Thursday, December 1, 2011

November data

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.

November 2011 (last week's numbers)
Net Unconditional Sales: 482 |419| {314} [200] (90)
New Listings: 847 |756| {570} [369] (201)
Active Listings: 4,329 |4,202| {4,218} [4,265] (4,503)
Sales to new listings ratio: 57%
Sales to active listings ratio: 11% or 9 MOI

November 2010
Net Unconditional Sales: 479
New Listings: 722
Active Listings: 3,723
Sales to new listings ratio: 66%
Sales to active listings ratio: 13% or 7.7 MOI
Average prices are as follows: SFH = $592K TH = $380K Condos = $320K

Sales volumes are so low, and have been for months, that they're more influenced than ever by unit-type and price sales mix. 

Animal Spirit feeds us some more really gem analysis on the low end market:

As people may know, as part of a master plan to take over Starbucks I’ve been collecting a few datasets on single family homes in the core areas. Since prices are generally set at the margins and since the lower margin is much more important for house prices than the upper one (i.e. house prices include a nominal lot value for which a house would sell to a builder like Marko’s dad, serving then to regenerate the housing stock). 

For quite a while prices at the low end of the market weren’t changing much. A house listed for 400K two years ago was listing (and selling) for 400K this year. Then fall happened. In May, out of 1050 listings, there were only 36 houses listed for under 400K. November 24, with 1008 listings on the market, there were 62 low priced beauties – or a 72% increase from May. If this is converted to dollars, the 5th percentile (95 listings out of 100 are for more money) in May was $415K, and in November this had dropped to $388K – $27,000 – 6.5%, or more than most down payments.

So how does this compare over time? The figure below shows that there were comparatively more low end houses in February of 2009, but that since April, 2011 (the dark blue line) there is a clear drop in prices (or at least more listings) for everything under $450K. I’ll let people play around a bit to see how much. But wait, doesn’t Marko tell us that lots are still going for $330-$350K in Fernwood. Sure, the graph shows us that there are virtually no houses listed for under $350K – the change (right now) is happening from $350-$450K.


Since someone will probably say that the types of houses that are listed for are changing, I’ll pull out a new data series that I’ve been collecting. Taking all houses $575K and less in price, >1,000 sq ft and in the core areas (including Central Saanich) and pulling out the area, list price, assessed price, sq. ft. and other data one can get a pretty good idea of what Mr. Market is doing without having a real estate license in good standing. Today’s post focuses on changes in the low end between May and November, so here is a scattergram/regression analysis showing the price per square foot (y axis) with the square feet of the listing (x axis).



Taking the output trend line, one can solve for what the average price for a listing of a given size would be at different points in time: 

Size (sq ft)
May
Oct / Nov
Change
1,000
453,359
427,560
-25,799
1,250
473,205
450,377
-22,828
1,500
490,063
469,922
-20,141
2,000
517,893
502,501
-15,392


Here we can see that a 1,000 sq foot shack that would have listed for an average of $453,000 in May is now $428,000 (26K, or 5.7% less). Interestingly, there is less change as houses get larger. Could this be that the underlying lot value is dropping? Or is it because speculators have been chased out of the market by the CMHC changes?

118 comments:

Just Jack said...

Fantastic graphs!

Leo S said...

Nice. Same results as what my charts have been showing me. The lower end has come down about 6-7% this year. And people still question whether it's a good idea to wait.

Just Jack said...

Buying properties under court ordered sales are not as easy as buying from the home owner. There are restrictions and risks that a buyer has to take on.

In years past, there were few homes that reached the court. Most were sold before the lender received conduct of sale.

That's no longer the case for most of Victoria. And the savings on buying a court sale are becoming substantial.

For example a recent sale of a condominium on Foul Bay for $169,000. The last time this condominium sold close to this price was when it sold for $173,000 in February 2005. This condominium was listed at one time at almost $250,000.

Yup, that is a 2005 price for a condominium selling under duress. While most of the condominiums not under duress are still selling at 2007 or 2008 price levels.

So, I can see a further drop of some 20 percent in condominium prices happening for Victoria in the near term. Or roughly a drop of $60,000 on the typical condo price.

And that will have an affect on starter homes as they compete for the first time home owner along with condos.

That's good news for builders. If the price of starter homes drop, then they might find it profitable to buy, demolish and build. At least those that are still in business might be able to do.

Alexandrahere said...

Re the new Microsoft office opening here in Victoria.

Do you think that most of the employees will be ones that have been laid off from Vancouver locations of Electronic Arts? ( Hopefully Microsoft isn't as cut-throat as EA in terms of the manner in which they lay off their loyal people.) Or do you think they will hire mostly locals?

Renter said...

Nicely done, Animal Spirit!

Fiduciary said...

Alexandrahere: I'd imagine they'll hire either locals or people that are willing to move here permanently - really, if they're moving away from Vancouver what's the use in hiring Vancouverites to staff it? If they want people from Vancouver those people can work in their Vancouver office. I work with some people doing the opposite trip weekly (living in Vancouver and working here) and it's not that easy.

That said, I did seriously consider applying for a job in Vancouver last month. :)

Anton said...

It is easy to attract people to Victoria if there is a good job waiting for them. People who want to raise a family especially see the appeal of Victoria. In Vancouver, unless one is a very high earner there is a choice of raising a kid in a skybox or enduring a long commute to get to a liveable neighborhood.

Just Jack said...

