Monday, September 19, 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.

September 2011 (last week's numbers)
Net Unconditional Sales: 237 [126] (51)
New Listings: 810 [502] (186)
Active Listings: 4,738 [4,689] (4,590)
Sales to new listings ratio: 29% [25%] (27%)

September 2010
Net Unconditional Sales: 395
New Listings: 1,211
Active Listings: 4,323
Sales to new listings ratio: 32%
Sales to active listings ratio: 9% or 10.9 MOI


Daily sales volume is averaging 13 units per day... a noticeable drop from last month's 16-17 units per day average. This is remarkable as the typically industry spin usually tells us the market picks up again once the summer buying doldrums end. Am I the only one noticing the absence of that line? Seems steady-as-she-goes is the new buy-now-or-be-priced-out-forever. There are only two truths in the Victoria market right now: sales are low and inventory is high.

102 comments:

JustWatching said...

HHV said "There are only two truths in the Victoria market right now: sales are low and inventory is high."

It is even more dramatic than this. Sales are dropping and inventory is going up every week.

Usually the inventory is tapering off as we head into the fall market. This September we have this:

Sept. 19 - 4,738
Sept. 12 - 4,689
Sept. 5 - 4,590

And this September will be the 2nd worst year for sales in 10 years.

Sweetrealtor said...

I think September sales numbers will actually turn out better than 2010. It is noticeably busier in mid September after the hangover of Labour Day weekend passed. I have 3 accepted offers waiting to clear conditions now and more coming. A lot of the properties that I'm showing to my buyers have existing subject to sale offers on them already, typical of a slower market. So when things pick up, the trickle down from one sale often results in two or more sales. Stay tuned, it's going to be interesting to see how the month wraps up.

Marko said...

I've already had one sale this month and have 2 accepted offers waiting to clear conditions....looks like Fair Realty will have a good month ;).

Just Jack said...

The kids are back in school, time to go a house hunting.

Pender and Salt Spring Islands have had a nice little bounce in sales too. Maybe because some of Vancouver is spilling over onto it. Sooke and Shawnigan Lake sales activity is still depressing.

It still seems to be a game of musical houses to me. People trying to trade up to better hood or better house (not necessarily the same thing in Victoria) before the music stops.

I don't think this will be the worst month ever for Greater Victoria sales, but it may be in the lowest three ever recorded months for the real estate board in the last 20 or more years. Way down from the government induced euphoria years of 2009 and 2006.

Maybe we're near the normal sales volume for a city of our
size with a turn over rate of around 2 percent of our total stock of housing annually. Imagine 2 percent of our total stock of housing setting the price for the remaining households to max out their lines of credit.

What dumb ass son of an MBA, thought that one up.

Brenda said...

...*IF* you had to choose, would it be a better house or a better neighbourhood?

Just Jack said...

Some people jumped too soon onto the real estate wagon without checking prices before they bought. They probably thought that it did not matter what they purchased as all prices go up.

The high rise towers in Regents Park are a nice example. Back in 2004, these were one of the few good quality steel and concrete buildings in Victoria, before Humboldt Valley was built.

So, if you were an out of town buyer looking for something to buy, these suites looked good to you. So, it was really easy to overbuy then and pay $283,000 back in 2004. But now, seven years later, cooler heads prevail and that condo now sells for $364,000. A modest increase of 29 percent over 7 years. While the condo market in general moved up by almost 65% during the same time.

Some times it pays to wait or get advise before you buy.

Just Jack said...

If I had to choose it would be the best house in the worst neighborhood.

Because I would loose the least amount of money and still have a nice home to live in. I could see myself paying myself out of debt sooner by buying a near new home with a suite in Sooke as opposed to a tiny home in Oak Bay. The potential downside of Oak Bay building lots is staggering.

DavidL said...

@Brenda

Even in the less desirable neighbourhoods, you can find a street or a few blocks of residential houses that are quite lovely. Houses in these locations sell for less that other neighbourhoods that are in "higher demand". Just be sure to examine local traffic patterns (including walking and bicycling routes). You don't want to be surprised by an "oasis" that is hard to get in and out of at certain times of day.

NewVicResident said...

This is definitely off topic, but all municipalities in BC have to have their tax sales next Monday. They are required to post information about properties for sale no more than 10 days and no less than 3 days prior in 2 newspapers. Has anyone seen any details from Victoria, Oak Bay, or Saanich?

JustWatching said...

Sweetrealtor said "I think September sales numbers will actually turn out better than 2010."

This is true and you can expect VREB to pump this stat in their next news release. But 2010 was a disaster.

However, we are at 237 sales with only 11 days left in the month. Even if sales doubled and came in at 475 (which I doubt) this is still a dismal number compared to the last 10 years.

Check it out - click here

omc said...

Remember, what you are seeing is sales that have had conditions removed. From my understanding there is a normal 2 - 3 week lag for an accepted offer to show up Asa sale.

I'll make a prediction; next week will show a surge in sales.

I have usually only noticed a modest rise in sales in the fall, but a big rise in prices in the winter.

happy renter said...

