Wednesday, September 28, 2011

Bear Mountain - Victoria's Vegas - Part 1

The Bear Mountain development, brainchild of Len Barrie, a former NHL hockey player, along with several other NHL players acting as investors, broke ground in 2005. The original $2.1 billion plan called for 1,112 single-family homes, 1,997 condos, 220 townhouses and more than 1,000 fractional-ownership town homes. Early in the last real estate boom, the development received country-wide attention and was even mentioned in the New York Times.

By 2006 several condominium buildings were under way and many more had been approved, including the 20-storey Soaring Peaks and 14-storey Highlander (started but never finished).

In 2006, the Bear Mountain sales team set a record for condo sales in one day with $66 million worth of units sold!

In 2007, Vancouver-based development company Quigg announced plans for 45-, 39-,33- and 27-storey towers--these plans stalled in 2008 due to the economic downturn. 2007 and 2008 were also the years that condo prices on the mountain hit their peak.

By 2009, due to a weak global economy and poor management decisions, things slowly began to unravel – the entire development was put on hold and remaining condos prices were slashed significantly to clear out remaining inventory. While prices in to the Bear Mountain condo market recovered slightly in 2010, 2011 has brought another bear market to Bear Mountain. Let's examine some of this year’s sales, previous purchase prices and current listings:

Current listings looking at huge losses
Unit List price Previous sale price Date
105 – 1400 Lynburne $258,000 $334,900 + GST Nov 2008
509 – 1400 Lynburne $319,900 $355,000 + HST August 2010
305 – 1325 Bear Mountain Pkwy $298,000 $350,000 June 2008
417 – 1325 Bear Mountain Pkwy $311,000 (court ordered) $479,000 + GST June 2007


2011 sales and previous purchase prices
Unit 2011 Sale price & date Previous sale price & year
416 – 1325 Bear Mountain Pkwy $312,800 (Sept) $517,924 + GST (2007)
302 – 1375 Bear Mountain Pkwy $365,000 (Sept) $319,047 + GST (2009)
147 – 1335 Bear Mountain Pkwy $412,000 (Aug) $415,000 + GST (2010)
414 – 1335 Bear Mountain Pkwy $345,000 (Aug) $365,000 (2009)
144 -1335 Bear Mountain Pkwy $220,000 (July) $262,000 (2010)
617 – 1400 Lynburne $307,500 (July) $335,000 + GST (2009)

*The above post was contributed by an anonymous reader. Sales data was fact-checked for accuracy. 

54 comments:

a simple man said...

thanks anonymous reader. Nice to look at these numbers, although Just Jack does an awesome job at keeping us apprised of this as well.

Mindset said...

Wow, good information and a very interesting read HHV and anonymous reader.

This led me to thinking about the number of properties sold in the 'boom' in an area, and how that correlates to current instability. It seems to me that Bear Mountain was one of the biggest SFH games in town during the boom due to the lack of other quality properties available at that time.

There is generally a lot of supply right now everywhere, but in areas where there are low numbers of houses for sale (i.e. ten mile) and owners have already proven to be stable, this does not seem to be the case. Perhaps there are buyers watching these more rare areas waiting for a property to come up for sale, and a lot less competition on pricing when they do?

Just Jack said...

It looks like the only people that can provide affordable housing are the First Nations.

Such as a 32 year old 1,040 square foot townhouse at 1506 Admirals road that just sold for $142,000.

Maybe, I'll bring this up with Mayor Dean next time I see him.

jesse said...

The name was a giveaway for impending tales of woe. AmIright?

Just Jack said...

With so much for sale on Salt Spring Island, condos and town homes are taking a serious beating and seem to be falling to 2004 price levels.

As the marketplace contracts from the outer areas into the city, will condos and townhomes here become our whipping boy too?

SilverSurfer said...

A quick thanks to HHV for keeping up this blog with excellent posts like this one, despite that he's moved out Victoria recently. Your time & efforts here are much appreciated!

Zidane said...

HHV: Yes, we appreciate your work.

Introvert said...

It's sad to see regular contributors omc and EagerBuy(Not) leave the blog due to fatigue from reading endless predictions of a market crash that seems never to come. But who could blame them?!

What is more, when the creator/owner of Victoria's premier real estate blog chooses to buy his first house in another province, it definitely is poignant/hilarious/kind of sad. It means HHV also threw in the towel, in his own way.