I suppose its all relative. When you compare the commute in Vancouver to Victoria. 2 hours versus one hour.

But when your sitting in car, stopped in the middle of the highway, it still sucks.

It would have been nice if the Studio was not in the downtown core - but that would have been putting the employees first instead of the egos of a few.

Fiduciary said...

Just Jack, I respectfully disagree, I think it's good the studio is downtown. Downtown is where everything else is - restaurants, shopping etc. Sure it's noble to want a shorter commute, but with a studio like that where your employees are going to be very specific, and living in many different parts of the city, downtown is the optimal location.

Where else would be better? Langford/colwood would be worse for everyone that doesn't live out there.

Anton said...

Ok, I'll confess to not having my finger right on the pulse of remuneration in the game design industry. I do suspect though, that if they say they want the "best and the brightest" presumably they will be paying enough so their employees won't have to be commuting from a townhouse in Langford. Of course that is unless they want to.

Renter said...

I work for a Microsoft competitor. We have consultant offices right downtown, but the development lab is in Royal Oak. We have staff coming in from both Sidney and Sooke. Any developer who has been around a while is making north of six figures. University hires would be making about half that.

Just Jack said...

Well if they are spending their time in restaurants and shopping when are they working?

If the studio was in the Westshore, then they would be going against the rush hour with little traffic.

But its all relative if the boss lives in Oak Bay or Victoria, then the office will be downtown. And if Microsoft is paying the freight it will be a top floor of a building in the choicest water view location.

It's a great coup to get a Microsoft Studio in Victoria, would we really have one here if the principles did not already live here? I don't think so. But the important thing is we got one. Hopefully it will end up with 60 new employees.

Just Jack said...

That makes more sense to have a small consulting office downtown.

And the development lab in Royal Oak or better yet in Langford.

a simple man said...

Animal spirit - thanks for taking the time to crunch these numbers for us over many starbucks coffee - I owe you one.

This is added data showing the foundation falling out of the inverted pyramid that is Victoria real estate.

commuter12 said...

Hey does that microsoft competitor start with an H and end with a P?

HouseHuntVictoria said...

This is the first year since I started blogging where the low-end housing market wasn't resilient. In the 2008/09 "blip," the low end held up for the most part while the middle-uppers did not. Something's afoot.

JustWatching said...

HHV,

What may be afoot is tighter CMHC mortgage rules..

Tighter credit scores article

While the average borrower of a CMHC-insured mortgage held a credit score of 731 in 2010, that number rose to 735 for the first nine months of 2011-- the highest climb since 2007.

“I haven’t had a single client with a Beacon score of less than 600 get a (A) mortgage approved this year,” Nick Tassone, broker-owner of Midtown Mortgage Service in Sault Ste. Marie, Ont., told MortgageBrokerNews.ca. “We’re seeing either the lenders or CMHC stick to that recommended 600 score on high ratios. What I’ve also seen is a number of clients referred to me just after they’ve sold a home and are about to buy a new one but because their credit score has taken a hit, there’s nothing I can do for them. They’re stranded.”

It means that CMHC recommendations are now being more closely adhered to, with most lenders declining deals that fail to meet those standards.

Under the Crown corp. “recommended” guidelines, homebuyers should have a Beacon score above 600 in order to win CMHC insurance on a loan to value of 80 per cent or higher. It jumps to 610 for LTVs of 90.1 per cent to 95 per cent and falls to 580 for conventional loans with an LTV of 60 per cent to 80 per cent.

Animal Spirit said...

interesting - non-waterfront SFH sales jumped way up from 218 in October to 265 in November, while condo sales went down by the same amount. Any comments on the increased SFH sales?

a simple man said...

from cbc.ca

Canada lost a surprising 18,600 jobs in November, pushing the country's unemployment rate up by 0.1 percentage points to 7.4 per cent, Statistics Canada said Friday.

Economists had been looking for between 16,000 and 17,000 jobs to be added, and for the unemployment rate to remain unchanged at 7.3 per cent.

JustWatching said...

Readers keep visiting House Hunt Victoria because they get the truth about real estate in Victoria.

Today I have some big news!!

For years posters have been saying if only we had a House Price Index for Victoria (like Vancouver). Median and average sales price comparisons have limited usefulness for determining market value.

Well now we do!!

HPI for Victoria in the news

Teranet and National Bank publish a monthly House Price Index that tracks changes in house values in a number of Canadian cities. They recently added 5 cities (Victoria, Winnipeg, Edmonton, Hamilton and Quebec City) to their monthly House Price Index report bringing the total number of cities tracked to eleven.

Teranet - National Bank House Price Index-Victoria™

Here is a link to send all your friends that say real estate in Victoria keeps going up.

http://victoria-hpi.notlong.com/

Notice that in July we were back to 2008 prices and prices have been dropping further since then according to those analysing recent sales stats.

JustWatching said...

You can see in the graph I posted that Victoria prices have flatlined for 3 years. After the big drop in late 2008 the government goosed the market with record low interest rates. Even this could only push prices back up to 2008 highs.

What happens if we go back into recession? Market values drop..

If that doesn't happen and the economy fully recovers interest rates will rise and the amount buyers can borrow, based on their income, drops. What happens to house prices then?

Its over folks - watch out below.

Marko said...

Working with a few buyers right now....showing lots of subpar listings. Despite the high inventory not a lot of nice properties out there.

DavidL said...

