Monday, August 29, 2011

Monday market update, HST free

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.

August 2011
Net Unconditional Sales: 469 {354} [236] (116)
New Listings: 1056 {845} [595] (296)
Active Listings: 4,811 {4,821} [4,843] (4,783)
Sales to new listings ratio:  44% {42%} [39%] (39%)

August 2010
Net Unconditional Sales: 425
New Listings: 956
Active Listings: 4,356
Sales to new listings ratio: 47%
Sales to active listings ratio: 9% or 10.25 MOI

We know know what happens when this blog covers more than just real estate topics. Oops, my bad.

Back to the market, which can only be described as an atypical August: reported prices will peak out this month very near the all-time average reported price top we witnessed in 2008. The truth in the market is nothing close to that though: prices continue to soften while market conditions continue to favour buyers, especially outside the core.

Daily average unit sales have been remarkably stable, still in the 16-17 range. Look for the spin machine to be in overdrive on Thursday as the usual suspects promote the sh&t out of flawed market reporting methods.

50 comments:

Just Jack said...

If you're willing to do some equity repairs and don't mind a no subject offer on a court ordered sale. Then maybe there are some deals (in relation to current prices) out there.

A townhome on Arncote in Langford bought from the developer in January 2008 for $422,500 just re-sold for $321,000.

But no deals like this in the inner city - yet.

Just Jack said...

A flip gone bad.

That would be a property on Lockley bought In February 2011 for $312,000.

Add Property purchase tax, mortgage payments, pro rated taxes, and renovations costs.
-remodelled bathroom
-rear deck
-roof
-siding
-windows
-refinished floors
-paint

Then re-sell this week for $365,000 less real estate commissions of around $15,000.

Not the brightest way to spend your retirement - flipping homes.

Introvert said...

HHV, I love your Monday market update posts; they challenge you to say essentially the same thing in a different way each time, namely, "Prices haven't tanked yet. Maybe next Monday."

omc said...

I don't think that is what HHV is saying at all this week; the average, ,median and # of sales is higher than last year. It is a reflection of what is selling right now not increasing prices IMHO, but be ready for the spinmeisters to make something out of nothing.

jesse said...

Maybe prices haven't "tanked" yet but a few areas are exhibiting signs of tankitis.

EagerBuyer(Not) said...

Has real estate tanked in Victoria? You bet according to Casey Edge, executive director of the Canadian Home Builders' Association of Victoria.

Home builders, restaurateurs hope return to PST/GST will help ailing sectors

Edge says the average price of a new, single-family home in Greater Victoria dropped $68,000 since July 2010 when the HST was implemented.

But like any salesman for a product he thinks now is a great time to buy.

"It's certainly a good time for consumers to be looking right now because people are caught up in the HST issue thinking that they're going to save money if they wait for another year or two."

So what do HHV readers think? Will new home buyers sit on the sidelines until the HST is gone?

EagerBuyer(Not) said...

More bubble talk - this time from Capital Economics’ David Madani.

Globe and Mail article

The largest increase ever seen in Canadian housing prices has wrenched real estate out of its usual alignment to people’s income, Capital Economics’ David Madani says. He believes the signs increasingly point to a housing bubble.

“The stories we hear about people buying homes to rent out as investment properties, and others buying homes fearing that if they wait they will be priced out of the market, only convince us even more,” he writes in a research note.

It’s mass psychology – “animal spirits” – that has driven up housing prices to unsustainable levels, he believes. The upshot: He expects house prices to fall by 25 per cent over the next few years.


And even more bubble talk...

Canadian housing market: Sound or a bubble set to burst?

CTV reports the debate in Canadian housing circles about the soundness of the housing market. Is there a U.S. style housing bubble? The signals are mixed, according to experts. Prices in Vancouver look dangerously high, while towns such as Saint John, New Brunswick are quite affordable. Compared to renting, owning a home is now more expensive than it has been in decades. Home prices are rising faster than incomes. Higher home prices has lead to more borrowing. Three years ago, just 1 in 9 mortgage-holders borrowed more than 80% of the value of their homes. It’s 1 in 6 today.

CMHC insurance business has doubled, to more than $500 billion worth of mortgages. About $45 billion is with the riskiest group—buyers with less than 10% equity. If there is a Canadian housing bubble, the government backed CMHC – meaning Canadian taxpayers – are left holding the bag.

EagerBuyer(Not) said...

More news - Many in BC are in debt up to their ears and are saving nothing.

