Monday, October 17, 2011

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.

October 2011 (last week's numbers)
Net Unconditional Sales: 231 (131)
New Listings: 556 (340)
Active Listings: 4,569 (4,562)
Sales to new listings ratio: 41.5%

September 2010
Net Unconditional Sales: 467
New Listings: 976
Active Listings: 4,046
Sales to new listings ratio: 47%
Sales to active listings ratio: 11% or 8.7 MOI



Sales and listings volumes both dropped, which is expected at this time of year. SFH average sits at $594,000 right now. We're entering the winter doldrums in an already dreary Victoria real estate market. I suspect the gift-focus this holiday season to be a little less consumerist and a little more focused on 'gifts from the heart' primarily out of necessity rather than desire. 

100 comments:

Introvert said...

Average home price rises 6.5% to $352,600

a simple man said...

CREA stats show the average selling price in September fell by a seasonally-adjusted 0.4 per cent from the month before. Big month-over-month declines were recorded in Victoria (down 9.7 per cent), Saguenay (down 11.9 per cent), and Vancouver (down 3.7 per cent).

a simple man said...

Read the headlines - things will get worse. Be prepared for it and weather the storm.

phil said...

Noteworthy how the two oldest Canadian cities had the largest monthly decline in prices. Saguenay -11.9%, Victoria -9.7%.

But I guess it’s the retirement belts in the US that are also still suffering the steepest declines.

Just Jack said...

Bear Mountain condominiums get slammed again. A fourth floor, 1265 square foot condominium overlooking the golf course. One time listed at $689,000 from the developer. Then sold in July 2007 for $479,000. Now sells under a Conduct of Sale for $310,000 or $245 per square foot.
30 percent increase over the last 6 years. In relation to the appreciation of the crack shacks in Fernwood, that return sucks.

It looks like the market correction is now into Saanich West. Like the recent sale of a house on Heath for $440,000. 6 1/2 years ago it was bought for $340,000. I suppose the Gorge neighborhood should no longer be considered location, location, location.

Maybe just location, location for this neighborhood.

The same for a property in View Royal. Original purchase in 2005 for $409,000 and sold this week for $551,000 after quality updates were made.

The best deal of the day goes to Regents Park. A downtown condominium bought back in 1993 for $185,000. Sells today for $340,000 or $307 per square foot. Especially when you would be paying more than double that amount ($727,000) to live a couple blocks over in Humboldt Valley. Same square footage, same eleventh floor location and very similar view.

There are three things that can be said about the Vancouver builders of Humboldt Valley.

Over hyped, over priced and over here.

Leo S said...

"Maybe I'll move to Victoria"

DavidL said...

Just Jack wrote: It looks like the market correction is now into Saanich West.

Yup ... I've lived in the same Saanich West neighborhood for 19 years - and have seen a dramatic decline in prices over the summer. Single family houses appear to have dropped at least 10% since peaking in March 2010.

There are significant variations in prices in some neighbourhoods. Two houses of similar quality and location can vary by 10 or even 15 percent. Some houses are priced to sell, some are priced to stagnate.

Introvert said...

Regarding the "Going Going Gone" article that "Leo S" linked to, the most salient thing I read was:

One thing that has changed in the past year is our perspective: we no longer believe a crash is inevitable, or that it would make any real difference to us. Like one of those Re/Max balloons, prices have risen so far out of our reach that even if they deflated significantly we still couldn’t get on board.

Victoria isn't Vancouver, but I think the sentiment can similarly be applied to us.

a simple man said...

Introvert - I agree - even if the Victoria region drops 30%, it will still be simply too expensive for many based on incomes here.

Just Jack said...

It's unlikely that a drop from peak prices could be contained to 30 percent.

I would think that over half the value of properties is due to the ease of credit and low interest rates, not brick and mortar. Then there is the aging population that are NOT buyers of real estate. And that over 70 percent of people own (make payments to the banks) the homes they live in. And then their is the number of involuntary landlords who own two or more properties.

The future is made up of a lot of people trying to sell real estate and a lot fewer buyers.

30 percent from peak prices would be a mild correction. And the banks could live with that. Canadians will not walk away from their homes if prices slid 30 percent over a couple of years. Most Canadians would not be impacted by the drop as they had bought years before the peak.

Past real estate markets have bottomed out with homes selling at 2 to 3 times median income. But prospective buyers still had access to credit in those real estate troughs. If our credit market ceases up, then the only people able to buy homes would be those that don't own homes and have saved big sums of cash. Very, very small group of people.

CMHC will be in the toilet, as the politicians are forced to explain why the taxpayer is on the hook for someone's boat and Ram truck, they bought on their home line of credit. The premiums for CMHC insurance will go ballistic, making high ratio financing unaffordable.

