build therefore prices will never fall therefore buy now or be priced out forever (wait a minute they have been falling in Japan for more than 10 years).

How about the Netherlands? Wait Italy? Maybe Spain? Or France? South Africa? Sweden? India? Russia? China? Ahhhhhhhh!!!!!

We are CANADIAN. It is our RIGHT to have over inflated housing prices and 5% down mortgages backed by our government. We deserve to have a greater percentage of home ownership(~68%) than voter turnout(~62%).

45% drop. Pfff... Never happen.

Rhino said...

A&J,
I have been reading these satirical rants on the blogs for probably about 4 years now. To be honest they are kinda losing their edge. Like listening to a great song.....2000 times.

Give me the crash already!! I'm ready...I want to see it baby!

Animal Spirit said...

Marko,

Let's say 10 realtors in Victoria are doing listing only on MLS, each has 5 listings a month - o.k. that is only 50 listings. But then let's say that 15 of those sell. MOI would change from approx 8.5 (572/4857) to 557/4807, or 8.6 without the previously non-MLS lists. Not much of a change.

Let's change the number a bit going forward. 20 realtors list 20 houses each on MLS that wouldn't be listed otherwise. Total listings go up 400. If very few of these sold (which previously many FSBO wouldn't sell due to high pricings), then actual MOI would be reported higher.

Not sure where my logic is going on this, but the stats could change a bit. Not enough to impact the rat population in Oak Bay. BTW - rats are soon to be listed as part of the heritage house code. Word is that there will be roasted rats along with roasted chestnuts on Oak Bay Ave. this year. Proceeds to the keep Oak Bay British tweed club.

Leo S said...

To be honest they are kinda losing their edge.

You're right about that. Definitely only skimming Garth's posts these days. How many thousands of different ways has he said the same thing?

Doesn't mean it's wrong though. Housing was overvalued 4 years ago and its more overvalued now. The market has stayed irrational longer than most bears thought, which is the case with most bubbles. For us we weren't in a solid position to buy until about a year or two ago so it matters little.

I'm withdrawing myself somewhat from the stats watching. No longer putting properties into the PCS favourites because it's still ludicrously overvalued, and will only run my scripts once a week or so. It'll easily be another year before we buy so time to take a step back.

DavidL said...

@Mindset asked: Anyone know what the multiples were here before the RE bubble inflated? Say the early 2000's?

I would guesstimate that 10 years ago (in 2001) that the average family income was $70K and the average SFH was $250K ... so about 3.5 times.

@Alexandrahere wrote: The population of Saanich East is approximately 102,000 ...

According to Saanich's own demographic data, about 30% of the population is in the western part of Saanich (west of the #17 Pat Bay Hwy.). The 2006 census data suggests the total population was 108,265 - so East Saanich would have a population of 75,786 in 2006.

DavidL said...

Regarding the Oak Bay rats ... in my (misspent) youth, I did a lot of garden maintenance and landscaping in Oak Bay. I ran into many of these long-toothed rodents - scurrying around the foundations of buildings, climbing downspouts, and raiding compost bins and garbage cans. Compared with their much smaller cousins in other parts of Victoria, these Oak Bay rats bigger, more ornery. They also prefer two lumps of sugar in their afternoon tea which is given to them by a near-sighted octegenarian who thinks they the neighbours' cats.

DavidL said...

A 1800 sq. ft. Saanich house with single pane windows, build in 1959 costs $2900 per year to heat with oil. The lower floor has no insulation in the walls, the attic is insulated with cellulose fibre from old newspapers. A single programmable thermostat adjusts the temperature setting for the oil furnace.

A 2400 sq. ft. Saanich house with double pane windows and R12 fiberglass insulation, built 20 years later in 1979 costs $700 per year to heat with electrical baseboard heaters. The heat is turned off in April and turned on again in mid-October. Each room has a programmable thermostat.

The newer home saves $200/month on heating costs. Over a 30-year mortgage, that works out to $72,000 (not accounting for inflation).

JustWaiting said...