@Marco wrote: Despite the high inventory not a lot of nice properties out there.
Do you think that this could be due to some house sellers being financially distressed, and not having the spare cash (or credit) to make the required cosmetic improvements to sell their home?

@Just Watching
Thanks for the link to the Teranet's Victoria House Price Index.

@Animal Spirit
Fantastic data, charts and analysis ... thanks for sharing!

Leo S said...

The Teranet index was expanded to Victoria at the end of October. Good to have for sure.

DavidL said...

640 MARIGOLD RD -- MLS® 294049
Has been on the market for 190 days. Originally listed at $525K and has now reduced to $435K. Granted, the location is not ideal ... but the asking price is also $53K below assessed value! Watch out below ...

JustWatching said...

Did you know that British Colombians have more consumer debt than anyone else in the country...

Vancouver Sun article

The average B.C. resident has $36,588 in non-mortgage debt - 43 per cent higher than the Canadian average of $25,594.

More and more people are relying on lines of credit, with 42 per cent of all non-mortgage debt held in lines of credit. Many of those are unsecured.

After lines of credit, 18.5 per cent of non-mortgage debt is in instalment loans with regular payments, 15 per cent is in revolving loans, which are mostly loans through stores for furniture or appliances, 11.5 per cent is on credit cards and 7.5 per cent is on car loans issued through auto companies.


-------

Hmmm... 42% of non-mortgage debt is in lines of credit. Sounds just like the American using their house as an ATM before the crash.

I suspect the banks will get mighty nervous if house prices start dropping like they did in winter 2008-2009. What happens if they start asking for repayment of the loan?

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

It's looking like a good time to cash out of this market before its too late. Always a good idea to take tax free profits now and again. Wife and I bought the place 12 years ago, we're pushing 38 and want a change, we want to rent now.

I would love some input on how to price the home right for quick sale. We have lots of wiggle room, 50k below assessment and we'd still clear 300k.

The house is in Langford, but a nicer part of langford, right across the street from glen lake. No lake views yet, but only 30 seconds to the beach access.
-12000 sq\ft flat lot(subdividable for two new houses).
-Well kept 2800 sq\ft 2 story house.
-1 bedroom, 1 bath 1200 sq/ft finished suit down stairs.
-3 bedroom 1-1/2 bath open concept living upstairs.
-2 car garage with lots of additional parking.
-New exteriors...roof,fascia gutters\dwn spouts, soffits, siding, trim, garage doors, deck and patios...nice curb appeal.
-2 gas fire places, 1 up, 1 down, brand new air tight wood stove up stairs, updated kitchen and bath.
-City sewer, nat gas, fully treed with big firs, if you took 1 tree down per year you could heat the house for 15 years or more.
-Built in 81 well cared for, All updates done by pro's, journeyman carpenter myself.

So, how much below assessment would sell this house quick?

Is it worth putting another 10k in for fresh paint or just sell for less?

Whats real estate commission these days (sell only won't be buying for years).

What are the penalties for selling before my 5 yr term expires?

Thanks a bunch.

patriotz said...

"I suspect the banks will get mighty nervous if house prices start dropping like they did in winter 2008-2009. What happens if they start asking for repayment of the loan?

If the loan is insured they will renew because the taxpayers are holding the bag, not them.

For uninsured loans there's a 20% cushion. In theory they can demand repayment at end of term if the property is underwater but my guess is they won't. What would the banks rather do - keep the owner paying every month and making a profit on their books, or foreclosing and selling which results in a loss on their books. And remember the latter pushes prices even lower which results in more losses.

Cycle said...

Jim Hume reminds us that buying your first home has never been easy:

http://www.timescolonist.com/secret+buying+that+first+house+Learn+without/5629809/story.html

Actually, brings up a good point and puts things into perspective. Has it ever been easy?

Leo S said...

Wife and I bought the place 12 years ago, we're pushing 38 and want a change, we want to rent now.

This is interesting. Why do you want to rent now? Is it just locking in the profits and hoping to buy lower? If you bought 12 years ago you bought at the perfect time to take advantage of the runup, so obviously there's no danger of negative equity or something similar.

Gotta say, if we had a house for that long and had ridden the bubble up I wouldn't mind riding it down again for a while. Or are you looking to upgrade?

As a first time homebuyer I'm sure it can't hurt to wait, but I wouldn't be certain about the economics of selling and buying back in later. If it stays basically flat you're not likely to be ahead.

Marko said...

Mr. Mike if you send me an email (markojuras@shaw.ca) with your address I can send you a rough estimate of what your home should be listed for.

As far as commission the number you will hear most often is 6%100k+3.0% balance which is split half and half between your listing agent and the buyer's agent.

However, now there are a variety of business models out there. What I charge is 2.5% balance and I offer 2.5%100k+1.5% balance to the buyer's agent so I make 1% on the amount over 100k. I find this business model works well in a slow market as it gives buyer's agent (sells the home 90%+ of the time) solid incentive to show your home yet you save substantially on the commission.

Let me know if there are any other questions I can answer.

Just Jack said...

Well Mr. Mike, you have a lot of different things going on all at once.

The biggest one, is the subdivision potential of the property. If the home straddles both potential lots, then all you have is a big home on a big lot. And given your description of the property thats what it sounds like you have.

Otherwise you will have to demolish (or possibly move the home) and that would only leave you with the value of two empty lots.

The house on a large lot would likely get you your highest price anyway.

You seem to rely on the assessment quite heavily in pricing your property - don't.