For most people, that would mean saving 20 percent for the down payment. At the average income how many years would in take the typical Victorian to save 20 percent for a down payment? The answer to that question is how long this market could stay in a trough. And just about the time the real estate market is about to get better, the front end boomers will be dying of old age and the 40 to 55 year olds of today will be dying of obesity related deceases.

Damn those corn dogs.

Introvert said...

And if our prices dropped 30%, I bet prices wouldn't stay at that level for all that long; they would go up again--maybe even steeply--sooner rather than later.

As far as buying a house goes, buying one in Greater Victoria (especially in the core) is probably one of the best places in Canada to do so, in terms of long-run valuations. Your investment won't double (any more), but you're extremely unlikely to lose your shirt (or even lose money), in the long-run.

I'm sure there are better long-term investment vehicles than Victoria real estate (stocks, bonds, mutual funds--I wouldn't know; I don't invest in these things), but as far as Canadian real estate goes, Victoria is a damn good long-term investment, relatively speaking.

HouseHuntVictoria said...

"And if our prices dropped 30%, I bet prices wouldn't stay at that level for all that long; they would go up again--maybe even steeply--sooner rather than later."

Because that experience has occurred in all the other attractive-to-boomer, retirement and nice-weather locales that have experienced significant corrections?

Fear is as powerful as greed... maybe more so. When prices are falling significantly, they don't tend to bounce back in a hurry... Victoria's own experience shows 5 years in the 1980s and 7 years in the 1990s to recover back to where they were previously and those corrections had the demographic bubble buying to support, not selling.

a simple man said...

Introvert - I agree with you that Victoria will hold a premium over many other Canadian cities. Until there is some catastrophic event (subduction earthquake), real estate here will be worth more. However, I also agree with HHV in that history has shown us that after a drop in Victoria it can take half a decade for the market to find its feet again. And I am not sure if we have ever seen such inflation of prices as we have seen lately. Bodes poorly for what is to come.

I have recently given up on the thought of owning a home for a few years yet.

Just Jack said...

You would probably be better off buying on Salt Spring Island today, than in Oak Bay.

Salt Spring is already into the correction while Oak Bay has yet to feel the whip.

Even the western communities might be a better long term bet. Afterall, where are you going to put all of these people coming to Victoria. Certainly not in Oak Bay, the population numbers for Oak Bay have been stagnate for the last several years.

And it's not 65 year olds moving to Victoria. It's 55 year olds. And the number one reason why they move to Victoria is to be near their kids and grand kids.

And what is happening to the kids of the 55 year olds. They are being squeezed out of the market place and looking at opportunities in other provinces.

And if you're 55 years old and working in Alberta, there is a lot of upward movement and higher salaries because of the retirement wave of 65 year olds and the early retirees buggering off to Victoria already. You just might want to stay in Alberta - for the money.

No, I wouldn't bet the family fortune on real estate in Victoria being any different than any other retirement community from Miami to Santa Barbara.

Just Jack said...

As for the premium Victoria gets in relation to other communities. One has to keep that premium in perspective.

Prices in the City of Surrey are very similar to Victoria.

Doesn't sound so good to be compared to Surrey - does it. I suppose that's the price of living on an island, adrift from the real world.

I can imagine being single, 29 years old, living in Toronto making 6 figures a year and my boss coming in and saying I'm being transferred to Victoria.

Believe me, I would not be jumping out of my chair.

Nancy said...

I know in the banking sector if they tell you that you are moving to Victoria you are toast. It is considered the end.

Just Jack said...

Gotta agree with you Nancy.

The first thing that goes through your mind is "What did I do wrong?"

Introvert said...

Then again, if you're a banker, your life has already gone severely wrong.

Just Jack said...

How long can the inner city sustain the attacks of the foreclosure Huns.

Court ordered sale in Cobble Hill at $215,000. That's a mortgage payment of $800 a month for a 1,650 square foot home on a standard size lot. Needs work - but you'll be able to pay for your kid's university education rather than spending your golden years as a Wall Mart greeter.

Or how about a condominium in View Royal. A top floor suite bought back in 2005 for $298,000 and sells today for $302,000.

Or how about a retirement rancher in Cedar Hill. Bought in 2008 for $525,000 and sells today for $505,000.

And the steal of the day goes to a 321 square foot condo on Granderson in Langford for $94,000.

Seems someone needed additional closet space.

But the good news is that if you live in a war shack near Dallas road they are still being listed for 3/4's of a million dollars.

It's no wonder you get people that adamantly disagree with the market falling. Because in their world prices are steady. It's just that their world is getting smaller and smaller every day.


Eventually, the Huns will catapult an infected pig carcass over the tweed curtain and Oak Bay will fall too.

And we'll be on track to roll back prices to at least 2005 levels.

DavidL said...