B.C. residents have unrealistic hopes of shedding debt, poll finds

While most B.C. residents believe they’ll be debt-free by age 58, fewer than one-third of B.C. residents aged 45 to 64 don’t owe any money, according to a Harris-Decima poll conducted for the Canadian Imperial Bank of Commerce.

About one-quarter of B.C. residents report that they’ve abandoned hopes for a debt-free retirement. Fourteen per cent believe they will pay off all debts in their 70s and one in 10 says they will never be debt-free,

Many homeowners who are mortgage-shopping still ask how much they can get instead of how much they can comfortably afford, he pointed out. “For a lot of people who put themselves into a tight spot, it makes it difficult to get ahead,” he said.

One in five B.C. residents who responded to an ING Direct survey released Monday said their biggest monthly expense — besides mortgage or rent payments — was loans and credit card payments, compared to 16 per cent nationally. Half of B.C. respondents reported that they could not afford to save $25 more per week.


Just Jack said...

Depending on where you live, best describes how you're seeing the marketplace. A wise man once said (no it wasn't me) that you can't see a bubble when you're in one.

Months of Inventory for:

The Gulf Islands 403 homes for sale
and 13 sold in the last 30 days.
31 Months of Inventory.

The Malahat with 258 houses for sale and 17 sold.
15 MOI

The Western Communities have some 630 abodes offered for your attention, but only 61 sold
10.3 MOI

The Saanich Peninsula including Sidney have 252 dwellings that would like to have a new owner, but only 27 bought last month.
9.3 MOI

And lastly delusional Victoria, where 728 houses are up for grabs and 158 were grabbed last month
4.6 MOI


So where you live, tells the story of how you see the marketplace. On the Gulf Islands finding a buyer for your home is akin to winning the lottery. While in crOAK Bay, the out-of-towners are still paying 3.3 million for a skybox that hasn't been finished yet and they can only use for 16 weeks of the year. I think there growing more than wheat on the prairies these days.

omc said...

I think your analysis is pretty much accurate JJ, and is the reason for the rising average prices. Areas I am watching, crOak Bay etc, are really picking up. I am not sure what this means except that houses are out of range of locals. When the market was set for a decline, the last people in were at the bottom of the ladder.

No shortage of money out there for questionable areas in Oak Bay with crap houses and flips. Thats the other marker I am watching, flippers, and they are on the increase.

Just Jack said...

A sale this week on Rutledge might be an indicator of where we fall in prices in relation to years past. The owner did install new windows and other upgrades so its not perfect, but its an indicator

Sold this week for $463,250
Sold August 2008 for $430,500
Sold September 2006 for $380,000
Sold April 1998 for $180,000

City core prices have basically flatlined over the last three years. Not a good time to be a flipper. I say that because, in my opinion, most flippers make bad decisions and its only because prices advanced while they where farting around with the house did they make good gains. Its not because they know what they are doing - they were just lucky. Not so much anymore.

EagerBuyer(Not) said...

Yesterday I commented on how far residents of BC have fallen into debt.

However, Flaherty's last round of CMHC rule changes cutoff many homeowners from using their house as an ATM machine.

Refinance Activity Plummets 40%, Says CMHC

Tighter mortgage rules are hurting CMHC’s default insurance business. This is most evident in insured mortgage refinances, which have plunged a remarkable 40%.

That’s due in part to the government’s move on March 18, 2011 to limit insured mortgage refinances to a maximum of 85% loan-to-value (instead of 90% previously).

That 40% decline is in CMHC-insured mortgage refinances only (and not HELOCs or uninsured mortgages).

And yes, the big banks have traditionally limited HELOCs to 80% LTV.

The HELOC market is $215 billion, representing 22% of all Canadian mortgages according to CAAMP. About 2.64 million Canadians have a HELOC, out of 9.45 million owner-occupied households.

JustWatching said...

Just Jack,

Thanks for the MOI update on the outlying areas of Greater Victoria.

Maybe that explains why I am seeing this on PCS.

Saanich Price Changes

Sooke & Malahat Price changes

In Saanich 102 out of 223 listings have had one or more price changes.
(390-620K price range).

JustWatching said...

HHV said "Look for the spin machine to be in overdrive on Thursday as the usual suspects promote the sh&t out of flawed market reporting methods."

I estimate we will hit 515 MLS sales this month. How does that compare to previous years. Here is a graph that was posted by on your blog last August.

August MLS sales 2001-2010

This year will be better than last year, on par with 2008 and worse than any other year since 2001. But you won't see that in the VREB press release or written by their parrot, the TC.

omc said...