Anyone have any thoughts about 418 Arnold? The price has already dropped $14,000 after only 13 days on market.

Zidane said...

Re 418 Arnold. I'll give the realtor the prize for worst writeup ever. Someone would buy a house on the basis of the quality of the soil? Amd it "abuts" the LG's residence? Oy.

omc said...

I haven't seen that one, but it fits with what has happened with the market. That house looks like it will need a lot of work, and is far too small for any family. It is a niche house because of this. A while ago the flippers would have gotten it any ways, now they only seem to be active in oak bay. I would expect that one to go lower yet.

omc said...
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Marko said...

SFH average up & over 650k due to a massive sale of 6+ million...

Marko

Zidane said...

Marko, do you know what the average was before this big sale?

Sweetrealtor said...

@Justwatching

You're preaching to the choir. I'm never one to say it is busy and a great market when it's not. Although I think the numbers for Sept will exceed 2010, this year overall is very much comparable to 2008 in activity, price drops, and low sales.

omc said...

Marko or sweetrealtor,

any idea who bought the palace? Gee, wouldn't it be great if it was mainland Chinese. <=sarcasm

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

omc,

6 million is a lot of cash but the seller had to reduce the price by millions in order to unload. Price started at 8.25 million when it was listed in December 2010. Price was reduced to 7.6M and then the lowball of 6.1M was accepted. The selling realtor at Remax Camosun must be smiling tonight.

Animal Spirit said...

zidane - that is too easy: (650,000*250(approx sales so far in September) - 6,100,000)/249 = 628,112.

So, the 6.1M house raised the average by around 22K. Which is yet another reason why averages are virtually useless in populations with skewed distributions.

Marko, any chance in presenting the median sales price instead of the average? The average jumps about like a cat on speed - the median (though still not good because of market distribution changes). Could of course trademark Marko's Repeat Sale Indicator (MRSI) and give us truly good data.

Brenda said...

may I barge in again, and ask another question of you knowledgeable people?
In your opinion is Esquimalt undervalued or undesirable?
It has a very negative knee-jerk reaction, but there are some nice pockets of single family homes. (This statement seems to be true of pretty much everywhere in Victoria)
opinions?
thank you

Just Jack said...

In relation to the other core municipalities the typical property value in Esquimalt is the lowest. Most likely because Esquimalt is perceived as the least desirable of the other core municipalities.

That doesn't make Esquimalt undervalued or undesirable.

But if we compare Esquimalt with East L.A. then Esquimalt would be more desirable.

Mindset said...

Is Esquimalt undervalued or undesirable?

I would say that Esquimalt prices are reflective of general buyer interest in the area. There are some nice pockets and some incredible views.

For a long term investment, that will depend on whether or not factors like the economy, retirements, or the new bridge will expand investment in the area. I've seen complete areas in cities like Vancouver transformed by increases in investment and fundamental changes in neighbourhood factors like the selling of rental stock to actual home owners.

Marko said...

There are only 116 SFH sales so far so I would say the 6.1 million sale pulled up the average a bit more than Animial Spirt would suggest.

Just Jack said...

I now live in Victoria, but at one time I also lived in Esquimalt.

I enjoyed living in both areas and can't really find any massive difference between the two. I think people in Victoria are a little bit thinner and better looking. And Esquimalt is mostly government workers and New Democrats, but that's true of most undesirable areas.

So, move to Victoria where you will be thinner, better looking, have a real job and vote correctly.

DavidL said...

@Brenda

For as long as I can remember, Esquimalt has been considered a "less desirable" part of Victoria. In the 70's and 80's, the only place that ranked "lower" than Equimalt was Langford. (That was long before the big box stores, rampant development and rebranding or Langford as "Westshore".)

Frankly, I think that there are some very nice neighbourhoods in Esquimalt and if I were thinking of buying a second house, I would seriously consider some of the nicer areas (Rock Heights, Saxe Point, Old Esquimalt, etc.)

DavidL said...

@Just Jack

Slow day today? ;-)

The large Canadian Forces contingent in Esquimalt tends to vote for whatever party is most supportive of the military - typically the Conservatives.

omc said...

Not many in the military can actually afford to live in E-town.

Marko said...

http://www.youtube.com/watch?v=BnW7yt_YbBA

Marko said...
This comment has been removed by the author.
Just Jack said...

Yeah, its a slow day. I'm actually saying nice things about Esquimalt.

I actually do like Esquimalt, the fitness centre and pool are great. Some interesting walks along the seashore and I've only been asked to leave the base, twice. But, I know they don't give the base police bullets so I'm okay with a 30 yard head start.

Unlike uplands where they just sick the Dobermans on you. And man, them dogs are fast.

DavidL said...

@ Marco
From Tony Joe's video (offset 20 to 40 seconds):

"I suppose you really got to to decide if you want to buy in a period that is slower and is easier to buy than one that is in the upswing - because your choice is to wait until the market starts picking up again ... and if you do, you are going to bump in to greedy sellers, you are going to bump in to feeding frenzies, you are going to bump in to multiple offers .... Now is not such a bad time - when you think about it."