Okay Just Jack ... How the heck to you get access to such valuable historical sales information? I realize you probably don't want to divulge what you do for a living - but I'm guessing that your business allows you complete access to historical assessment and sales information.

EatMe said...

DavidL - Just Jack has mentioned he's a cop so I presume he just "investigates" whatever he likes and knows how to get full access to any info he is seeking...

Alexandrahere said...

Jack is too smart to be a cop.

snaptee said...

You're assuming that what he writes is accurate.

DavidL said...

I'm guessing that "catapult[ing] an infected pig carcass over the tweed curtain" may not be accurate. Very funny, though ...

Just Jack said...

The Romans actually did catapult infected dead animals behind enemy walls to spread disease. The first use of biological warfare. May not have been pigs, could have been cows. So that would be factual but not accurate. The priests would bless the cow and paint a cross on them before being sling shot. Many a Greek's lasts words were "Holy Cow"

Just Jack said...

But I suppose those in Oak Bay that still hold on to the believe that prices will never come down will just have to wait for pigs to fly.

a simple man said...

Tales from the trenches:

Called Honda today to do a few small maintenance job. "How much is labour?" I asked "$119 an hour." the proud man responded. I obviously erred getting a PhD.

No wonder people are being squeezed.

a simple man said...

Instead of painting a cross on the livestock catapulted into Oak Bay, just put then in lulu lemon - they will sail by unnoticed until the bitter end.

Just Jack said...

Did someone say Lulu lemon!

DavidL said...

Nice outfit, Jack. Hopefully it doesn't cut off the circulation too much.

Deluxe Cow Catapult Set

DavidL said...

Actually, you have toned up nicely since you posted your bicycling pic last summer.

Mindset said...

Introvert said: I'm sure there are better long-term investment vehicles than Victoria real estate (stocks, bonds, mutual funds--I wouldn't know; I don't invest in these things)...

Why jump to stocks? How about a house in Saskatchewan? The last 3 years have seen significant RE gains, and based on commodities and agricultural futures, looks a LOT brighter than Victoria. Heck, even with the Alberta corrections, I think they are in much better shape than we are fundamentally due to rents, incomes and current prices. Imagine what would happen if Victoria Rents went up 50% to where they should be? Rents are low because people here simply can’t pay more.

Worried prices there might go down? I would worry more about Victoria.

we no longer believe a crash is inevitable, or that it would make any real difference to us. Like one of those Re/Max balloons, prices have risen so far out of our reach that even if they deflated significantly we still couldn’t get on board.

For the average family, living in Victoria is a hardship in more ways than one, and unfortunately this reality is not discussed much in this forum. Sure, the weather and scenery are nice, but personal happiness is generally very dependent on being able to see a better future and to make progress. For the broader population housing was one of the only ways of 'getting ahead' here, and that option has simply gone away. Make steep payments while working in a‘stuck’ job and your house value is decreasing and how happy are you? Generally pretty miserable.

Welcome to Victoria in a RE slump, down tourism , and government budget cuts, where high house prices are just another negative. I could be wrong, but just where is that opportunity for young families and entrepreneurs again? I'm not seeing the opportunities. And to me, that is a fundamental and real problem that cannot be ignored.

Business in Vancouver summed this whole problem up nicely; you can read an article on it here:
High House Prices are Killing Vancouvers Competitiveness

a simple man said...

I agree, Mindset. The high housing prices and few professional opportunities here make it very inhospitable for new families trying to make a start of it.

The birds will come home to roost, as they always do.

Mindset said...

The high housing prices and few professional opportunities here make it very inhospitable for new families trying to make a start of it.

I know of a few families that came here from Alberta for the weather and scenery, but returned to Alberta for the opportunities there. And these were mature professionals (pre-retirement of course, so still in prime earning and career/business advancement years), not just families starting out. It seems like the best strategy for Victoria is to leave, make your money, and when your career is done, to come back?

a simple man said...

perhaps this is why we are known as the city of "the newly-wed and nearly-dead."

Leo S said...

"National Bank and Teranet are pleased to announce the expansion of the Teranet – National Bank House Price Index™ to five additional metropolitan areas. House price indices will now also be available for Edmonton, Hamilton, Québec, Victoria and Winnipeg as early as October 26, 2011."

http://www.housepriceindex.ca

Introvert said...

How about a house in Saskatchewan?

Commodities a) are finite, and b) are subject to booms and busts.

Victoria will ALWAYS have weather and climate on its side.

The last 3 years have seen significant RE gains [in Saskatchewan]

That's great, but I'm talking long-term.

Just Jack said...

"Victoria will always have weather and climate on its side."

..............

Always did - nothing shockingly new in that statement.

But that didn't stop prices from falling in years past or people leaving the city for better jobs in the 1990's.