I have to disagree with the flipper statement JJ. Occasionally we see a failure like st ann, but mostly I see craziness like the one that just sold on Orchard. I mentally add up renos in most flips in the sub 50k range, which when added to the purchase price brings you to less than $700k on average. I see these houses sell for mid $800k range; a HUGE profit.

As the market was correcting I saw less flips, I am seeing more now.

a simple man said...

add dunlevy to the list of failed flips.

EagerBuyer(Not) said...

Looks like none of the readers here wanted to comment on how the real estate market will be affected by switch back to GST/PST

So lets see what Cameron Muir, chief pumper economist, at BCREA has to say on the subject.

Tax change unlikely to dent real estate market

Demand for new homes and luxury residences in B.C. could spike when the PST/GST system is re-introduced in March of 2013, said Chief Economist Cameron Muir of the BC Real Estate Association.

Purchasers of new dwellings, and those with a value greater than $1 million, might choose to hold off until after the HST’s termination, since they would incur the most cost under the harmonized tax, he explained.

However, Muir emphasized that the tax shift would have a negligible impact on overall real estate demand in the province.

“The vast majority of home sales in the province, about three-quarters of them, are existing homes, which are not subject to the HST,” he said.

Muir believes the cost of related services — like real estate commissions, appraisals and building inspections — typically aren’t significant enough to cause homebuyers to delay a purchase until after the HST’s termination in March 2013.

-------------

This guy sure knows how to talk out of both sides of his mouth.

Unknown said...
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Animal Spirit said...

Question coming out of the last thread:

Marko said: "Condo average is up to 345k thanks to someone from Calgary dropping 3.3 mill on a unit at the Oak Bay Hotel"

However, in a thread a while ago, someone said that pre-sales are only booked by VREB when a development is finished. Does anyone know which is true?

btw - "It’s mass psychology – “animal spirits” – that has driven up housing prices to unsustainable levels, he believes. " - no, I (even if I am plural) have personally not driven up the Victoria housing prices.

Frannie said...

@Waiting
I was away from the blog for a few days, and so missed your post about what your family is going through. I am so sorry.

Regarding your kind offer to become involved in the challenge to Smart Meters, I will respectfully suggest that you have enough on your mind, and that nobody can fault you for putting all your energies toward your family right now. Let those of us who are not going through a personal crisis right now fight for you, and because of you.

Meanwhile, I will repost some of the links, for those who are interested in pursuing this on their own.

Citizens for Safe Technology is an excellent source, with links to a lot of current info and research (and I assure you it doesn’t all lead back to “one or two sources,” as some have alleged.

The Smart Meters Blog presents refutations to all of Hydro’s misleading statements and fallacious arguments.

This excellent Focus magazine article examines Hydro’s conflicts of interest, misrepresentations and spin.

Dr. Magda Havas has been working on these issues, and giving expert testimony on them, for years.

Again, Waiting, you and your family will be in my thoughts, and I wish you the very, very best.

backinVictoria said...

Speaking of flippers in (potential) trouble....

Just noticed that our old buddy 828Hampshire finally sold their place for $665k. They had recently listed it for $687k (with I believe a second realtor after initially listing with Marko) Last year they had it FSBO for $739k.

Can anyone tell me what the property sold for prior to this sale? Any speculation on the haircut they took?

Robert Reynolds - HMR Insurance said...

I hate to get involved with the smart meter thing, as I don't think radio waves are harmful, but as a techie person, woulden't it have been easier/faster/cheaper to use some variant of ethernet over power, or even running some network cable to every home rather than a wireless signal? WiFi, ain't cheap, it also ain't reliable, it also ain't low power. $2 of CAT-5/6E cable seems like a better choice.

Also, Fuck Cancer! I've paid out 3 death claims this year for Cancer.

Frannie said...

For those who asked for it:
The link to the WHO/IARC report that classifies radioactivity from EMF as a class 2B carcinogen

Link to the press release on this report

Interview on the CBC with Dr. Magda Havas

Dr. Havas, Ph.D. Toronto, post-doc Cornell, has been an expert witness in 12 countries.

Frannie said...

I am very frustrated that my links don't seem to be working. Here are the last three for you to cut and paste.

http://monographs.iarc.fr/ENG/Classification/ClassificationsAlphaOrder.pdf

http://monographs.iarc.fr/ENG/Classification/index.php

http://www.cbc.ca/ontheisland/2011/07/26/smart-meter-safety-concerns-jack-laytons-departure-and-protecting-avatar-grove/

and one to the blog:
http://pandamian.wordpress.com/

Introvert said...

Frannie, do you have any links on how climate change is a hoax?

Leo S said...