But in a demonstration of incredible determination and resolve, HHV continues to blog and predict Victoria's housing collapse from his none-of-your-business-super-top-secret location. As long as there are enough renter-doomsayers still left reading and contributing to it, the blog shall live on!

Trilobite said...

Very interesting post HHV! Though an only an occasional poster, I really enjoy reading the debates and then there's those invaluable facts and factoids. HHV, please keep up the good work and OMC ... hopefully you'll reconsider.

Animal Spirit said...

Nice trolling attempt introvert.

CanSpeccy said...

Here's a perspective on the Canadian housing market from the US.

Several points, at least, in the discussion worth noting. First, Canadian incomes have risen faster than US incomes (actually US incomes have fallen, I believe).

Second, Canadian income growth has been related to China's boom, which has driven up commodity prices. Third, China may be about to slow sharply.

Phil said...

CanSpeccy - Garth just posted a similar chart but it shows the Canadian average price at over 350K, way past the US peak. I'm not sure who to believe.

Leo S said...

First, Canadian incomes have risen faster than US incomes

That may be true, but incomes haven't even come close to keeping up with house price appreciation.

source

CanSpeccy said...

Phil,

Yes, Garth Turner maintains that Canadian house prices are higher in those in the US, not the other way around. However, having browsed around on some US property Web sites, e.g., Zillow.com, it seems to me that if you compare like with like, US houses in many places are still quite pricey compared with ours.

A difference, perhaps, is that the US has many small houses, around 800 square feet built on a slab on a small lot -- two or three thousand square feet -- and these are mostly cheap, but not comparable with the great majority of houses we have in Victoria, or Vancouver.

CanSpeccy said...

Leo,

It's true, incomes have not kept up with prices. When we moved to Victoria in the early seventies, one real estate agent apologized for the fact that lot prices in Oak Bay had just doubled from $4000 to $8000! (we bought a house on a largish lot for $67,000). The same lots today are worth about $600,000, or an appreciation of 75 to 150-fold. During the same period, wages have risen about six or eight-fold, I should think.

The reason for the great discrepancy between the increase in prices and the increase in wages is the huge reduction in interest rates, from a peak in the 70's of 18 or 20% to a low, now of around 2-3%. So interest rates really are important, and anyone borrowing a vast amount to buy a house with a low-interest mortgage better be hoping for massive inflation to wipe out the real value of the capital to be repaid.

In Australia, they have taken this to a logical conclusion by introducing non-repayment mortgages. You just pay the interest, presumably in the assumption that after 30 years the capital repayment will be a triviality in real terms.

Leo S said...

CanSpeccy - Garth just posted a similar chart but it shows the Canadian average price at over 350K, way past the US peak. I'm not sure who to believe.

Garth's graph is dollars, the other graph is index values. Not directly comparable.

Leo S said...

Zillow.com, it seems to me that if you compare like with like, US houses in many places are still quite pricey compared with ours.

Which cities are you looking at? A quick glance at downtown Portland shows plenty of very nice looking homes available in the $300-$400k range and lots of stuff lower than that. Average home price is about $280,000 there.
By all accounts, Portland is a very nice city with an agreeable climate.

Some cities (San Fran) of course are still sky high... But that is in an entirely different league than Victoria.

DavidL said...

@Lwo S wrote: A quick glance at downtown Portland shows plenty of very nice looking homes available in the $300-$400k range and lots of stuff lower than that. Average home price is about $280,000 there.
By all accounts, Portland is a very nice city with an agreeable climate.


Portland is a very nice city ... I visit relatives there regularly. Until 2008, Portland real estate seemed to be escaping the "correction" that was affecting housing prices is many other parts of the US. However, since then, prices have tumbled by 30% and sometimes up to 40%. One relative has seen their $800K home (comparable to an $800K home in Victoria) tumble down to a resale value of just over $500K. (Zillow is a great tool for tracking this information.)

However, home ownership in Portland is quite different than in Victoria. As there is no state tax, the tax assessment on a $460K home is $9000/year - or $750/month. This drastically affects the cost of owning a home, and in turn - the monthly rental rates.

Introvert said...

By all accounts, Portland is a very nice city with an agreeable climate.

I agree. But Portland is one of a great many very nice cities with agreeable climates in the U.S. By contrast, Victoria is among only a small handful of nice cities with agreeable climates in Canada. So my argument goes: we will always have a premium (even after a crash) and, after any crash, the likelihood of our prices bouncing back to above normal is far greater while the time it would take for them to do so is far shorter here than in Saskatoon or almost any other city in Canada. This is my "Victoria is different" argument, in short.