And the weather didn't stop the baby boomer retirement wave of the FIRST world war from ending in the late 70's and early 80's.

The baby boom after the second world war is a wave. That means it has a beginning, It crests and then it diminishes. I don't see the retirees coming to Victoria in the numbers they did just a few years ago and in my opinion the retirement wave has crested for Victoria. And wet climates are not good for a lot of our elderly citizens. Especially those with Arthritis - which most do. We do have a lot of snow birds in Victoria that leave for Arizona in the Winter to escape our weather.

Decades ago, one of the reasons why elderly people chose to retire to Victoria was because it was cheaper to live here on their pensions. A decade of parabolic price increases changed that one. You could sell the farm in Alberta and live comfortably in a Fernwood two-bedroom home and still have beer money for the Legion. Good luck with that one today.

The last ones who thought that the sun gods would protect them where the Incas - and that didn't work out to good for them.

Leo S said...

Victoria will ALWAYS have weather and climate on its side.

I still don't get this argument.

Yes Victoria will always have good weather on its side, but it already has always had that and the prices reflect it. It's not like Victoria is the great undiscovered paradise that will attract the hordes once they find out about it.

You have a much better chance of making money on real estate by investing where the prices haven't already been bid up beyond the average family's reach. Halifax perhaps.

Alexandrahere said...

Stock Market down again today. Not very long ago the TSX was 2500 points above the Dow. Today the TSX finished at only 345 points above. There seems to be nowhere to invest today. Well, unless you want to move to Sask and buy a bungalow.

DavidL said...

@Alexandrahere

I have noticed the same pattern/spread between the DJI and TSX. As the TSX is heavily weighted with commodities - it tends to reflect where the manufacturing sector is heading. It does not bode well ...

As for investing, with all the talk about all-time consumer debt, deficit budgets, and bail-out loans ... about a year ago I started shifting from equities to bonds and other debt instruments. Needless to say, as the stock market has become more unstable - investors have fled from the market. My portfolio is up about 10% so far this year ... but as with any market - timing is everything.

Just Jack said...

Victoria's charm is that it's a small, clean, and polite town filled with quaint mom and pop book and antique stores.

Oops, sorry that was in 1999.

Most of the mom and pop stores are gone now. But you can still see their boarded up store windows downtown behind the two storey high billboards announcing the next high rise condo tower of micro mini suites for young professionals (waiters, waitresses, dog walkers and real estate agents).

It's sad to see the city go this way, but it has to. I would have liked to have seen the city tax away the parabolic profits and spend more on cleaning the city, parks and recreation. It's wonderful for home owners to have had their home values more than double in 10 years, but I would have preferred the city to have doubled or tripled the property taxes and spread the wealth out. Because if you had to pay a thousand bucks a month in property taxes, you wouldn't be paying $650,000 for a starter home in Fairfield.

Think of all the Blue Bridges we could have built by now!

Alexandrahere said...

Good for you DavidL....you are up twice as much as me.

Agree JJ on cleaning up the city and surrounding parks. The downtown sidewalks are a disgrace....and the taxpayers put so much money into all those fancy brick/stone patterned ones. Gum should be outlawed!!

I don't agree however with getting rid of most of the parking in Beacon Hill Park. There isn't a lot of auto traffic going through there now. People take vans full of kids there to see the farm animals and they do need somewhere to park. This is the only time many get to see and touch a bit of farm life. Its not as though you can take a leisurely Sunday drive these days, slowing down to enable the kids to see the horses & cows.

Just Jack said...

We're lucky to have the petting zoo. They were going to close it down a year or two back.

Very few vehicles use the park. In fact the park is under used by the citizens. Mostly because the families are now out in Langford and rarely come into the city on week ends. Same with the beaches in the city and most of the other neighborhood parks.

Compare that to the lakeshores in the Westshore on a warm day. Never has so much tattooed flesh been stretched over so many plump frames.

Don't get me wrong. The opportunity to take my dog for a solitary run on Gonzales Beach in the morning is great. As long as I get there before the SPCA dog catcher spots me through his/her binoculars on the cliff. If you want to reduce crime in Victoria, fire the cops and hire more dog catchers. These people are everywhere. Or better yet, put the cops on commission where they get $175 bucks for every bad guy they bring in. That should clean up most of the downtown core and Uplands.

Just Jack said...

I think we should clean up the pan-handlers in the downtown area. Much like they did in Vancouver with the prostitutes.

People give money to the pan-handlers because they feel guilty for having more than the pan-handlers.

If you lessened peoples' guilt by having them donate each month to an organization and receive a coat button saying that they gave money that month, then they wouldn't have the guilt to give cash. The money raised could then be spent on food, clothing and housing by the non profit organizations such as food banks.