Hmmm ... Tony's logic suggests that is is more convenient to buy at the top of the market than during an upswing. Certainly, don't let pesky things like personal economics, market conditions, or future resale value factor into your decision.

phil said...

Great video. I will try to replay it next equinox for fun.

I am convinced in the next six months, we will see the exit of the denial stage, with a collective "what was I thinking?" shift.

The bottom (for Canucks) is at minimum 6 to 7 years away.

Mindset said...

I suppose you really got to decide if you want to buy in a period that is slower and is easier to buy than one that is in the upswing

Agree with Tony and are looking for easy to buy?

In Victoria, prices are about 90-95% of the peak, housing stock is still pretty dismal in desirable areas, and most sellers are not motivated at all.

Maybe he slipped and was talking about Palm Springs. Prices are 40% of what they were at the peak, housing stock is current (clean 4 bedrooms with palm trees and a pool for sub 200K), and all sellers are motivated.

US RE might even be a good hedge against the bubbling inflation and our weakening dollar.

You'll notice that Tony is covertly admitting that the market is very soft here right now, but he is being quite crafty in how he is subtly leveraging our memories of previous 'buying frenzies' to 'imply' that they might return sometime soon and that buyers should 'act now'.

The buying frenzies are long gone Tony, and if you are bumping elbows in this market, it's around a rare motivated seller or a unique property, so bumping elbows might even be a good sign.

Robert Reynolds - HMR Insurance said...

Risky times are here again

Mindset said...

Risky times are here again

I don't think the risky times ever really left. Our government just loaded a bunch of debt onto our children and deferred a bunch of risk into our futures so that we could all avoid feeling like we were in the trouble that we were.

And as almost everyone knows now, the negative interest rates and record CMHC backings were tactically deployed to leverage national Real Estate hype and it's positive effect on consumer confidence.

They fired up the band so that we might not notice that the Titanic hit an iceburg and we would keep dancing for a while longer. Problem is, they missed the opportunity for an orderly exit to the lifeboats.

It is my opinion that nothing is different today than last year or the year before, except now the government bag-of-tricks is empty. Too bad the only real outcome of this short-term 'illusion of stability' is record Canadian personal debt levels and some pretty incredible taxpayer exposure to government backed debt.

Shame on the government for firing up the band, and shame on so many of us for ignoring the grinding metal and wobbly deck and keeping right on dancing.

a simple man said...

Mindset - I wholeheartedly agree on the state of RE and the govt interventions to not only prop it up but to pour gas on the fire.

I took the lifeboat off the titanic a few years ago and feel like I drifted down to Aruba and am enjoying the sun.

Marko said...

What luck - sold half my portfolio two weeks for the downpayment on my condo.

Some very nice dividends out there with today's correction.

Marko said...

I don't think interest rates are heading anywhere...

Mindset said...

I don't think interest rates are heading anywhere...

True, and it sure is dark times when negative interest rates can't be moved, even with the surprising 3.1% inflation in August and need to get primary lending rates back into at least neutral territory (anything below BOC 2% is lending at a loss, and is still borrowing from our futures).

Wasn't long ago that Interest rates were the brakes/accelerator for the economy. Today? We have the gas pedal stuck to the floor and don't dare lift our foot because even with it pinned, the vehicle is slowing down.

phil said...

Yikes! Morning news just mentioned the beat down our precious commodities are taking. It would be neat if there was a real time calculation for how much our number one commodity real estate is getting shellacked today.

EatMe said...

You guys are incredibly myopic! Sounds like most of you expect the world economy to collapse and never recover. The economy is much different today than it was in 2008. I think, at some point, growth will take off and inflation will pick up. When some confidence returns companies are in great shape to start hiring and growing. The commodities sell off and lower dollar will help… There are lots of positive signs out there!

EagerBuyer(Not) said...

Real estate agents are professionals and operate with high ethical standards. Innovative marketing is key to their success. Here is one example...

Calgary sales promotion

If this tactic was used in Victoria The agent might offer some of BC's biggest export instead of a bottled product.

Just Janice said...

I think the Market will retest the lows of March 2009, and I also think until the problems are fundamently resolved there will be no real recovery.

Canada's housing future is bleak...but I don't think the lows are 6-7 years away. Rather I think we're looking at 2-3 years from now. I no longer see any chance for a 'soft landing' or years of price stagnation. In the broader context, I just don't think there's enough out there to dampen a plummet once it starts.

Marko - perhaps you got out of the frying pan and leaped into the fire - nothing quite like a 'leveraged' loss....

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

Not worried....in my particular scenario my mortgage + strata fees + taxes are cheaper than renting.

Worse case scenario is I lose a bit of equity - not too concerned.

Basically the concensus on this blog is to rent and have most assessts in cash - risk immune but definitely no upside.

phil said...

I agree with Just Janice that it will only take 2-3 years for the big drop, but I wouldn't underestimate how far off the bottom is. As an example, over 5 years in and no sign yet of the bottom for the Americans.

Bloomberg Businessweek Sept. 22
Home prices in July fell the most in the region that includes Nevada and Arizona, slumping 6.9 percent from a year earlier, the FHFA said. They decreased 6.7 percent in the area that includes California.