Rich folks do everything big even when it comes to price reductions.

MLS 286684 was originally listed at 13.5 million. Yesterday it was 10.3 and today reduced to 8.9M

MLS 289438 was 2.475M and just reduced to 2.25M

MLS 286512 was 8.25M and dropped to 7.595M yesterday

But sellers in this price range have to do something when there are 332 of you competing and only 27 sell in a month. Only 1 sold over 2 million but the the buyer had 70 to choose from.

Mindset said...

David L said: (income to price ratio on houses) .... about 3.5 times

Thanks David.

Rhino said: I have been reading these satirical rants on the blogs for probably about 4 years now. To be honest they are kinda losing their edge.

I'm with you there, but actually find it more interesting now that the government interventions have not only eased significantly but are turning the other way.

It was almost 4 years ago now that RE across the world tanked. The rants were actually pretty accurate and important warnings for most of the globe, and the global RE damages have actually been bigger than expected by just about everyone.

I think the whole point of this blog is making educated decisions when it comes to RE. Value based investors (like Warren Buffet) wouldn't touch the current Canadian RE as an investment with a 10 foot pole... and there are a number of very solid reasons for that.

a simple man said...

OK. Then let's turn it around for a while. List the reasons why it is a good time to buy. I'll start:

1. Interest rates are very low.
2.

nan said...

"Interest rates are very low"

This is not a good reason to buy. Low Interest rates allow financing of higher mortgages, which are harder to pay off. In addition, you're thrown to the wolves after 5 years which, on a 35 year amortization leaves you with less than 10% equity. Will you be able to afford a mortgage of 90% what you bought for today in 5 years? If you are maxed, and interest rates go up more than 1%, you won't. I would rather borrow when interest rates are higher. Movements on interest rates usually go 25 basis point at a time, which as a % of total is easier to handle if interest goes up and prices are lower, making it easier to pay off principal with bonuses, tax refunds, inheritance and other windfalls...

nan said...

"Interest rates are very low"

This is not a good reason to buy. Low Interest rates allow financing of higher mortgages, which are harder to pay off. In addition, you're thrown to the wolves after 5 years which, on a 35 year amortization leaves you with less than 10% equity. Will you be able to afford a mortgage of 90% what you bought for today in 5 years? If you are maxed, and interest rates go up more than 1%, you won't. I would rather borrow when interest rates are higher. Movements on interest rates usually go 25 basis point at a time, which as a % of total is easier to handle if interest goes up and prices are lower, making it easier to pay off principal with bonuses, tax refunds, inheritance and other windfalls...

Mindset said...

OK. Then let's turn it around for a while. List the reasons why it is a good time to buy.

2. Its different this time (this is a completely new paradigm)
3. Canada is different than everywhere else
4. You may be able to sell your home in 6 months in a HAM bidding war and make some quick $$

OK, and a good reason?

5. You understand the risks, have the financial ability to weather the looming depreciation or interest rate changes, and want a home to live in here in our beautiful city.

EagerBuyer(Not) said...

Local agent posts difference between average list price and average sales price for different areas of Victoria. For houses it shows big spreads in most areas.

Click here

Yes I know it is the Pfann site and there is lots of hyperbole but the stats are interesting nonetheless

EatMe said...

DavidL - I would guesstimate that 10 years ago (in 2001) that the average family income was $70K and the average SFH was $250K ... so about 3.5 times.


Uh a wild ass guess? That's helpful... I'm going to guess it was $45K and average SFH was $240 or just over 5x. (How about we just look it up...)

EatMe said...

Rhino said: I have been reading these satirical rants on the blogs for probably about 4 years now. To be honest they are kinda losing their edge.

Exactly the same 4 years ago! 2006 I thought interest rates were as low as they could go and would never go lower. Surprise surprise! All of you expecting higher rates - how high are you expecting them to go with the anemic global growth right now? There's some inflation but we all know that in this environment it will be pretty easy to tamp out. I see rates rising 1 - 2% but no more. Could end up in some brief short term pain for real estate.

a simple man said...