But never, never give cash directly to a pan-handler. Buy them a sandwich and a coke, but never give cash. Without cash, the pan-handlers will move on to places like Bear Mountain.

The hotels around the city should have collection pots and the public should be continuously informed that its better to donate money to the pot than give pan-handlers money to buy pot.

Marko said...

According to David Chard, principal of Chard Developments, the acquisition is in line with his company's bullish outlook on the Victoria real estate market and the local economy in general.

"We have a lot of confidence in the market and we're sort of lining up our next projects over the course of the next five years," said Chard. "The Victoria market is solid, and has been over a very long period of time.

"It's a solid economy due to government, the shipyard, universities and hospitals. It's not a boom-and-bust type of economy. It's got a good steady base. It has a good employment situation and people have good-paying jobs."

Having said that, Chard said developers have to be patient given the relatively slow absorption rates for new housing units.



Read more: http://www.timescolonist.com/entertainment/Dubai+downtown+castoff+sold+Chard/5572635/story.html#ixzz1bHUCpVvr

Marko said...

So far I have had 16 clients buy this year....only one did not fit the typical profile (husband roofing contractor & wife office employee).

Out of the remaining 15 at least one person in the household was employed by either UVIC, BC Ferries, National Defense, Pronvincal Government, Fire Hall, Police Force, VIHA.

There are some solid salaries in this town.

Just Jack said...

Nice bit of boilerplate by Chard.



One of the best bosses I ever had, had no idea how the employees did there job. But he new boilerplate. He could speak for an hours and say nothing - and it sounded good, we all had great confidence in his abilities. We just didn't know what they were.

One of the other good bosses, that I worked for, hated boilerplate and spoke directly to the issues. But hard to stay awake listening to him.

I liked the "big picture" boss better - because we got free cake.

Rhino said...

Why are they solid just because they are government jobs? wasn't the deal supposed to be you trade job security for income when you work as a public servant. Definitely not the case these days.

a simple man said...

UVIC - low salaries except full professors and upper management
BC Ferries - primarily low salaries
National Defense - navy? come on
Provincial Government - a few big salaries, but a lot of worker bees
Fire Hall and Police - every city has them
VIHA - mostly underpaid staff - docs do well.

Just Jack said...

Having a "solid" job doesn't mean you act in financially responsible manner.

Ed McMahon, the side kick of the Johnny Carson show, had a solid job too he lost his home to foreclosure.

The best thing about one person working for the government are the medical and dental plans. The bad thing is that there is limited upward salary movement.

So, when they get into trouble, there is very little they can do to earn more cash.

Marko said...

Yes, if you are a housekeeper at VIHA life is not so good - it is really pathetic like $14/hour to clean in the ICU and Emerg - no thanks. UVIC is not too bad; housekeepers are around $18/hr and typically you are not dealing with blood - just 1st years throwing furniture out of the windows in the common area.

However, most decent positions at a lot of these intuitions pull in decent wages. You don't have to be a Captain at the ferries to pull in over 100k. Senior engineer, 1st mate, possibly 2nd mate with some overtime, etc.

Not exactly sure what my friend is doing at National defence but base salary is 65k to start.

Combine two 65k incomes and you have 130k/year.

It is not all doom and gloom out there.

a simple man said...

On the big ferries, how many captains and first mates are there and how many other workers?

What is the mean/median salary in Victoria right now? Does anyone know?

Marko said...

The mean/median salary in Victoria is not the mean/median buyer thought....

Leo S said...

Well, average household income in 2005 was $69,000 and median was $55,000.
Between 2000 and 2005 it increased 23%. So let's add 25% to the 2005 value and we get an average household income of $86,000.

So the average house costs about 7 times the average income.

But I know this one guy who makes $200k a year, so the housing market is probably fine, right?

a simple man said...

but mean/median income is something comparable across cities and times. Yes, those buying will have a higher mean/median but that is true everywhere.

Just Jack said...

The more you earn - the more you spend. And with prices in Victoria being so high - the less you save.

Then there are those expectations in your mind. Hey I make good money - I deserve a BMW. I earn more than this guy, I should have a better house or a younger wife (and then it get's expensive).

Leo S said...
This comment has been removed by the author.
Leo S said...

The mean/median salary in Victoria is not the mean/median buyer thought....

Yes, but that's the ratio that is used to compare affordability. Generally it should be around 3.5.

However it would be interesting to figure out the ratio for the average home buyer. Canada has a home ownership rate of 70%, so a reasonable assumption might be to remove the bottom 30% of household incomes, since they are likely renting (except for the denizens of this blog, but those aren't likely significant).

Best I can tell from this report is that if we remove the bottom 30% of income earners, we get an average of about $82,000 in 2006, which is likely now about $100,000.

So for the average house buying family, the average home costs 6 times their average income.

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

Downward pressure, downward pressure, downward pressure.