Mindset said...

Eatme said: You guys are incredibly myopic! Sounds like most of you expect the world economy to collapse and never recover

Collapse? Not sure too many people are using that word. Correction is definately being used a lot.

Not much for short-sited or 'myopic' discussion either. Seems like the general discusssion are about a long-term slowdown, which aligns pretty well with the global information out there.

No need to be inimical.

Brenda said...

...so what does a long-term slow down mean for someone like me? Someone who is seriously looking for a new house? (By new, I mean new to me, not a 2011 build)
Do we put in a low(ish) bid on a house? Do we look in certain areas of Victoria/surrounding area and avoid others?
...and holding off for years isn't an option for our growing household/children.
thanks again!

Just Jack said...

Affordability and risk are not the same. Rents go up and down and so do prices. The relationship between rent and price has very little to do with risk.

Risk would be how much of your disposable income is being used to service the debt and for how long that debt is carried.

If only 20 percent of your income is being used to service the debt and with the ability to pay back the debt in 15 years then that would be low risk.

If 40 percent of your income is being used to service the debt without the ability to reduce the time to pay back the loan to less 30 years then that would be high risk.

If you take out a five year term mortgage and you can pay off the mortgage at the end of the five years that's no risk.

Risk has nothing to do with the price of the home or the rent.

So, Marko your condo may be affordable but it could also be very risky.

Just Jack said...

Brenda, the market while slow is still very functional. If your bidding on properties that appeal to most of the general population, then low bids will most likely not be successful.

You have to look at the odd ball properties. Properties that have been listed in excess of 60 days and in areas where similar homes have more than 12 months of inventory. And you'll have to hunt down properties under duress such as divorces, estates, court ordered sales. In most cases, the home owner is no longer alive or involved with the deal.

You have to learn to be a vulture - and appeal to the selling agents greed. Which means having the agent double end on the deal or offering a full commission if an offer of X amount is successful. (I am not condoning these practices, its just the art of the deal)

Otherwise, you are going to have to pay within a couple percentage points of fair market value for the home.

So how much of a predator can you be.

Sweetrealtor said...

@ Brenda. Low bids can work well on overpriced properties, get your agent to present offers to the seller directly to help soften the blow. If a property is in good condition and decently priced, it will go quick so you have to pay attention for these gems and act soon, even in a slow market.

Buyers today have the peace of mind to take their time. This slowdown isn't going to change overnight. You don't have to worry about prices jumping for a couple of years, at least - IMHO.

Prices may continue to decline after you purchase, but it sounds like you are buying for a long term investment (raising a family). How far prices will drop is anyone's guess. People here like to predict up to 30% but that seems pretty optimistic (buyer's point of view). Bottom line is - no one is holding a crystal ball.

Location is really up to you and your lifestyle. The outer areas may decline further and take longer to rebound that the core Victoria areas. But you can get an almost new house in Langford for the price of a 40's bungalow in Victoria. I wouldn't let the market situation dictate where I purchased, lifestyle and what type of housing you desire should dictate this.

Leo S said...

Worse case scenario is I lose a bit of equity - not too concerned.

Uhh, yeah, the worst case is that you lose money. That's kind of the point of this website is that people don't feel like "losing a bit of equity". Just like buying anything else. "I'm gonna go all in on Greek bonds... worst case I lose a bit of money"

Basically the concensus on this blog is to rent and have most assessts in cash

There is no consensus on this blog, and if there was it certainly wouldn't be that.

HachiRoku said...

Hi All,

Just visiting Osaka with my family for vacation and thought this information might interest a few:

Japan 2011 land prices -3.4% Y/Y, 20th straight yearly drop

20 years of falling prices...20 years!

Also saw an add on TV for a 3LDK (3 bedrooms, living room, dining room and kitchen) condo in downtown Osaka for $256K. My wife and I just looked at each other in disbelief since Osaka is consistently in the top 5 most expensive cities to live in.

So to compare apples to apples, what is a 3 bedroom condo going for in downtown Vancouver these days?

Just Jack said...

Losing equity is not like losing real money.

Except it restricts your borrowing for other ventures and your ability to take advantage of opportunities that present themselves throughout your life.

If you get twenty years of declining prices, banks tighten up on their lending policies and fewer people qualify to take advantage of 3LDK condos in Osaka. At one time Japan had 100 year amortizations on their mortgages. That didn't work out to well.

Imagine being at the bottom of a well and looking up at the sky. It certainly limits your vision of the future.

Negative Equity - its a bummer.

Mike said...

Yeah but Hachi, Canada is different in that we're apparently running out of land. Sure Japan is 75% mountains and has 4 times Canada’s population on an island not much bigger than Vancouver Island... nevertheless theres still so much land in the narrow strip between Japans mountains and ocean to develop. That's why i see Japan land prices falling for many more years. Canada, you can barely find a plot of soil to stretch out your arms. Lot prices will easily quadruple here in the next few years ;)

HouseHuntVictoria said...