OK - for 2000 the CRD mean household income was $55,144 and the mean family income was $66,098. Didn't read what the difference was. For details click here.

Mean SFD for the CRD from VREB for 2000 was $251,398.

So, between 3.8 and 4.6 multiples.

Just Jack said...

Multiples are so tricky to use for example back in 1996 a house in Esquimalt was bought for $145,000 by a single parent making $55,000 per year. 2.6 multiple. This individual played it safe, by buying less than they could afford. But that's what happens in a property recession - you don't max out on your mortgage.

Today that same house is $400,000 and a single person in the same vocation makes $70,000 per year. 5.7 multiple. And this person is likely at the maximum.

What also changed was the interest rate is half the rate of the mid 1990's.

That's not to sale that the home is just as affordable as in the mid 1990's, today. The monthly payments have grown from $850 per month to 1,200 per month as well as the property taxes.


What I'm seeing is that we are in the denial stage with a faint hope that prices will rebound. But with the worsened economy - how can they?

Today's buyer know they're standing on a cliff, it's just that they're looking over their shoulder at the past, and not ahead.

omc said...

I have to agree with eatme; interest rates ain't going any where for the next while. I will go as far as to predict 1% in the next 5 years. The world economy is far too weak to support more, and it is going to be quite a while until we see real growth.

Interest rates may show a bit up, but the discounting has been increased to make up for it. I can get a variable at 2.05%, and that is just nutty.

The analogy of Canadian houses being like bonds might just hold true and we could see the market basically flat line for some time to come.

Some areas of the market might keep going up (Oak Bay), while other parts correct (apartments and west shore). This would be due to the demographics of each area. Oak Bay has an influx of people with money having sold out in Vancouver. West shore will feel the loss of construction jobs and have a price ceiling due to local wages. Even then, I don't know if the construction industry will get hit like I thought it would, due to the Vancouver people demolishing and rebuilding in Oak Bay.

Just Jack said...

Our vacancy rates are up from 2.5 to 2.7 percent for purpose built apartment buildings. At one time we were 0.5 percent. Which puts us a little above the National Average.

But WOW, Kelowna and Abbotsford have hit the skids with vacancy rates of 6.6 percent and more. Most likely due to the drop in construction related jobs.

I guess fewer people want to live here now than they did just three years ago.

Phil said...

Don't forget the Japanese market crashed and they've had 2 "lost decades" DESPITE low rates. Hasn't helped the US much either has it? And they can lock in for 30 years at low rates.

Any decline here will have a snowball effect. People stop buying, and desperate sellers set the margin. This time there isn't much the brilliant Carney and Flaherty can do to stop it. The market will have it's way. The bubble will pop, with or without the help of interest rates.

Just Jack said...

Those that were involved in the 1980's speculative boom were hit by rising vacancy rates. Even falling interest rates couldn't help them. They couldn't refinance a debt that was greater than the value of the home. People with 2, 3 or a half dozen homes saw them go vacant and the homes fell one by one into court ordered sales.

Today, a substantially larger portion of the market relies on basement suite income. The higher vacancy rate will hurt them more immediately than an increase in the interest rates come mortgage renewal time.

Declining home prices and rising vacancy rates, this can't end well.

argentum tulipa said...

Below is a likely path for rates. If prices correct too fast revealing our CMHC situation, then our rates would obviously lift off from US's path. Otherwise, "konnichiwa!"

http://i.imgur.com/dIBqX.png

omc said...

"The bubble will pop, with or without the help of interest rates."

I think we said the same thing back in the 90s. Property just ended up slumping for about 7 years. I was in the construction industry back then. I believe we have the same influencing factors now; Asian money coming in and interest rates only moderately increasing.

I used to believe we were in for a fair correction; I don't know any more. When I started to run into Vancouver money at the open houses, I knew things had changed. I still wouldn't buy a condo if you held a gun to my head though.

SuperBob said...