Nancy said...

CanSpeecy,

How do people keep up. It keeps going up-and up how do people do it. Debt eventually runs out. You someday have to pay it back.

Watching and waiting said...

1627 Hybury Pl (ML No: 298096) Update:
"REDUCED TO SELL!"
now a 20k price drop down to 659k from the original asking price of 739k.How low can this flip go?

Leo S said...

However, home ownership in Portland is quite different than in Victoria. As there is no state tax, the tax assessment on a $460K home is $9000/year - or $750/month. This drastically affects the cost of owning a home

Depends. The Oregon property tax system is completely broken as it is based on a fixed increase from home valuations in 1995. So you could be paying a lot, or you could be paying very little depending on what that home was valued 15 years ago. Read about it at the end of this page: A Broken System of Property Taxes in Oregon

Fiduciary said...

Whenever anyone posts a "Victoria is different" argument, I always wonder what people in other cities would think. Yes, climate is something Victoria has going for it, but for many people the fact that to get off the island is expensive is a downside. It's in situations like these where I find it very valuable to think objectively. Victorians saying Victoria is different has a huge bias. If there were a HouseHuntToronto they'd be saying Toronto is different, or HouseHuntGenericBubbleCity they'd say their city is different as well.

Thus, the only "Victoria is different" arguments I buy are ones coming from people who are shown to be objective. MoneySense has a decent comparison, but they even have a bit of a bias because their offices are in southern Ontario.

Phil said...

Portland rents look about 40% lower than Victoria's. Throw in no sales tax, better weather and you really have to wonder what we are so smug about up here.

$1575 in Portland

a simple man said...

I think people in other cities see Victoria as a nice, mild climate with a tonne of rain and little sunshine. They see us as completely isolated from the outside world and that people dance around with goats and smoke dope most of the time. The characteristic that is almost most commonly attributed to Victoria though is overpriced.

To say that most people in canada would beat a path here is wrong. The majority of my friends in Vancouver would see moving here a jail sentence.

I love it here, but I am weird and ok with it (disclaimer: I do not dance with goats, often).

CanSpeccy said...

"How do people keep up. It keeps going up-and up how do people do it. Debt eventually runs out. You someday have to pay it back."

Well maybe. But the hope for anyone buying with leverage today must be that inflation will reduce the real value of the outstanding capital.

This has worked consistently since the late 60's because it has been the policy of the BOC to create inflation through money printing at rates of around 5%. Since nominal wages have at least kept up with inflation, that has meant that after 30 years one is making capital repayments in dollars worth only about 25% of what they were worth when borrowed.

Inflation means nominal house prices generally rise. But although the trend in house prices in Victoria over the last 40 years has been strongly upward, there have been downturns. Between 1982 and 1986, for example, some house prices dropped by as much as 40%.

Paula said...

Regarding perceptions of Victoria from people in other citiies:

A few friends of mine moved from Manitoba to Victoria because of family and the weather.
But I also have friends who moved to Halifax because of similarly mild weather and lower housing costs. Also, friends in Calgary who'll never move because they don't want to live far from family who depend on local job opportunities (and they'd rather just spend winters in Arizona anyway). Then there are the people in Kelowna who love the dry summers, and friends in Vancouver who think Victoria is too isolated from the rest of BC.

It's true that there are only a handful of Canadian cities that have mild weather (on both west and east coasts - a few large snowfalls don't scare Maritimers), but we also have one tenth the population of the US, so we only need one tenth the number of mild cities to fulfill the needs of all the people who think that a mild, rainforest climate is the most important priority.

CanSpeccy said...

Re: Zillow, Which cities are you looking at?

Um, well how about this? One could do as well as that for seven hundred grand in Victoria, surely?

CanSpeccy said...

Or look at this on a 3000 square foot lot for $8 million!

HouseHuntVictoria said...

"we will always have a premium (even after a crash"

No argument from me here. Victoria has, for a very long time (30 years or more) cost more, so history supports this assertion.

"and, after any crash, the likelihood of our prices bouncing back to above normal is far greater while the time it would take for them to do so is far shorter here than in Saskatoon"

I beg to differ. Saskatoon over history has been less prone to boom bust cycles in their real estate market. Furthermore, in less than 4 years, between 2004 and 2008, Saskatoon witnessed approx. 100% price appreciation to Victoria's approx. 66%. So I'd say history doesn't support your statement.