What Hachi is saying is very true... it's also a lesson in demographics & immigration. We're not far away from the Japanese experience demographically. Our immigration experience may serve to mitigate some of the long steady declines as the older generations sell/die off, but the trouble with immigration as a remedy for aging is our average age is still increasing despite immigration (apparently aging boomers know no cultural/racial/national boundaries).

Paula said...

I just came across this blog and it's been great to read everyone's in-depth insights.

A question for you all ... any opinions as to why 1261 Rockland is taking so long to sell? Is it the price or the location, or something else? (It's on a tour bus route and close to Moss St intersection so I'm trying to understand if that's a negative).

EagerBuyer(Not) said...

Brenda said "so what does a long-term slow down mean for someone like me? Someone who is seriously looking for a new house? ...and holding off for years isn't an option for our growing household/children.
thanks again!"

Brenda - Honestly ask yourself these questions.

- If I buy now and in 5 years my house has dropped 10-15% in market value from what I paid am I still smiling and OK with my decision?

- If I have to move and sell in a few years and I basically lose my down payment because of lower house prices and real estate agent fees would I still buy today?

- In a few years if someone buys the nicer house next door for less than what I paid for mine how will I feel?

- After I buy will the mortgage payments, taxes and maintenance costs leave me with any disposable income to enjoy life?

If you aren't comfortable with the answers to these questions just rent. There are lots of nice houses out there which rent for less than what it costs to own them.

If you are OK with your answers then buy what you think you will be able to live in for many years. Don't buy a starter house hoping to climb the property ladder in a few years. Try to put all emotion aside when making offers and be prepared to walk away if the seller won't take your offer. Select an agent who will work with you for some time and not push you into something.

Zidane said...

Re "consensus" on this blog - perhaps EagerBuyer(Not) has nailed it?

JustWatching said...

Paula

1261 Rockland came on the market March 14 at 899K and was reduced to 799K on May 5. It is still way above the BC assessment of 732K.

I haven't been inside this one but the pictures show that the kitchen was last updated in the 80's. It doesn't look very functional with the stove off in the corner. Bathrooms look pretty dated as well. The overall decor gives the impression of needing an update.

So IMHO it looks overpriced and in need of remodelling. This is a 1957 house and a thorough building inspection would be a necessity. Check out the basement of these 50+ houses for issues.

For 800K it looks like buyers are giving it a pass. Try offering under assessment if you are really interested.

Leo S said...

Losing equity is not like losing real money.

Depends on how you got that equity. If you bought in 2000, and the market appreciation gave you your equity, then yes, it doesn't really matter if market depreciation takes some of it away.

However, we're talking about a recent purchase, where your equity is actual dollars you earned and paid into the mortgage. Losing that kind of equity is exactly like your stocks devaluing.

Paula said...

Thanks for your comments, JustWatching. It seems that the price point is the biggest problem.
At this point, I'm mostly "just watching" as well - concerned with the same things that other people have mentioned, eg., not the greatest time to buy if we're still close to peak. I've also been curious if anything else is affecting Fairfield/Rockland right now, eg., the City of Victoria Official Community Plan that calls for increased density, which means more traffic. Then again, there's always going to be more traffic close to downtown.

Just Jack said...

Your right Leo, maybe I'll call it sweat equity rather than actual down payment money.

As for mortgage payments, taxes, repairs and miscellaneous items above market rent, I'll just call that experience.

Just Jack said...

Well for me, its the style of home that is the problem. The home is in architectural contrast with the surrounding neighborhood.

When I think of Rockland, I think of two storey homes with a ground level main living floor and the bedrooms on the top floor. Not like the home's with basements that are so common in Victoria. I just expect a better quality home for Rockland.

Paula said...

That's true - the architectural style doesn't fit the neighbourhood, which affects the perceived value.

chris said...

Noteworthy comparison with regards to HachiRoku's comment:

Vancouver Metro population density = 735 persons/sq km

Osaka Metro population density = 12005 persons/sq km

Hence the humour of a Vancouverite vocalizing that they're "running out of land".

It's a real chin-thumber to figure out which direction Vancouver's land prices are headed over the next 20 years ..especially now that their average age has reached the 'Osakanites' age of 20 years ago?

Leo S said...

Before everyone gets too excited about Japan... They also started much higher than we are at. So yes, 20 years of decline but the peak there was astronomical.

Also, 3 weeks ago I posted about a spike in the sold price/assessment for the under $550ks. Turns out it was just a blip, we're back down to ~95%. Also the over $550s are the lowest since I've started tracking, at 98%.

Animal Spirit said...

Marko - thanks for the correction way up above. Recalculating the effect of the 6.1M home over 115 SFH sales (to then) gives 48,000 smackers, or a difference of 650,000 down to 602,000.

a simple man said...

animal spirit - this is exactly why median should be used for following averages.

Mindset said...

Re "consensus" on this blog - perhaps EagerBuyer(Not) has nailed it?

I'm not sure there is a consensus here; it's a pretty diverse crowd which I think is great. We have realtors, renters, owners, speculators, and families just looking for a home in the mix which makes for diverse discussion.