List the conditions for buying now:

1. I'm filthy rich.
2. After I buy, I'll still have millions in secure investments.
3. I hate parking my paid-off luxury cars on the street.
4. Victoria is a great place to summer with a cottage in Uplands.
5. The supermodels that I date prefer men with nice digs.

It's a good time to buy if you can afford to lose the complete value of your house.

Rhino said...

I have to agree with eatme on interest rates. The real issue at hand is still deflation. industrial economies won't raise rates until this threat is gone. And it won't be gone...for a long long time.

Look around your house, has the percentage of stuff made in china gone up or down in the last 10 years?
What about your debt, and access to credit? who is the biggest supplier of this credit globally?

How are we going to even all this imbalance out. Is it easier to get the average Chinese family up to 75K a year or get your family down to 5K a year. How about we meet in the middle?

a simple man said...

omc - I thin the only thing I know right now is that it makes no sense for me to buy in Oak Bay at this time. Just too much money for what you get. Certainly there is some spillover Vancouver money here - but how long will that last? And there are a lot of houses sitting on the market despite that.

When Vancouver pops it just may take us all down with it. But, the million (or billion) dollar question is when?

Will it be precipitated by a Chinese pop first?

This is such a tangled web that I don't think anyone really knows.

I'll stick with what I know - it makes no sense for me to buy a house in Oak Bay right now.

EatMe said...

a simple man said...
This is such a tangled web that I don't think anyone really knows.

I'll stick with what I know - it makes no sense for me to buy a house in Oak Bay right now.

vs.
Declining home prices and rising vacancy rates, this can't end well.

It's a good time to buy if you can afford to lose the complete value of your house.

a simple man I think you might be one of the few sober people here! Good comment.

argentum tulipa said...

Does this blog touch upon real interest rates much? I’ve discovered more people need to remember that real interest rates often rise as the rates everyone sees are falling (like today). As an example, let’s surmise we fall into a Japanese lost decade scenario. Question: Is the mortgage you get in 2014 at 1.0% for 5 years a higher or lower rate than you could get today? Answer: HIGHER. If the inflation rate is negative, as it would be in that scenario, the real interest rate you’re paying is higher than today. Even as I write this, most think rates are falling as they read about banks lowering mortgage rates. However, if the inflation rate is now falling faster, like it has been recently, then real-ly rates are rising.

Just Jack said...

And people in Sooke say the same thing when the run into "Victoria money" buying in Sooke or the same for the Chinese buying in Richmond.

Yes, it causes a temporary micro bubble in small sectors. Which just elevates that sector more than others with a bigger drop in the end.

That's what happened in our waterfront properties. Lots of attention by Americans and Albertans (our HAM) drove the price up - for awhile. Now, waterfront has had one of the larger roll backs in prices.

-----
And when I look around my house, the percentage of stuff from China has gone DOWN. Because I no longer buy Chinese plastic. For example my phone battery died. I didn't go to Home Depot and buy another one - I went to a second hand store and got a push button phone with a cord from the 1980's. Works fine - no batteries needed. My neighbor gave me his old push mower built in England in the 1950's - all machined steel parts - no plastic. I took it apart, sharpened it, repainted it and people ask me where the can buy one like mine - sorry that kind of pride in workmanship was 60 years ago.

No plastic crap under the Christmas tree, the toys for my daughter are all made in North America.

And I'll drink to that!

Just Jack said...

New sale on Haultain today at $565,000. Previously bought one year ago in July for $565,000.

A townhouse on Kimberly just bought for $390,000. Purchased three years ago in May for $382,000.

Bear Mountain condo just bought for $426,000. Previously purchased in 2006 for $435,000 plus tax.

There are quite a few homes up for sale that have been purchased in the last 3 or 4 years, but very few of them are selling. Most of the sales are for properties that been held for more than 5 years when prices were significantly lower than they are today. It seems that most people that are selling today are pocketing a difference of $100,000 to $150,000.

omc said...