And now here's a question for you: if Victoria is different, and we agree that different means more attractive to Canadians than most other cities, then why does Victoria's immigration rate lag the Canadian average and the BC average. I would expect that if Victoria was "the" city to live in in Canada, it'd be growing faster and be experiencing a higher rate of migration/immigration than all those other "ordinary" cities.

Fiduciary said...

HHV, that last point is exactly what I'm talking about. Immigration stats, population growth, those are objective things that should measure whether it's different here. Anecdotal arguments about how "people love to retire here" or how "people love our weather" don't make it different here.

patriotz said...

"So my argument goes: we will always have a premium"

A premium of price/rent? Why? Does the climate make the landlord's losses any different?

patriotz said...

"Um, well how about this? One could do as well as that for seven hundred grand in Victoria, surely?"

You're really clutching at straws when you pick a house in one of San Francisco's most exclusive neighbourhoods to try to make Victoria look cheap.

Don't stop there, you can make Victoria look even cheaper if you pick, say, the East Side of Manhatten.

Introvert said...

As of July 2011, Saskatoon was Canada's fastest growing city. And maybe it still is. So why, then, is the average SFH in Saskatoon still stuck around $300,000? With more immigrants than any other city in the country, why aren't Saskatoon's prices in the $600,000 range, like ours? The two aren't even in the same league!

Wouldn't that make Victoria "different" if it can sustain $600,000-range prices with very low influxes of people? Because that's what Victoria is doing.

If almost all Canadians agree Victoria is mild and agreeable, then maybe only the rich among them tend to actually pick up and move here, thus maintaining our high prices?

Mike said...

Victoria prices like everywhere are sticky, but they are coming unglued.

On wages and immigration. The latest numbers show BC is now the laggard in both.

BC had the worst wage growth y-o-y to July of all provinces at 0.9%. The Canadian average is 2.2%.

For immigration, BC had the largest decline of any province y-o-y to July, from the previous year. It now has one of the slowest population growth rates of the provinces.

Leo S said...

Um, well how about this? One could do as well as that for seven hundred grand in Victoria, surely?

Forgive me for not stumbling on the exact example you had in mind.

And you're seriously comparing San Francisco, a city with 10 times the population and economic importance of Victoria?

Animal Spirit said...

of course canspeccy is comparing San Francisco to Victoria. He or she wants to make the argument that Victoria's is not overvalued - either to obfuscate the arguements others or making or to self convince that prices indeed should be at the levels they are at. A diversionary 'hey, look over here' tactic.

Prices are too high. It is that simple. No other argument is needed.

HouseHuntVictoria said...

"So why, then, is the average SFH in Saskatoon still stuck around $300,000?"

Likely for the same reason that Victoria's average price has been stuck around $600K for 4 years... the market is flat for the same reasons: availability of credit being the primary one.

Victoria isn't different because it can sustain $600K prices while Saskatoon can sustain $300K prices precisely because Victoria cost more to begin with. If you look at the two cities on percentages, rather than dollar amount, they're basically the same, except that Saskatoon's house price inflation more accurately reflects their immigration data.

"If almost all Canadians agree Victoria is mild and agreeable"

I haven't seen any data/survey that supports this statement, just a BS "poll" that has 6 cities ahead of Victoria on the "desirability" meter, Saskatoon being one of them...

Mindset said...

Or look at this on a 3000 square foot lot for $8 million!

Wow, thats like saying a Honda Minivan is worth a premium because Ferrari's are selling out.

Silicon Valley is a world leader in technology and innovation. Houses are pricy there because it is one of 'the' places on the planet to be. See any headquarters around here like Lockheed, Apple, Intel, HP, Adobe or Google? There are thousands of head offices for world leading organizations in the area.

The technology industry has also faired very well in the downturn.

Sure, you pay a premium for San Fran, but don't forget that prices there have come off the peak as well. Peak condo prices are off 33% based on Case Shiller, one of the better price change measures going.

DavidL said...

I just noticed that 851 McKenzie Ave (MLS 300004) is listed at $400K - $48K less that its assessment. Anyone know what the "story" is on this house is (flooding, termites, etc.)? I am genuinely surprised to see a house listed this low in Saanich (by Swan Lake). Granted, it is right along a very busy part of McKenzie Ave ...

patriotz said...

"And you're seriously comparing San Francisco, a city with 10 times the population and economic importance of Victoria?"

Metro San Fransisco (a.k.a Bay Area) has a population of about 7 million, which is over 20 times that of Greater Victoria.