Here are some excerpts taken from the House Hunt Victoria blog going back four years:

----------

“But other analysts were not as optimistic, expressing concerns that housing could remain under downward pressure for the rest of this year” –May 24, 2007

“Fewer sales, more inventory will result in more downward pressure on prices as the months roll by.” –Jul. 16, 2008

“Keep your chins up, this time the downward pressure is coming from the upper end!” –Dec. 13, 2008

“Not as much inventory below 500K, but it is moving. This will give tremendous downward pressure on houses priced more than 500K...” -Feb. 14, 2009

“They will need to convert home equity into retirement income at some point in the near future that is likely to place a continuous downward pressure on home prices.” –Oct. 27, 2009

“It will take 3 months of increasing listings before it starts to put downward pressure on prices.” –Feb. 11, 2010

“From my calculations we should break 4000 before the end of the month and then we are in TONS of inventory territory and it WILL start putting major downward pressure on this market.” –Apr. 2, 2010

“This downward market setting is only getting started.” –Aug. 9, 2010

“If the stock markets keep falling Canadian consumer confidence will drop and our home prices will accelerate downward.” –Aug. 25, 2010

“They are in denial and it is sad as this spring likely there will be a huge increase in inventory and sales will stay flat leading to more downward pressure on prices.” –Oct. 20, 2010

“I think the true market will show itself this spring when all those listings return as well as a flood of new listings but sales stay low - there is going to be a lot of downward pressure on prices come the new year.” Nov. 30, 2010

“If we keep adding listings at this rate we will be well over 4500 by the end of April - and thats going to put downward pressure on prices” –Feb. 28, 2011

“Selling now, with so many others also trying to sell, only contributes to downward pressure on overall prices.” –May 4, 2011

“... at this rate, May sales may be real low, causing quite a bit of downward pressure on prices” –May 9, 2011

“Well the contraction in market prices got a little closer to Oak Bay and Victoria today with a sale in the Stawberry Vale area of Saanich West for $623K. The property previously sold in Nov, 2009 for $645K and was listed for sale in 2006 for $610K. That should start putting downward pressure on the values in Fernwood, Fairfield and Oak Bay.” –May 19, 2011

“MOI is the most interesting thing. Hovering around 10 months - this puts downward pressure on prices, for sure.” –Aug. 2, 2011


----------

Gee, there sure must have been downward pressure on prices!

Click here to see the downward pressure.

How do you guys and gals explain four years' worth of downward pressure talk with nothing to show for it? In fact, it's seemingly been upward pressure--the freaking opposite of what you were saying.

Rhino said...

I'm seeing downward pressure every day, stuff is selling for a lot less than last year.

Want to see downward pressure...just open your PCS account buddy!

Trilobite said...

But Introvert does have a point, doesn't he. Just like many on this board, I've been a bear for a long time ... but thus far, by and large, I've been wrong. There may been some downward pressure recently but I think it's way too early to call it a clear downward trend.

The problem with bubbles of course is that they keep on going and going and ... going until they burst. So just because the bears were wrong till now doesn't mean they're wrong from now on.

Marko said...

What is going on with 2851 Scott? Re-listed for $386,000 -

"This fixer-upper is available AS IS with the underground oil tank removed after completion or have it custom renovated by seller for a great package deal. $5,000 discount if purchaser completes prior to November 21, 2011 . This 4 bedroom home is in an ideal, quiet residential location. Fernwood Village, Hillside Mall, and bus routes are in easy walking distance. This home has 2 bedrooms on the main floor with 2 more upstairs and a 5'8 basement. Home could also be torn down to treat as a level 50 'x110' lot. The house needs a complete cosmetic overhaul, but appears to be structurally sound with a recent roof, and foundation upgrades. This is an assignment of contract. The current buried oil tank will be professionally removed by seller."

Mindset said...

Re: downward pressure... (hindsight rant)

Hmm, tell you what, how about you explain where the upward pressure is going to come from going forward? Your criticism based on hindsight is just way too easy.

I could spend 20 minutes and make just about any world class investor look like an idiot by analyzing their comments and predictions over the past few years.

You are obviously making a positive statement about the RE market. How about putting some current and future thoughts out here for everyone to consider? I'm interested in hearing what you think is happening today, and will happen going forward.

(P.S. I promise not to cut and paste your predictions at some convenient future date to make you look wrong.)

Leo S said...

@Introvert... That's quite the impressive copy/paste job.

How do you guys and gals explain four years' worth of downward pressure talk with nothing to show for it?

Unlike the CREA, this blog is not an organization and doesn't speak as one. Thus I don't really feel the need to explain statements that aren't mine.