A property like yours is unusual for BC Assessment to value, especially when the data that they are using most likely dates back to the time you bought your home 12 years ago. And you've done changes to your home since then.

Also, the new assessments will be coming out shortly. So any kind of factor that you're trying to determine today, may be meaningless next month.

You will have to contact your bank to find out what penalties you might incur when selling. Try to get their answer in writing.

If you want to price the home for a quick sale, you will need the advice of someone in real estate, that can give you a value and a range in value of where the property lays. There is no equation for how much to discount a property to get a "quick" sale, it depends on your local market.

I'm not sure if I would use the same person that gave you the market evaluation, to sell your home. There may be a conflict in interest between the two parties - but that's your call.

Anyway, I don't think you have to "fire sale" your home. Why not get the best price possible and expose the home to the market for a reasonable time.

Then think of a month in April in Paris (Ontario or Europe) with the bride.

Bon chance, mon ami

patriotz said...

"Has it ever been easy?"

Had an easy time buying my first house in the 80's, and on one income too.

But having a 40% down payment helped a lot.

Paula said...

Marko, quick question on this post:

“6%100k+3.0% balance is split half and half between your listing agent and the buyer's agent … What I charge is 2.5% balance and I offer 2.5%100k+1.5% balance to the buyer's agent so I make 1% on the amount over 100k.”

In the 1st scenario on a $600k house, $6000 + $15000 would be split between the seller and buyer agents. So the seller would have to pay $21,000 to the 2 agents.

But in the 2nd scenario, if the buyer agent gets $12,500 and the seller agent gets $2500+$7500, the total that the seller would have to pay is $22,500.

So isn’t the home owner paying for that extra $1500 incentive?

Marko said...

I charge 2.5% gross commission.

So $600,000 x 0.025 = $15,000

The buyer's agent is offered $10,000 (2.5%100k + 1.5%balance) and I would make $5,000 (1% over 100k).

Also keep in mind that HST applies; therefore, the difference is even bigger.

$21,000 + HST versus
$15,000 + HST

Paula said...

Thanks, Marko. One more question: if the buyer's agent is the buyer (no agent), then can the buyer get the $10k?
I'm just trying to understand if this comes up during negotiations.

patriotz said...

"One more question: if the buyer's agent is the buyer (no agent), then can the buyer get the $10k?"

Yes the buyer "can" get the $10k.

Remember sales commissions are agreed on between the seller and the listing agent. The listing agent can do anything he wants with that commission, i.e. splitting it with a "buyer's agent" or with a buyer or both.

So it comes down to what the listing agent is willing to do to make a sale. Is he willing to put the buyer first, or another agent first.

a simple man said...

So, 2056 Hampshire sold for $755K, 4K below asking. A great house in a great location for an aggressive price. This is my new watermark house as it had enough room for my family and is in the area we desire. Spring 2010 this house would have gone for 900K range. Times are a changin'.

Still a lot of flips sitting on the market in Oak Bay with seemingly little interest, some now going to rental hoping that the market recovers next year. But, what if it drops more next year? I would not be surprised to see another 10% come off by next summer.

Marko said...

"Thanks, Marko. One more question: if the buyer's agent is the buyer (no agent), then can the buyer get the $10k?"

For my listings absolutely not. When I list a property I ONLY represent the seller. If a buyer approaches me directly I inform him or her that I do not offer something called "Limited Duel Agency." The buyer either has to represent themselves or go out and find another agent to represent them.

What I do if the buyer chooses to represent themselves is I offer the seller a discount. Let's say I list a $600,000 property and we get an offer the same day from a buyer representing herself. It wouldn't look good if I pocketed $15,000 in one day; therefore, I would reduce my gross commission to the seller.

Giving money back to buyer when I am a listing agent would be a massive conflict of interest in my opinion. An intelligent buyer should assume that possibly I am discounting my commission to the seller and they have more negotiation room; however, I would not disclose this to the buyer unless I had instructions from the seller otherwise.

All that being said, you can always hire a buyer's agent such as myself to represent you and I would give you over $7,000 in cash back on a $600,000 purchase. Some conditions apply including it can't be my listing!

mrmike said...

test

mrmike said...

@leo s:
Yes, I want to take my profits. I bought this house when I was 24 and the novelty of home ownership is way over. To me it's just a roof over my head and an expensive one. Lots of surprises can pop up! 3 years ago my septic field went (they do go) I was looking at a minimum 30k to replace and my yard completely destroyed in the process SURPRISE!
Luckily I had sewer at the road so it only cost me 7k. Most People I know own a home, To me its not a big deal, rather have the 300k in my jeans than illusionary equity.
I don't want to follow the heard anymore! BTW Leo S are you a Law Enforcement Officer for Saanich?

@just jack.
It's the new norm in my hood to subdivide these lots for 2 homes but I'm not going there. It can be done if thats what someone wants to do. No we are in no hurry to sell, but we don't want it to go stale either. Thanks for your post, I enjoy reading your stuff.

@marko.
Thanks marko, Ive sent an email.

Leo S said...

Yes, I want to take my profits.

Good luck to you. At least the market is pointing in the right direction for it. Although you might have had an easier time selling a year ago.

BTW Leo S are you a Law Enforcement Officer for Saanich?

Took me a while to figure this one out. Nope, it's just my name. Crazy eh? A real name on the internet.

Paula said...

Thanks for the great info, Marko - it's good to know what options are out there.