@Frannie None of your links work. And you're wildly misinformed, but this is not the place to continue arguing so I'm done.


Sale to assessments up to 100%! A real estate surge for the fall?

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

Actually, the one to the Smart Meters blog works fine in cut and paste, but here are the others again, perhaps third time will be the charm:

http://www.iarc.fr/en/media-centre/pr/2011/pdfs/pr208_E.pdf

http://www.cbc.ca/ontheisland/2011/07/26/smart-meter-safety-concerns-jack-laytons-departure-and-protecting-avatar-grove/

And Leo, I don't know what it will take to make you understand that I don't give a s**t about your opinion of me or my informedness, and am not interested in your name-calling or attempts to denigrate or humiliate. Your insistence that something is so doesn't make it so. Sorry my links didn't work, but it wouldn't matter what I did or said, your attitude and remarks would not change. So this is for those who actually might be interested, and not for you. If you aren't interested in my posts, you are perfectly free not to read them.

jesse said...

Frannie, the data you cite do not in any way show smart meters are unsafe, they raise the point that there is a chance they might be unsafe. I hope readers here understand the difference.

Trilobite said...

@Frannie, you wrote: "Your insistence that something is so doesn't make it so." And that's exactly what I'd say to you.

There is absolutely no scientific evidence that smart meters are unsafe whether you believe it or not.

Marko said...

Quite the bounce in the stock markets....even thought I was buying 2-3 weeks ago did not expect such a quick bounce. Time to sell off some things this morning....

Marko said...

As for Smart Meters isn't the solution really simple....give people the option of opting out and put them on a higher rate tier?

VIHA has implemented these in the new patient care center -> http://www.vocera.com/index.php/voice/badge

I don't think staff have a choice...

omc said...

backinvictoria,

I believe 828 sold last year for $640k. I don't think I would include this one as a flipper, as I don't think he actually did any renos on that house. It just looked like economic necessity made them sell. How much they will end up losing depends on if they used CMHC. I doubt they paid full realtors comission.

Craig said...

"do you have any links on how climate change is a hoax?"

I'm not sure there is a single individual on the planet who doesn't think climate changes.

You missed the part where the human contribution of 3.2% of the .03% of CO2 in the atmosphere will tip the planet into self-destruct mode.

EagerBuyer(Not) said...

HHV,

I hope you do something about these Smart Meter and climate change posts. They are way off topic and really are spam on this blog. Those interested in these subjects can go to Kids in Victoria or Vibrant Victoria and debate all day long.

If you allow it to continue I think you will lose many of your regular posters.

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

backinvictoria & omc,

Our old friend at 828 hampshire lost money.

The house was purchsed on July 12, 2010 for 660K. Add in the lawyers fees and property transfer tax of 11K and the total climbs to 672K. CMHC isurance, if required, would be on top of this but could be transferred to a new property.

Assessment value is 687K. The place was listed again on August 5 for 685K, and became a pending sale on August 26 for a purchase price of 665K. Take off realtor fees of 15-25K (discount or full service) and you get the owner seeing a net of 640-650K.

So the loss is around 22 to 32K and a whole lot of aggravation.

** Note I didn't factor in the mortgage interest, taxes, moving expenses or any reno costs. These make it worse but are somewhat offset by equivalent rent since they had to live somewhere.

EagerBuyer(Not) said...

This blogger sums it up nicely...

Five Rules to Remember When Dealing with Real Estate Agents

A reader asked me to comment on historically low mortgage rates and their effect on housing. He asked because Realtors are telling him mortgage rates prove now is a "great time to buy".

That comment prompted me to write Five Rules to Remember When Dealing with Real Estate Agents

Rule Number One

Real estate agents will always say "Now is a Great Time to Buy" no matter what the trend of prices, mortgage rates, or inventory.

Here are some phrases to expect depending on current conditions.

1. Prices are going up, better act fast.
2. Alternatively, prices are falling, homes won't last long at these prices.

1. Interest rates are going up, better buy quick before you get priced out.
2. Alternatively, mortgage rates are falling, they won't go much lower.

1. Inventory is huge. It's a buyers' market.
2. Alternatively, Inventory is shrinking fast. Don't let your dream home pass you by.

Rule Number Two

Unless you specifically have a buyers' agent negotiating on your behalf, the agent represents the seller.

Rule Number Three

The agent has only two missions:

* To get you to buy something
* To get you to pay as much as possible so the agent make the largest commission possible

Rule Number Four

As a result of rules one, two, and three, it is imperative to be skeptical about anything positive your agent says.