I would agree that there are quite a few of us that just wanted people to know how obvious it was becoming that the days of printing money and feeling smart and thrilled with house you bought at the peak (especially one you were banking on going up in value) were over.

This appears to have been good advice as buying a house in Victoria over the past 3 years has clearly not been about making an investment, which so many were still hanging onto as a core belief (mind you, I rarely hear positive RE speak at all anymore). If you bought Gold last year you would have made a killing though, which leads me to my second point.

In addition to the RE market, it’s important to note that we are living in times so risky that many indicators are worse today than the great depression. And with Carney/Flaherty now unwilling to prop up RE, Canada's RE market is going to correct.

I would say this is the entire point of this blog; spend some time understanding the market, cut through the hype, and make educated RE decisions.

People like Tony (in the video in this thread) and VREB/CREA, tell only a very small selective self-interested part of the broader story.

EagerBuyer(Not) said...

Finally an article in the newspaper (not the TC) that tells the truth.

Buyers’ market takes hold

Just Jack said...

Nicely written article. Now that the market is clearly becoming more bearish, I would expect real estate agents to shift their marketing strategy.

While an agent still has to "wine and dine" both sellers and buyers, the agent will now be taking the prospective purchaser to the better restaurant.

Agents may also reduce the amount of listings that they manage and become more selective in what listings they accept. Especially as the number of agents continues to decline. At one time Victoria had around 1,700 agents and we are down to around 1,300 today.

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

Brenda said...so what does a long-term slow down mean for someone like me? Someone who is seriously looking for a new house?

Take your time and find the house you want at a fair price. Today, you are in the driver seat. Be willing to lose 12-20% in the near term of you have to sell.

I disagree with SweetRealtor on low-balling overpriced homes. High prices usually indicate seller greed or a selling agent that 'bought' a listing and set an unrealistic seller expectation. Although an overpriced home may move on price, the end result is rarely a good deal or pleasant interaction.

I have always had the best luck by only going after homes I like and where the seller is at least semi-motivated. Negotiations are always the easiest with reasonable people (and yes, that includes us as buyers too. A reasonable low-ball today is probably 7-10% below market, going lower than this will likely shut negotiations down).

And as Just Jack said, if you are moderately savvy, dealing directly with the sellers agent (no buyers agent) does increase your priority (you become a full comission) and it can eliminate some of the typical transaction shenanigans (like, we need time to think about this while we try to drum up other buyers to create purchase urgency, or quickly call everyone in the agency in case there is a full internal comission floating around).

Introvert said...

My favourite part of the "Buyers’ market takes hold" article is:

Owning residential real estate in our very appealing corner of Canada cannot help but be a good investment in the long term.

Indeed. Victoria is appealing and therefore "different" than lots of other places in Canada. Homes shouldn't necessarily be considered investments, but if one does consider a home an investment then a Victoria home is a more preferable long-run investment than a home in almost any other Canadian city.

True, "buying at the top" is not wise, so buying a Victoria home today isn't likely a genius investment move. But, after the market does correct (as most agree it will), the likelihood of future price gains, in the long-term, is always stronger in Victoria than in most other places in Canada. Because it's really nice here.

a simple man said...

Introvert - I agree with you - it is nice here and people will always pay a relative premium for that.

Sweetrealtor said...

@Mindset: "I disagree with SweetRealtor on low-balling overpriced homes. High prices usually indicate seller greed or a selling agent that 'bought' a listing and set an unrealistic seller expectation. Although an overpriced home may move on price, the end result is rarely a good deal or pleasant interaction. "

I'm not sure what you disagree with me about. That it's ok to low ball an overpriced home? That the agent should talk to the seller and try to be a voice of reason in these circumstances?

I don't think recommending people use the listing agent is a wise approach. Double ends/Dual agency situations are a bona fide conflict of interest and one of the most, if not the most, litigious aspects of real estate.

A lot of sellers already know they are overpriced. They just don't want to "give it away." It often takes some time on the market and getting feedback from other agents and buyers to finally persuade the sellers to get real.

Adventurous buyers, willing to offer fair value on an overpriced listing, will be rewarded while others wait for the price drops. And having a good buyer agent in your corner will make a difference.

And fair value is not 7-10% below market value, it is market value.

reasonfirst said...

Simple Man/Introvert:

I think you are saying 2 different things here.

1. Victoria will always be at a premium (Simple)

2. This premium will continue to increase(Introvert)

Agree with 1 but not 2 as I don't think Victoria will become increasingly nicer.

HouseHuntVictoria said...

The notion that Victoria should command an increasing premium is laughable...

a simple man said...

***note that I said relative premium, as in if the rest if Canada drops 30% then so should Victoria, but Victoria will still be slightly more after the crash, because it is just so darn nice here. But the crash will happen here and it will be huge.

HHV - reserve judgment until after your first winter away.

HouseHuntVictoria said...

a simple man... I've had more than a few winters away over the years. I don't dispute that Victoria has almost always been more pricey than the majority of cities in Canada when it comes to local real estate values, but I do find it laughable that there is anything fundamental pointing to an increase in the pricy-ness over time.

Is there suddenly more people who find Victoria attractive than before?