Animal Spirit said...

What in heaven's name are some people thinking? Went to a random open house today where not only was the house a gross-overpriced (i.e. at around 700 K was 100 K overpriced) quasi flip wihtout good finishing, but the major firm realtor was dressed like a slob.

Note to seller: if you hire someone for 20K to sell your house, check to see that you'd want him in your house to begin with.

To save embarrasing someone, I won't say where the open house was, or which firm, but it wasn't anyone associated with this site, or anyone I personally know.

DavidL said...

@Leo S wrote: Crazy eh? A real name on the internet.

Almost as crazy as me using "DavidL" for my name. Mind you, it narrows me down to 1 of 285 people. ;-)

Marko said...

2875 Beach Dr listed yesterday for $4,980,000.

Last sale 2006 for $5,600,000
Previous sale 2005 for 5,000,000

Not the best investment.

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

Market stats for Monday Dec. 5 @ 8:00 AM
December 2010 in ()

Net Unconditional Sales: 45 (349)
New Listings: 78 (522)
Active Listings: 3948 (3252)

Marko said...

Monday, December 5, 2011 8:00am

MTD December
2011 2010
Net Unconditional Sales: 45 349
New Listings: 78 522
Active Listings: 3,948 3,252

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

Marko said...

JustWatching you a realtor as well?

Just Jack said...

The Beach Drive property has a substantial value in the land component. During a market contraction these are the properties that will have big price declines. Properties like waterfront, acreage, starter homes, etc.

Also, back in 2005 and 2006 there were a lot of Americans and Albertans thinking they were smarter than the local yocals and buying up Victoria's "cheap" water front properties. Our version of the Hot Asian Market (HAM) that Vancouver experienced. This shows that in the short term outside influences can drive up prices temporarily (a bubble ???), but in the long term it is the local economic conditions that will always prevail.


In my opinion, these properties that lay outside of general market demand, are the forerunners of future price declines in the general market. Now that waterfront properties are rolling back to 2005 or 2006 prices, what will happen to properties one layer below from waterfront such as panoramic water view properties. Why buy a view property when you can have water front for nearly the same price?

Alexandrahere said...

Last week was a bumper crop in terms of sales within my criteria of SFH in Vic,OB,Esq,SE&SW with a min of 2 beds & 2 baths and priced between $375K & $775K.

28 homes sold this week resulting in the 3rd highest volume in my areas since I began tracking in mid 2010.

There was an unusual 6 sales in OB this week.

There were 16 new listings, 31 OM's and 29 price changes.

Avg Sale Price: $573K;Med:565K

Over half of the sales went for below BC Assessment and half had secondary suites.

Condos & townhouses priced between $260K & $775K with the rest of the criteria almost the same, didn't fare so well in terms of sales. There were 7 in total with the avg condo sale at $307K & T/H at $405K.

I am seeing many more older style condo's going for under $260K. A year and a half ago they would have sold in the mid $360K range.

Just Jack said...

Those older style condominiums in your target neighborhood, likely have age restrictions. The demand is clearly for family accommodation and not retirement.

Greater Victoria just isn't the Mecca for retirees, it once was. And I would bet, its because the baby boom retirement wave that has been going on for the last decade has crested and fewer retirees each year will be moving to Greater Victoria over the next decade. And I would further guess that the mortality rate will exceed the number of retirees coming to Victoria after 2020.

But - as you know - my bets can be wrong.

Alexandrahere said...

JJ and all: The "older" style condo's are pretty well all managed by professional management companies such as Brown Bros, Proline, Devon, Pemberton Holmes etc. At one time, these condos were mostly self-managed. These same outfits as you know manage apartment blocks as well. Anyway, they love the condos that have age and pet & rental restrictions.....so much less hassle for them in terms of complaints. They actually encourage residents not to lift restrictions. It has taken a long time but many of the bldgs are becoming a little more lenient. Thus many more are allowing for one cat/bird/dog as well as some rentals etc., and the age restrictions are coming down to 55,50,45,40 and 19 in some bldgs.
Also, as new people move in, because they are getting such a "deal", they are totally remodeling their units. So on re-sale, they are seeing a much larger return.

With the first boomers turning 65 this year, I hardly think that generation wave has yet crested...albeit many of those started retirement at 50 & 55 yrs of age.

As many of these mini "glass tower" condos recently built in the Victoria area (such as The Falls,) start to age.....say in five years, they will indeed begin to deteriorate and their value will plummet.

Leo S said...

Price/Assessment keeps dropping in the lower end. The 30 sale median is at an all time low of 91.71%.

How low will it go? And will there be an end of year price bump like last year as inventory decreases? I'm expecting one, but no sign of it yet.

Just Jack said...

The mistake your making is assuming people move to another city starting at 65.

Past market boom and busts show that people make the move to another city earlier at 55 years. The wave is made up of those retiring early and those transferring to Victoria with the intent to retire in the next 10 years here.

So that big upswing in prices that we have had since 2000 IS THE BOOMERS retiring (born 1945 to 1963). There is no next big boom of retirees coming to Victoria. We just had it. The front end of the boomer wave (born 1945 to 1955) pushed prices up to the point that there are now less back end boomers (born 1956 to 1963) left who can afford to retire to Victoria.

The success of our real estate market (high prices) is what is hurting our retirement market.

This is showing up in the advertisements for new projects. Far fewer new projects are advertising to the retirement market than they did a few years ago. Now the advertising is aimed at young "professionals."