This kind of self-importance has been de rigour in Vancouver for some time and seems to have jumped the strait. Next, they'll be comparing Nanaimo to Santa Barbara.

CanSpeccy said...

"As of July 2011, Saskatoon was Canada's fastest growing city. And maybe it still is. So why, then, is the average SFH in Saskatoon still stuck around $300,000? With more immigrants than any other city in the country, why aren't Saskatoon's prices in the $600,000 range, like ours?"

There's a big difference between a town on the prairie and a town on a peninsula surrounded by water.

Victoria, has filled up except up the Saanich Peninsula, which is mostly zoned agricultural or around the corner on the West side, which for most people would entail a difficult commute.

And Saskatoon has no oceanfrontage, whereas Victoria never gets so cold you cannot even skate.

Mindset said...

Canspeccy, I don't think anyone is debating that Victoria is worth a premium over Saskatoon, it's just whether or not Victoria is now over-valued from a Canadian RE perspective.

Sure Victoria has warm winters and oceanfront (well, so does the whole coast up to Parksville and Sooke), but Sask has a lot more good jobs, affordable housing (comparibly), a much younger population (labour force, taxation base), and what looks to be a very strong and vibrant future (ours forecast appears pretty weak).

Let's put aside San Fran for a moment. Salt Spring has great weather, ocean front properties and building restrictions. Yet like Victoria, the inventory keeps increasing.

If everybody wanted to live here, and restricted amounts of land was a real issue, we wouldn't see the inventory or days on market increases that we are today.

CanSpeccy said...

It seems hopeless attempting to engage in discussion here. My posts keep disappearing!

Is the moderator trying to skew the discussion, or what?

HouseHuntVictoria said...

Comments aren't moderated here Canspeccy...

CanSpeccy said...

"Comments aren't moderated here Canspeccy..."

OK. so where did they go?

When I posted a link to a 700 K house in the small California town of St. Luis Obispo, an hour or so ago, it appeared as a blog comment. Now it has gone.

Likewise, my comment about Saskatoon prices versus Victoria, was a repeat of another comment that I made, which at first appeared among comments here and then disappeared.

Nancy said...

House Hunt Victoria,

I know many people who left because they don't like the rain. My friend's parent's were going to retire here but they could not stand the rainy winter and the drug addicts downtown.

They moved to US instead - they are there 1/2 the year and Winnipeg the other half.

Not everyone thinks this place is amazing.

CanSpeccy said...

"If everybody wanted to live here, and restricted amounts of land was a real issue, we wouldn't see the inventory or days on market increases that we are today."

The restricted availability and hence high cost of lots in Victoria explain, in part, the current relatively high price of Victoria property. But if inventory and days on market are both increasing, that implies that prices are decreasing.

But the question is whether these trends will persist?

Personally, I hope they do. It seems outrageous that most young people wishing to own a house in Victoria, have to take on horrendous risk in order to do so. But wishing does not make anything so.

What would drive house prices in Victoria down would be rezoning to increase density. Along Beach Drive, for example, there are a number of large waterfront properties that would be ideal for condo development. Oak Bay Avenue also seems an excellent place for further development.

It is not difficult to see how population density in Oak Bay could be double, tripled or multiplied by four. With similar intensification of development in other core municipalities, Victoria would not need to spill out onto the Saanich Peninsular for decades, there would be no need for multi-billion-dollar subsidies to urban sprawl with rapid transit to the Western communities, etc., and one could greatly improve the frequency and hence convenience of public transit within Victoria.

CanSpeccy said...

When I said "What would drive house prices down" I should have said "home prices." The future for Victoria is intensified development and a transition from a small town with many single family homes on large lots to a large city with many people living in multi-family developments. This transition is already evident downtown. It should be encouraged throughout the city.

Those who want the quiet life can go to Salt Spring - plenty of places for sale there now, apparently.

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

Canspeccy,

Not sure... but I'm guessing either there's an issue with Blogger or your not doing it right somehow. Please don't be so quick to blame this writer. If I delete a comment, you'd see a message like the one above

@Nancy... my dad is a snowbird from Victoria. He leaves every year in late October and won't come back till late April. He hates the wet, winter weather. As does the Mrs HHV, who grew up elsewhere and never took to Victoria's mild (please read as cold, wet, moldy window) winters.

HouseHuntVictoria said...

@Canspeccy... found your missing comments... they're on the previous post here. My guess is your browser's back button is getting trigger happy.

CanSpeccy said...

"Please don't be so quick to blame this writer."

OK, Sorry.

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