More importantly, you seem to be confusing the term "downward pressure" with prices decreasing. There are always downward and upward pressures on the market. Up until 2008 the upward pressure was far bigger and prices rose. Since then the downward pressures of high listings, credit exhaustion, recession, etc have increased to balance out the upward pressures. So it is completely accurate to say there is increasing downward pressure on the market, as evidenced by no longer increasing prices.

Leo S said...

Scott St.. Maybe they heard that lot prices are increasing and want to cash in.

Chris said...

How do you guys and gals explain four years' worth of downward pressure talk with nothing to show for it?

Maybe I have unlucky friends, but the four I know who bought in 2007 have all lost 20% from their purchase price plus renos. They may not fully know it yet, but they're starting to catch on. I suspect the next 20% will be harder to deny as it will be more difficult for industry and the media to cover up. Not only that but the recent median and average skew will finally reveal a truer picture of price declines.

Just Jack said...

Our market has been under pressure for those four years, it has taken billions of dollars of cheap loan guarantees to keep it propped up. And still prices have rolled back to 2008, 2007 and in the outlying areas 2006 and 2005 price levels.

The same with the volume of sales, which have fallen to some of the lowest levels in decades.

Interesting that Teranet will be doing a repeat sales analysis for Victoria. It will be nice to have another method of looking at prices rather than using averages that can be skewed so easily.

It takes time to turn a ship this big around.

CanSpeccy said...

"So for the average house buying family, the average home costs 6 times their average income."

But about ten times disposable income and twenty times what's left after paying for food, transportation and clothing. So six times average income is actually a quite staggering amount to pay, unless you're confident that inflation will negate most of the real value of the capital outstanding.

Marko said...

"Yes, but that's the ratio that is used to compare affordability. Generally it should be around 3.5."

I disagree with that it should be 3.5. Sure, it may have been 3.5 for a long time but things change.

One of my clients was noting that in the 1970s as a young Captain on the BC Ferries he was making close to 10k/year. A waterfront lot at that time could be bought for about 10k. That was then....

Leo S said...

But about ten times disposable income

Round about 16 times in fact

Just Jack said...

That 6X's income ratio is more for comparison purposes, to show how far the market has stretched. Just like the average Canadian family has 2.3 children. Obviously, you can't have a third of a child.

The 6 times income ratio does not mean that a person looking to buy a home today will pay 6 times their income. The person buying today would have a significant down payment. The down payment could have come from selling their current home, or a big bonus or by offing mom and dad.

The key is to watch that ratio in relation to the falling sale volume. In otherwords in the great gambling casino of real estate, the stakes are higher but the number of players have dwindled down to one or two tables. Eventually the game ends and new one starts at lower stakes (say 2 to 3 times income) but with more players.

So as a market matures there are fewer players but with more money. And at each successful round more players are pushed out of the market. The 6 times figure gives a good indication of how big the pool of those cut out of the market has grown and how big of a tumble the market could take in order to entice these players back to the table.

Never split on anything less than two eights.

Leo S said...

I disagree with that it should be 3.5. Sure, it may have been 3.5 for a long time but things change.

Perhaps it should be higher than 3.5 in Victoria, given that it is a desirable place to live. But we're higher than Toronto. Does that make sense?

Perhaps a more comparable city is Ottawa. Stable government, university, and federal jobs just like here and their price/disposable income ratio is 10. So how is 16 justified here?

a simple man said...

Snow and distance from Quebec drivers.

Just Jack said...

The ratio is going to be more determined by the economy and not by an individuals income.

With a strong BC economy your going to see a high ratio. A tanked economy, like in the mid 1990's (about the time Ferry Captains were to be trained on the "FASTCATs") and we had a ratio of under 3 times income.

So, you have to ask yourself, could BC have another recession like or worse than the 1990's?

a simple man said...

I would say that we are headed towards no better than the 1990's - the world is teetering and the US is rolling out a new buy American mandate.

Just Jack said...

If you're in an area of high unemployment it doesn't matter how desirable the location, you can't afford to live there.

And if your rich, you don't want to live in an area with high unemployment either. That's why you don't find the highest prices near the downtown core. They are just far enough out, so that the unwashed are not seen. About the distance you can roll a shopping cart full or your life's possessions in about 47 minutes from the nearest Money Mart.

Salt Spring Island has weather too, and there not paying 6 times income. So does Vancouver, but there not paying 6 times either.

So what has been happening to our unemployment rate over the last few years?

Just Wondering said...

"One of my clients was noting that in the 1970s as a young Captain on the BC Ferries he was making close to 10k/year. A waterfront lot at that time could be bought for about 10k. That was then...."

I don't disagree with the salary, but 10K for a waterfront lot in the 70's? I think his/her memory isn't all it once was. I was alive, breathing and buying in the 70's (don't ask me about the 60's) and that's too low.