That condominiums with age restrictions sell for less than those without restrictions reflects this change. That no step ranchers are now more difficult to sell than homes with suites. All indicate that the retirement market is fading not increasing.

AND, those "character" homes that the front end boomers who grew up with in the Leave it to Beaver and Father Knows Best generation are what the front end boomers desire. The back end boomers grew up with the Brady Bunch, Eddy's Father, Room 222 and Fame. So, I'm not expecting those "character" homes to retain their current premium for much longer.

The back end boomers house of choice just might be the side split three level design of the 60' and 70's.

Leo S said...

That no step ranchers are now more difficult to sell than homes with suites. All indicate that the retirement market is fading not increasing.

Also that the only way a lot of back-end boomers will be able to move to Victoria is in a suite with their kids. Coincidentally the only way the kids can afford the place is with their parents' help.

patriotz said...

"The front end of the boomer wave (born 1945 to 1955) pushed prices up to the point that there are now less back end boomers (born 1956 to 1963) left who can afford to retire to Victoria."

Note also that the front end boomers were the ones who were in a position to make their first RE purchase before prices started zooming up in the late 80's and so are more likely to have a higher net worth today.

The present value today of $100K in 1985 is a LOT of money.

Also more likely to have grabbed the good jobs with good pensions.

And of course the GenXers, etc. will be even worse off.

Another reason why, as you say, the retirement market is likely already past its peak.

Just Jack said...

The youngest back end boomer would be 48 years old. Unless this is their second family, their kids should be almost finishing University and not at home.

The next mini baby boom doesn't happen until around 1976 making them about 30 to 40 years old. These Echos are the ones with the young families and the jumbo mortgages.

That the front end boomers and the Echo generation were buying at the same time, added to the escalation in prices.

But that combination is never going to happen again in our life times. Because the next mini baby boom coincides with the mortality of the first of the baby boomers. And that baby boom is much smaller than the mortality of the oldest generation.

And if you happen to be an over weight Echo who has worked most of your life behind a desk, then its not likely you'll make it to 65 anyway. So you'll probably be kicking it the same time as the early boomers too.

To summarize, real estate going forward for the next generation will not be the way to fame and fortune like it has for the past 30 years.

You will just have to make your money the old fashioned way - you'll have to earn it.

caveat emptor said...

According to stats can life expectancy is still increasing and so is Victoria's and BC's population
Life Expectancy:
http://www.statcan.gc.ca/pub/91-003-x/2007001/t/4129899-eng.htm
Population:
http://www.statcan.gc.ca/daily-quotidien/100526/dq100526b-eng.htm
So maybe we won't just be a depressed ghost town filled with rotting boomer corpses.

patriotz said...

Actually longer life expectancy means that the the average retiree will be more likely to run out a given amount of retirement savings.

It also means that government budgets will be more stressed providing benefits to them.

Just Jack said...

I've read those same statistics.

Stats Canada have the mega computers doing the number crunching and quite obviously, those statistics show that I am wrong in my opinion.

I have been doing my family tree covering about 2000 people and going back close to 400 years and what I've noticed is that since about 1830, almost all of those who survived the first few years of infancy went on to live into their 80's. However, lately family members have begun to die off as they get into their 50's to 60's. A trend that I never saw in the 150 to 200 years before.

Something has definitely changed in the last decade. I think mostly it's our weight. My grand parents and great-grandparents were never more than 175 lbs. Absolutely none of them would even be considered chubby. Now you have people in their 50's that are 225 to 275 lbs.

So, there you go - my family is made up of porkers.

DavidL said...

Just Jack wrote: The youngest back end boomer would be 48 years old. Unless this is their second family, their kids should be almost finishing University and not at home.

I'm not sure about your conclusion on this ... I know many boomers in their mid-50's with their kids just starting university (and living at home). I don't expect my children to start university until I'm in my late 50's. Couples are starting families much later than they did a generation ago ...

Marko said...

Completely opposite in my family. Family members with heart disease, diabetes, and some who have survived cancer are living a lot longer than previous generations.

Two of my grandfather's siblings died of TB - how common are TB deaths today?

The numbers don't lie - people are living longer on average than they did 100 years ago. Technology is constantly improving. For example, more and more heart aliments that previously required bypass I being performed via angios, etc.

There is going to be a lot of pressure on healthcare as baby-boomers start to age.

Marko said...

"I'm not sure about your conclusion on this ... I know many boomers in their mid-50's with their kids just starting university (and living at home). I don't expect my children to start university until I'm in my late 50's. Couples are starting families much later than they did a generation ago ..."

By the time you get the necessary education typically required today for a half decent paying job (i.e. bachelors or masters), get a career going and dig out of student loans you are pretty much 30-35 when it comes to starting a family. ;)

Chris said...

For some reason BC is no longer attracting people from other provinces as seen by the latest data. 2011 growth rate is nearly half what it was a few years ago. International migration is down too, but not as much as migration from other provinces.

http://www.statcan.gc.ca/pub/91-215-x/2011000/t466-eng.htm

Leo S said...

The stats of course don't lie. But there are two bumps when it comes to life expectancy. Lots of people will die in their late fifties and early sixties of all the common culprits.

If you make it past about 65 you likely either don't have those problems or survived them, and you are very likely to make it to over 80.

Not that it really affects the Victoria market. Just look at the stats on what people have saved for retirement (ie, not much). Most retirees from cheaper parts of the country have been priced out of Victoria anyway.