I'm with you that prices are too high in Oak Bay to buy. How long will the indirect HAM last? Will it Peter out? No one really knows. I have read conflicting analysis of the Vancouver market and a Chinese market crash;some people think that it would actually cause more people to divert money to Vancouver. In the 90s, the Asian influence floated the entire market, even though all economic measures were out of whack and the rest of the country dropped.

If one was to Buy in Oak Bay I would remember it is the location, most likely not the structure that holds worth. The rich Vancouverites are not interested in your 40s or 50s shack, just your location. The houses I have seen correct in south oak bay have been those where some one over paid for a questionable structure. I expect that Landsdowne and Henderson will correct as the locations are not worth the money, and the painted up crap houses are not either.

a simple man said...

speaking of which - Sandowne had the heavy equipment in the yard last week and regraded the yard. new roof is going on this week.

How long until we see the flip relisted at $900K?

Or maybe they are very ambitious, well-connected owners.

omc said...

If we start to see flips in that neighborhood, we are in trouble. The standard flip was always the crap 40s house in South Oak Bay, painted up with a fancy kitchen. do the yard up and wait for an out of town retiree who doesn't know the market... They would usually buy in the low $600k range and sell in the $800k range. It was mostly dirty realtor money doing this, so realtor's fees weren't an issue.

I wonder what the upper rage price for a crap 50s house, in a less than ideal location and small lot is. The out of town retirees aren't hot on that area.

jesse said...

" List the reasons why it is a good time to buy."

1. You can negotiate a huge discount for an uber-desperate seller who has had no offers.

That's about it from a strict financial perspective. Any other reason is justification for overpaying citing lifestyle reasons. Fine, but at least admit you're overpaying.

Craig said...

"I have to agree with eatme on interest rates. The real issue at hand is still deflation. industrial economies won't raise rates until this threat is gone. And it won't be gone...for a long long time."

UK inflation is running at 4.5%. Australia just had the biggest jump in inflation in over 5 years.

Marko said...

1627 Hybury looks like a flip...

omc said...

yikes ! the $700k range for a pimped up Gordon Head box. I vote that one, the most over priced home on the market.

Rhino said...

"
UK inflation is running at 4.5%. Australia just had the biggest jump in inflation in over 5 years."

Temporary in my opinion. Watch wages.

Mindset said...

Eatme Said: All of you expecting higher rates - how high are you expecting them to go with the anemic global growth right now?

I'm hearing statements like this a lot. Anyone want to provide the underlying theory on how a long drawn out global recession is good for house prices even if interest rates stay at record lows?

Earnings go down and unemployment go up in recessions which equals less buyers.

Deb said...

We have had a 1/2 lot in Oak Bay for ages that we would love to sell. But council doesn't make it very easy as variances would be needed.

Twice developers have presented their ideas but have been shot down. Are there any tiny houses or cottages going up in Oak Bay anywhere?

argentum tulipa said...

I agree Mindset,

The nominal rates everyone discusses mean next to nothing unless they understand what inflation is doing. In the nearing long recession, nominal rates *may stay at record lows, but real rates will climb. Real rates = nominal rate - inflation rate. Obviously the reason is, inflation will fall to zero or below. *However I also expect with anaemic growth, Canada’s mortgage scheme and indebtedness will be fully exposed to bond markets as our overvaluations deflate. Thus, nominal bond rates could also rise, as investors demand higher rates of return for lending to high debt Canadians.

Watching and waiting said...

1627 Hybury IS a flip ..sold for $505k a few months did it not?

Just Janice said...

160 Beach? Thoughts?

Trilobite said...

@Watching and Waiting

According to my PCS, 1627 Hybury sold for 526K in November last year ... and now it's listed for 729K.

I wonder, how much would they have spent.

Marko said...

160 Beach.....Well 97 Beach is 1.495 million and has been on the market 143 days so....brand new home.

Al said...

1627 Hybury Pl is over priced for sure. But how about this one, also in Gordon Head, although not a flipper, is it worth $789K asking?


1945 Appleton

Alexandrahere said...

I was reading an article today saying that the "average" US home today is selling at 2002 levels and many of the hardest hit locations are selling at 1990's levels.