Rule Number Five

It's equally important, if not more important, to take cues from what the agent does not say. For example, if the agent does not say anything about the school district, it is probably a poorly rated school district. Also, don't expect the agent to tell you if a crack house is next door, gangs have taken over a neighboring block, the tap water tastes like sulfur, or the street floods every April. At most, agents will only disclose what the law says they must.

Marko said...

27 sales this month over 1 million and 19 to people outside of Victoria!

Vancouver, China, Calgary, Ottawa, Seattle, Toronto, Germany, etc.

EagerBuyer(Not) said...

Another economist thinks that the switch back to GST/PST will have new home buyers sitting on the sidelines.

Economists forecast minor ups and downs with B.C.'s 18-month HST unwind

The real estate and housing industries could take a hit as British Columbians wait until March 2013 to save seven per cent on new home purchases or renovations.

"I suppose there will be some concern about adjusting the timing of the purchase of a house in order to maximize the tax liability."

Under the HST, homebuyers are charged an extra seven per cent tax on homes priced more than $525,000. Homebuyers are eligible for a tax rebate of up to a maximum of $26,500 under the HST.

Just Jack said...

But how many places are listed for over a million?

Animal Spirit said...

I second EagerBuyer(Not)'s request to keep the topics to housing and finance, and stay away from tangents.

Thanks.

Animal Spirit said...

that should have been 'posts', not 'topics'

JustWatching said...

Just Jack said "But how many places are listed for over a million? "

In Greater Victoria:

289 Single Family Homes
13 Townhouses
40 Condos

Marko says there were 27 sales this month

Mindset said...

27 sales this month over 1 million and 19 to people outside of Victoria!

And supposedly 4 out of 5 dentists prefer crest.

Sorry to be blunt, but how about some useful context information instead of what appears to be a posting of VREB style marketing hype.

For example, how many sales last month in the same price range? How much did they sell above or below assessed? Are local buyers numbers going up or down? What were sales like over 1M last year in the same month?

For example, some quick math based on JustWatchings numbers puts units over 1 million at about a years worth of inventory at current sales rates. How does that compare to the peak years (2007)?

omc said...

I wouldn't jump all over Marko about the over 1M sakes this month comment. He does tend to tell it like it is, good or bad. Houses in that range have been dead for quite a while, so it is significant. This place has always been a place to find raw info about the local market.

I have observed a big jump in out of towners in the 'hood, especially ithe last few months. It doesn't make sense to me, but it is happening again.

I agree that this blog should stay economic and RE only. Off topic posters should go else where.

HouseHuntVictoria said...

About those 27 million + sales:

This is what was once considered "normal" activity in this segment. For the past few years, segment sales were depressed and prices reflect such.

The 19 out-of-town buyers in the segment says two things: not many in Victoria can afford $1M+ for a house, and yes, Victoria waterfront/luxury properties are attractive for a very select few outside of Victoria (every other major city in Canada sells more luxury properties than Victoria each month).

There is still a glut of luxury/waterfront properties available in the Victoria marketplace.

Furthermore, the fact that we are even discussing this is shameful. It's shameful on the VREB for including these properties in the general market data. Does anyone think for a minute that these are part of the the Victoria "housing" market? IMO, they're an entirely different product, with entirely different inputs and entirely different purchasers. They shouldn't be dumped into the general sales data, but they are.

The reason they are included in the reported entirely benefits the upside in the reporting. When 27 of these types sell, they drastically pull the average price skyward. When few sell, the impact on the downside is not anywhere near as significant. It's a can't lose for the VREB. Most other boards exclude these types of properties from their reports.

The VREB, in their "inside" data that gets distributed to agents monthly, breaks them out (luxury, waterfront and acreage) and gives agents a separate average price for what most of us would consider "homes." That average is always considerably lower than the reported.

Marko said...

Thursday September 1, 2011 7:50am:

August August
2011 2010
Net Unconditional Sales: 542 425
New Listings: 1,200 956
Active Listings: 4,944 4,356

Please Note

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

Just Jack said...

If you let VREB exclude sales from the raw data, then you're really going to get dot, dot, dot


I wouldn't limit the data by price. Benchmarking for a typical property based on physical characteristics might be more valid. Or comparing the benchmark to the raw data may be more telling to see if those million plus sales do have a significant affect.

Its best to look at all types of data. Averages, medians, benchmarks and re-sales over time to get a well informed opinion.

It would be nice if someone did they same for Vancouver that we do here. At least the B.S. in their market could be weeded (should I really use weed when talking about Van) out.

a simple man said...

inventory still very, very high for this time of year. Sales less than average by a long shot.