Chris said...

Remarkable to see BC with a lower growth rate than Canada as a whole. I doubt thats happened since confederation. Yay it’s quitting time. Time flies while blogging.

http://www.statcan.gc.ca/pub/91-215-x/2011000/t104-eng.htm

Marko said...

"The stats of course don't lie. But there are two bumps when it comes to life expectancy. Lots of people will die in their late fifties and early sixties of all the common culprits.

If you make it past about 65 you likely either don't have those problems or survived them, and you are very likely to make it to over 80."

There is chart I've seen that gives life expectancy base on age. I just remember that at 90 your life expectancy is around 1.8 years...

K said...

"I am seeing many more older style condo's going for under $260K. A year and a half ago they would have sold in the mid $360K range."

Any examples you can point to?

Marko said...

Surprised 50 Howe Street is not moving at $699k. I showed it a few months ago - nice home.

MD80 said...
This comment has been removed by the author.
patriotz said...

Just looked at mls.ca and 50 Howe is "Priced to SELL!" at $724,900. Well evidently it's not.

Most expensive house for rent in the neighbourhood is this one for $2800/mo:

New luxury home beside Dallas Road

Leo S said...

Just dropped to 699 yesterday.

Sweetrealtor said...

50 Howe is a very nice house. I'm very surprised no one has taken the plunge here.

Al said...

We have a friend living just a couple blocks away from 50 Howe, and is thinking about selling next year. When his new wife asked us for possible pricing, we saw this one that is similar to their house, but surprised by the price (quite lower than he has in mind). Maybe there is a bidding war in the making :-)?

Alexandrahere said...

K: I don't keep my stats for condos & townhouses. My asking price range starts at $260K. I am thinking of lowering to $240K.

I started looking to purchase a 2 bed 2 bath condo in June of 2010 and finally purchased one in October. During that time I personally viewed at least 35 condos. All of them were either in Oak Bay, Fairfield, James Bay, a few in Esquimalt and Vic West and a couple in Saanich East.

I made a couple of offers on two in Fairfield before settling on the one I finally bought. The two that I made offers on were in the asking price range of $365K - $375K. One at $369 went for almost asking at that time. It was on Fairfield Rd & the other also went for close to asking and it was located on Collinson. Both 1970s buildings and in the 1000 block.

Similar ones to these are now going for less than $300K.

Today a two bed, two bath with two balconies (one enclosed)& completely updated sold for $290K It is located at 402-1052 Rockland. That one probably would have sold in the $350K range in mid July---Oct 2010.

If you go to MLS listings and key in Victoria BC...2 bed condos....you will find a myriad of them listed for under $300K

Alexandrahere said...

That house on Howe Street is indeed gorgeous. I am surprised at the new listing price as well. When you think of some of the junk in the same area sold in the 800K range a couple of years ago it makes you want to give your head a shake.

JustWatching said...

Yes 50 Howe St. in Fairfield is a nice property. Why is it still on the market? Because the seller is chasing the market down instead of listing at market value to begin with.

Here is the MLS history....

Listed as #293937 on May 25, 2011 for 829K. 24 DOM

Re-listed as #295380 on June 21 for 749K. Price later bumped to 799K. Expired after 71 DOM

Re-listed as #298931 on Sept. 7 for 784.9K Price reduced later to 725K. Expired after 75 DOM.

Re-listed again as #301825 on Nov. 22 for 725K. Price recently reduced to 699.9K

Any honest, competent buyers agent would know that this re-listing nonsense was going on and would let their client know. The seller now has buyers wondering what is wrong with the property.

JustWatching said...

Al,

Let your friend know what is going on with 50 Howe. If he lists too high and his agent plays the re-listing game he will get the same result. Lots of aggravation, inconvenience, tire kickers and eventually a lower price than if he listed at market value to begin with.

Marko and Sweetrealtor,

I know board and license rules do not let you give out this info on a public blog like this so I posted it.

Leo S said...

Re-listed as #295380 on June 21 for 749K. Price later bumped to 799K.

Would love to know the story behind this, as I see it fairly regularly.

What, did they list at 749k, see too much interest and suddenly think that they could get away with a higher price?
Or is this some sort of selling strategy that I'm not aware of, like scaring potential sellers into thinking they better offer now before the price is raised again?

Leo S said...

scaring potential *buyers* rather.

JustWatching said...

Remax is at it again with another housing report. They are pumping again for most parts of Canada. But in Victoria they are not so optimistic. They state sales will be down 11% this year compared to 2010 and that prices have been flat for the last few years. Of course next year will be stable with prices and sales predicted to remain about the same.

Here is a link to the youtube news release. Click here

Leo S said...

Interesting they predict inventory to come down and be back to normal levels by end of next year. I doubt that, but let's see who's behind holds the better prediction.

Al said...

Thanks JustWatching for the info. Looks like the owner of 50 Howe does want to sell and may have hired wrong agents.

My friend's house is in Victoria Heritage House book, was built for a local celebrity in early 1930s, and he paid $150K for it about 30 years ago and has done some reno and expansion over the years. So he does need to be careful when selling it.

Al said...

I know that 50 Howe is not in Oak Bay, but Fairfield is also a nice neighborhood. Hope that one of the regular posters here would like and get this nice house. We probably would if we haven't bought. :-)

arfenarf said...