JustWaiting said...

Just Janice,

I assume you went to the open house at 160 Beach yesterday. The house was listed in 2007 for 1.15M and finally sold after reducing the price to 1.089M. I don't know the actual sale price. Now it is in foreclosure at an asking price of 1.15M. The BC assessment is 870K.

The house across the street at 161 Beach is assessed at 1.074M and sold in April 2010 for 995k. The next door neighbour at 165 Beach is assessed at 651K and sold in April 2010 for 702K.

There are 22 houses in Oak Bay for sale between 1M to 1.25M. Last month in this price range there were 3 sales.

So... JustJanice what do you think about this place??

Watching and waiting said...

tragic MLS home pics ... normally I won't harp on realtors and their photos but my 10 year old could take better/in focus pics than this FOR FREE. The last pics catches a tenant by surprise ..

MLS®: 294878

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=10794583&PidKey=-1244349742

Mindset said...

Ok, I think we have a new winner for the 'laughable listing of the month.'

While driving past 2213 Windsor Rd on the way home, a clean but basic two story flip in Oak Bay, I was told it was listed for a cool 1.08 Million. My double take almost gave me whiplash.

Because I couldn't believe it, I did some asking around. Assessment, $613k. Home size, 2400sq ft. Lot size, 6500. Purchase price $550K last summer.

Granted they did lift it, and modestly refinish it, but starting $470K over assessed?

Maybe its because of its 'georgeosly' finished exterior (yup, that spelling is plucked right from the listing.) I guess getting your exterior refinished by 'George' is quite exclusive.

Waiting said...

@mindset I called about the windsor house when it was for sale by owner (a month or so ago. Crazy price! And...they pulled a 'St Anne' and made it one bedroom up. Not sure why anyone would do that...

omc said...

That house on Windsor really doesn't make sense to me, and it wasn't a typical flip. They actually took that one right back to the studs and jacked it up. There was nothing special about it in the first place, so why bother. It wouldn't have been much more money to knock it down and start again. A lot of risk involved this time as it is a much different price point with a limited floor plan.

a simple man said...

and they just "reduced" the price to $970K. But now it does not include the HST as it did before. $970*1.12 = $1.086M. Old asking price $1.085M, but no HST.

Sure, now buyer gets some HST rebate, but come on.

SJ said...

Mindset, Waiting.

I couldn't believe the price of the Windsor one as well. I see it has already been reduced to $969,900.

It also states "HST Not Included". Does that mean you don't have to pay HST because it is a used residential, or do they mean that you have to include the HST on the purchase price?

Just wondering: if you undertake a "substantial" renovation (say 90% of the building), does this put your houses in the "new" construction category, and therefore HST applies? It states in the listing “completely rebuilt from the foundations to the roof.”
If they paid $550,000 for it - I wonder how much they put in. Even if they put in $150,000, that's still quite an asking price they've put on it. It will be really interesting to see if it sells, or rather, what it sells at, especially is the HST has to be added.

Also, I agree, one bedroom up and three fairly small bedrooms in the "grade level" basement doesn't seem very appealing either.

Less than 10 years ago, their asking price would have got you an Uplands home – I remember driving by a property (an old rancher) on a one acre waterfront (3120 Humber) I seem to remember it was listed in the upper $600,000’s. It sold and the new owners built a massive brown mansion (next to the white “icing coated” mansion). It sold in the millions. Those were the days when it must have been fun to flip/build houses.

Today, however, I wouldn't want to be the owners of the one on Windsor.

Mindset said...

I drove by it a few times while they were working on it. It was a lift, maybe to keep the roof and save a few bucks there? Or maybe they had to keep a percentage of the framing to avoid some new build costs and paperwork?

All I know is, when people say 'that looks like a million bucks', they sure aren't talking about Windsor.

Marko said...

Monday, June 13, 2011 8:00am:

MTD June
2011 2010
Net Unconditional Sales: 225 625
New Listings: 590 1,503
Active Listings: 4,742 4,730

Please Note

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