Just Jack said...

I would agree that there is a premium paid for cities with mild climates. However, the mild climate of Victoria is mostly offset by its location on an island.

South Surrey-White Rock also has a mild climate like Victoria. That's one of the many reasons why prices are higher in South Surrey - White Rock than they are here.

Even prices in the North Shore are higher than Victoria and living in the North Shore is like living in a car wash.

I would think that most places in the Fraser Valley have higher prices than Victoria too. So the island affect is a big offsetter to our mild climate.

Mike said...

I've been wondering why Kelowna, up island, and Victoria have been the weakest markets across the country lately. Any thoughts?

There are theories floating around that the nearly-dead cities may see bigger drops (no pun intended). Victoria also has one of the largest populations (%-wise) at or very near retirement, coupled with one of the smaller youth buyer groups. And the research I've read shows retirees become sellers of homes. What's more, the 3 regions I listed above get but a teeny fraction of international immigrants that are helping to buffer other regions. For some reason, unlike me, it's not their cup of tea. I wuv Victoria ~ which is why I don't believe it could fall further than say Saskaboon.

Just Jack said...

I don't think the real estate board considers double ends/Dual agency situations as a bona fide conflict of interest or they would stop the practice.

But, I would agree with the poster, that if you're a newbie to real estate, you're probably going to need help. That doesn't have to be another real estate agent, it could just be someone with more experience.

Yes, a lot of things can be physically wrong with a house, but the agent can't help you with that. And your lawyer will help with the purchase agreement. So, I think someone who has bought and sold before, can handle most purchases themselves.

Of course there are exceptions and some people need help.

Just Jack said...

If our market follows what happened in the USA. Not maybe to the same degree, but the direction in prices.

The biggest hits were felt in retirement areas that were also overbuilt with condominiums.

One of the things I've noticed about Victoria is that the builders were building properties that were profitable for them. Small condominiums and Mcmansions.

Where's the middle?

You can live in a newer one-bedroom condo in Victoria City or a newer $900,000 home.
There is a BIG market segment missing here. And I think that is really going to hurt Victoria's economy for a long time into the future. It just seems that families are not welcome in the City.

jesse said...

Kelowna and other smaller cities are falling faster because their economies are focused on construction and real estate. Their manufacturing bases long eroded, RE filled the void, for a time. Now the bills are coming in and no buyers. Welcome to BC's interior, Canada's real estate investment crash ground zero.

Introvert said...

Is there suddenly more people who find Victoria attractive than before?

Yes, actually. Let's say 65% of Canada's 34 million people agree that Victoria is an attractive place to live. In ten years, 65% of 40 million people should agree.

65% of 40M is greater than 65% of 34M.

So, yes, HHV, in the future there will be more people who find Victoria attractive than before.

And last I checked, Victoria's core municipalities are out of land. So housing supply will more or less remain constant forever.

Let's put it all together: demand in the long term is on a slight upward trajectory (in terms of raw numbers of Canadians finding Victoria attractive) + unchanging long-term housing supply = happy Victoria homeowners/investors.*

*Provided you didn't "buy at the top," or do a bunch of dumb things, yada, yada, yada.

Introvert said...

Victoria is "different." Here's why.

Not many Canadian cities have mild climates. Even fewer have mild climates situated in a rain shadow.

Vancouver is certainly mild, but it pours (double the rain of Victoria: Wikipedia). Same with most other cities on or near the West coast. Mild, but very wet.

Some say the Maritimes are pretty mild. Yes, but not as mild as Victoria. Halifax's average low in January/February is around -8. Victoria's is around +3. That's 11 degrees of difference. And Halifax encounters the odd tropical storm. Do we? Nope.

The big thing is that, if you want to stay in Canada, live in a very mild climate without the usual concomitant torrential rain, and have it be of a reasonable size and population, then Victoria is basically your best option.

This is in stark contrast to the United States, where cities meeting the mild-and-populous criteria are plentiful.

Certainly in the context of Canada, Victoria is "different."

Now then, this is HHV's cue to protest and argue that we're the "same."

Phil said...

Sure, Victoria has always been more expensive than most of Canada. But weather has had nothing to do with the post 2003 run up in prices. We can thank the low interest rates and CMHC backing for that.

Regardless, I think we've heard this before. Hows it working out for them now?

sunny San Diego

jesse said...

So... Victoria must have more retirees than the rest of the country? Just checking; that's the argument, right?

SJ said...

Noticed a sale on my PCS a couple of days ago: 1440 Mt Doug Cross. Went for $690,000, with a BC assessment of $946,000.

I haven't seen a sale like that since the five month recession we had in late '08 - early '09.

SJ said...

Noticed a sale on my PCS a couple of days ago: 1440 Mt Doug Cross. Went for $690,000 with a BC assessment of $946,000.

I haven't seen a sale that much under assessed since the five month recession we had in late '08 - early '09.

patriotz said...

"Homes shouldn't necessarily be considered investments"

Well of course my whole approach to RE is treating it as an investment. Would I buy a company with a P/E of 30 and no prospects of earnings growth? No, and nobody else would either. Nor would I buy a house with a price/rent of 300 and no prospect of growth in real rents.