The ratio in the 70's wasn't 3.5 either. It was far closer to 5. In the mid 70's your average 50's bungalow in a decent area was around $50,000 and a good median salary was about $10,000.

Just Jack said...

There was a real estate boom in the 1970's too. That's when most of Gordon Head was built. But we also had big gains in incomes. And the Oil Embargo that sunk the economy with shortages and high prices. America was loosing a war in South East Asia and the world economy was shattered with New York and Mexico about to go bankrupt.

Thank God, things are different today.

Marko said...

"I don't disagree with the salary, but 10K for a waterfront lot in the 70's?"

He said he clearly remembers that is what waterfront lots in Deep Cove were going for. Must have been early 1970s. By the late 70s I think a Gordon Head box was around 80K?

Marko said...

687 Island Rd - $1,189,000

Anyone going to check out the open house?

Marko said...

Is it just me or is every single house in south Oak Bay less than 650k being flipped?

Introvert said...

Does anyone here want to poop on the ship-building contract news?

Negative economic news usually elicits a few mentions on this blog; positive economic news: crickets.

I obviously think the announcement is great--lots of good paying jobs for years to come. Can't hurt real estate!

Just Jack said...

Now what we need is a contract for a ferry service between the dockyard and Colwood.

Leo S said...

Does anyone here want to poop on the ship-building contract news?

Do you ever post things that aren't designed to get a rise out of people?

Good news for sure, but don't expect it to have a big impact on real estate. 80-85% of the work is being done in Vancouver.

Just Jack said...

Great, now you tell me most will jobs will be in Vancouver. And I was skimming through adds to see how much the boats that the logging camps use to transport their workers cost in order to start up a ferry service.

That would have been a pretty cool way of getting around the Colwood Crawl.

Alexandrahere said...

In and around 1974, you could buy a brand new house in the Mount Douglas area of Gordon Head for around $36K. The average salary probably was around $14K per year. Also, by then most married women under 40 were working at least part-time.

Alexandrahere said...

I think one of the better buys of today is at 2942 Irma. It went for $425K and was assessed at $578K. A nice late 60' solid, spacious, bright home. It requires updating, but with about 40K in reno's, you would have quite a lovely place in a convenient area for $465K.

Zidane said...

Alexandrahere, what was the ask price on the Irma house?

Leo S said...

@Alexandrahere

I thought the same thing. Seemed like a decent deal. Heck that one sold for $9k under 2006 assessment.

Didn't look at it though, maybe it's built on a volcano or something.

Mindset said...

Is it just me or is every single house in south Oak Bay less than 650k being flipped?

I'd say you are onto a pattern there. Buy it, lift it, slap some windows and some hardwood in it, and list it for close to a million.

And then hold a few open houses for the crickets.

Think its' the same Windsor folks with a second flip on McNeil? Don't these people realize what a million gets you these days?

Just Jack said...

I've noticed a couple of deals like Irma happening lately. You would probably get more in monthly rent than what you would pay in monthly mortgage payments on this one.

Why so low? Feels like an estate sale where the executor just wanted it sold.

A lot more estate sales coming up in the future as the Baby Boomers parents fill their bucket list. Almost all of the Boomers parents are into their 80's now. And with over 6 months of detached home inventory in the core municipalities, I can see why the estate will look at all offers. It took 61 days to get an offer on the Irma property. Most likely because its not what the mainstream buyer is looking for.
HGTV keeps telling them to buy location, location, location. And that wouldn't be in the Burnside neighborhood.

But - that's where the deals are!
In the neighborhoods where no one is bidding against you.

I think its far better to buy something that is already into its correction than to buy a house in a neighborhood that has yet to correct.

Leo S said...

Irma started at $499k 2 months ago. Last asking was $439k.

The real mark of a motivated seller. Price drops until it sells.

Leo S said...

Why is it that the more exclamation marks a realtor puts after MOTIVATED SELLER the less motivated they actually are in accepting low offers?

Mindset said...

Heard a 'buyers' ad on the radio the other day. A couple with 300-450K looking for a 2 bedroom minimum condo in specific areas. Interesting strategy...

Maybe Realtors should be advertising buyers, and having the sellers come to them? Creating a bidding war between sellers over a buyer?

Realtors still get their fees, and it seems to make sense with the local market the way it is. No different than bidding wars between buyers a few years back (well, except reversed).

Introvert said...

Do you ever post things that aren't designed to get a rise out of people?

I'm the caffeine of this blog.

Mindset said...

Introvert: I'm the caffeine of this blog.

...all stimulant no nutrients??

Trilobite said...

Nutrients? I suppose that would be the bears. Though, personally, I'd prefer bulls.

Sweetrealtor said...

@ Leo S

Interestingly enough, my website company has stats to say that if you put in words like "motivated seller" or "priced to sell quickly", it actually takes longer to sell.