Perhaps you are using the popular definition of "investment" which is "something I'm sure I'll be able to sell for more than I paid for it". That belongs to the Beanie Baby crowd.

patriotz said...

Victoria is "different." Here's why.

But interest rates are the same as in, say, Halifax, so why should price/rent be different?

None of you factors change the fact that landlords in Victoria are losing money every month.

a simple man said...

Introvert: regarding how nice it is here - shhhh!

Patriotz: regarding landlords losing money every month - shhhh!

These secrets are best kept close.

Renting rules and is comparatively cheap in this beautiful city.

Leo S said...

So, yes, HHV, in the future there will be more people who find Victoria attractive than before.

That is not the same as more people willing to pay an ever increasing premium to live here. Yes, land is scarce in Victoria, but it isn't everywhere else in Canada. The idea that that price premium will increase forever just because Canada's population continues to increase is not very logical.

Not many Canadian cities have mild climates. Even fewer have mild climates situated in a rain shadow.


Some people like mild climates. Some people think they like mild climates because it sounds good and they've never known anything else. Having grown up in the interior I know that the winters there, with sunny days and snow are far nicer than the endless rain in Victoria. The summers too are fantastic, with nice dry heat and plenty of lakes. This summer in Victoria was not exactly a model of summer weather. It was shit rain and cold for half of it.
The only thing that Victoria does better is the Spring. Springtime in the interior is ugly and grey as the snow melts. Here it is green and that's what people latch on to.
That's nice, but the other seasons are just better in a lot of places.

As an aside, my parents came down a while ago for a visit. Their comment at the end "15 years ago Victoria was a nice quaint little island town. Now it's like any other city, loud and clogged with traffic".
As Victoria densifies, some of its charm goes with it, and people start looking for that small west coast town spirit somewhere else (Parksville, Qualicum Beach, etc).

HouseHuntVictoria said...

"Yes, actually. Let's say 65% of Canada's 34 million people agree that Victoria is an attractive place to live. In ten years, 65% of 40 million people should agree.

65% of 40M is greater than 65% of 34M."


65% of whatever number you conjure up is still 65%.

The argument that we're running out of land has been used for 30 years to justify sky-high prices. It's not true. We're consistently making more land, even in the core, through density and subdivision.

Furthermore, Victoria has grown exponentially, it's housing stock has consistently, and at times outpaced it's household formation rate. So while you want to make a clever argument that 65% of 10 is a bigger number than 65% of 9, you conveniently ignore that available housing grew/grows too. The supply demand ratio hasn't gotten consistently worse with time in other words, which is what you'd need to have happen to point to a fundamental upwards pressure on pricing.

While some purists still see Victoria as Saanich East, West, Oak Bay, Victoria and Esquimalt... many Canadians see "Victoria" as the area on the VREB map, which contains several thousand acres of yet-to-be developed housing-suitable land stock. Heck, Westhills alone has over 4 year's worth of planned supply if it was the only source of new housing for new household formation in the entire CRD.

Don't get me wrong, I love Victoria, it's a beautiful and desirable location... but I'm unwilling to gloss over the sales volume of SAD lights in the winter-time to justify out-of-whack property prices that have little to do with household formation numbers or supply demand ratios.

The next post is dedicated to the silly argument that Victoria is somehow unique and therefore should support forever rising house prices.

Bill Rimmer said...

Just Jack said on Sept 23.
“Even prices in the North Shore are higher than Victoria and living in the North Shore is like living in a car wash. I would think that most places in the Fraser Valley have higher prices than Victoria too. So the island affect is a big offsetter to our mild climate.”

In response, I moved from the west side of North Vancouver District to Victoria in 2008 and replaced my house built in 1953 with a house in Gonzales built in 1983 for $250,000 less. The square footage was almost the same. My property tax bill is lower and my heating cost is down by 1/3. For a while I lived on the South Surrey boundary of White Rock where I could have easily bought a comparable home for an equivalent price. I was surprised when my car insurance went up $60 for the South Surrey/ White Rock location compared to the premium I paid on the North Shore. When I came to Victoria my car insurance went down by over $400. I considered whether to buy in Victoria or White Rock but finally decided upon Victoria. The water frontage here is is far superior. Since moving I enjoy sailing in the Gulf and San Juan Islands close by and rainfall is 24 inches versus 75 inches plus on the North Shore. The real change is in the hours of sunshine. It took me over eight months before I found a satisfactory house in Victoria. The problem with buying a single family home in Victoria is that there were too many poorly renovated very old homes with suites. I did not want a suite. South Surrey/White Rock has a plentiful supply of newer homes but lacks the character of Victoria. I was also amazed by the heavy snowfalls in White Rock compared to Gonzales and Oak Bay.

patriotz said...

"Yes, land is scarce in Victoria, but it isn't everywhere else in Canada."

Scarcity means intensity of use.

Is land in Victoria used more intensively than in, say, Halifax? I would say it isn't.

When the ground level parking lots disappear in Victoria, you can start talking about scarcity.