50 Howe is about 100k out of my price range yet, but it is a beauty. Unfortunately, in my bracket (<600k, 3BR, inside McKenzie, prefer Victoria or Saanich panhandle), there's one junker after another. I have a shortlist of two. It's positively depressing.

Leo S said...

Arfenarf, we have the same range, and probably the same shortlist. Hands off Kingsley or Stockton!

a simple man said...

I really like Fairfield. If my kids were not now deeply entrenched in Oak Bay schools and all the social ties associated with that I would put Fairfield on a pretty equal footing with Oak Bay, all things considered.

Leo S said...

real estate decline is well under way in china

JustWatching said...

How did the Victoria real estate market do yesterday?

Unconditional sales: 10
New listings: 35
Price change: 19
Cancelled: 12
Expired: 14

JustWatching said...

New president of VREB, Carol Crabb, gets the lingo down in her first TC interview...

TC article - click here

Carol Crabb may be new to the job, but she's quickly picked up the tune often sung by presidents of the Victoria Real Estate Board.

Crabb, the incoming president of the board, said 2012 is expected to remain stable and balanced.

"The local real estate market has shown remarkable stability," Crabb said.

"It looks like that stability will continue through 2012. Interest rates aren't going anywhere."

With Victoria also boasting relatively low unemployment rates - 6.1 per cent in November - and a desirable climate, Crabb said the city's real estate market will maintain its balanced outlook despite continued economic upheaval in the U.S. and abroad.


I wonder who picks up the lunch bill when VREB and the TC get together. One might expect VREB to pay because the TC publishes verbatim (no fact checking) everything they say. But the TC gets all those advertising dollars and needs to say thanks to a good customer every now and then. on second thought maybe they take turns...

Doug said...

Any opinions on this place out by Swartz Bay?

11108 Calypso Lane
MLS# 300534
Big house, 3 car garage, looks nice in pics, for 829K.

VP said...

Value of BC building permits
Oct 2010: 1,169.4million
Oct 2011: 702.9million
Percent change: - 39.9%

Thankfully builders are finally catching on. I was starting to wonder if we end up with ghost cities like China. That would be creepy.

Nancy said...

Not a lot of nice houses in Victoria .....

hmmmm.....


Most homes are dumps. You just have to drive around.

Animal Spirit said...

Any comments about the sale for $537,000 at 1640 Earlston? Seems like a good solid house in a decent area for 95% of assessed.

Is this the new baseline?

Marko said...

"Any comments about the sale for $537,000 at 1640 Earlston? Seems like a good solid house in a decent area for 95% of assessed."

That seems like a decent deal. Floorplan is not ideal (small bedrooms, small kitchen); however, it would be easy to suite. Nice lot.

"Any opinions on this place out by Swartz Bay?

11108 Calypso Lane
MLS# 300534
Big house, 3 car garage, looks nice in pics, for 829K."

Listed for 899k both in 2008 and 2010. Looks pretty nice - kitchen could use some updating and lacking bedrooms upstairs for a bigger family.

Al said...

Saanich has been doing some major underground water/creek pipe work that cut through the low point across multiple streets there, including Mortimer, Earlston, Midgard, some wide (10-15ft) and deep digging through people's back yards and side yards, just finished a few weeks ago. I would ask questions if I saw the yard or neighbors' yards have new lawns now.

Doug said...

Thanks, Marco.

yogurt said...

Hm, the 5 bedroom on Kenneth at Quadra (MLS 301100) just dropped from $449 to $399K. Too close to the busy street for us, but I like seeing drops like that in Lakehill. More please.

Leo S said...

The place on Kenneth has been at $415k since Nov 26th. They're showing the right motivation in selling though!

yogurt said...

Oops, I see! Still, a nice psychological barrier to see crossed. Thanks LeoS.

happy renter said...

Interesting stuff in the Globe today:

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/bank-of-canada-warns-condo-boom-could-be-ending/article2264763/

http://www.theglobeandmail.com/report-on-business/economy/housing/toronto-edmonton-help-drive-new-house-prices-higher-in-october/article2264295/

Alexandrahere said...

Well the TSX and the DOW are both down a couple of hundred points today. The DOW finished a couple of points higher than Toronto for the first time in many years. Two years ago we were 2500 points above the DOW. Things change.

So far this week within my criteria I have only 9 sales so far.....all but one have been in the 600K-730K price range. If this continues, both the average and the median are going to be much higher for this week than usual.

Anyone else experiencing this in their key areas?

Paula said...

Regarding 50 Howe Street: it's a very nice house, but it may have a limited audience because most buyers want at least 1 bedroom or den on the main floor. Another factor is that the basement is 6'6", reducing suite potential.

JustWatching said...

Looks like the feds are getting a little concerned about housing debt in Canada...

Bank of Canada Blows the Alarm on Housing Again

JustWatching said...

Yesterday was another slow sales day for Victoria real estate....

Wednesday stats
Unconditional sales: 10
New listings: 11
Price change: 17
Cancelled: 6
Expired: 12


Tuesday stats
Unconditional sales: 10
New listings: 35
Price change: 19
Cancelled: 12
Expired: 14

Just Jack said...

What would be the hardest property to sell in a declining market or market that heavily favors buyers?

Firstly, its going to be in Sooke or some other outlying area with almost and more than 12 months of inventory. And its going to be a type of property that has little demand when there are better alternatives. And that would be your half duplex strata home. When the market softens who the heck wants half a home when you can buy a whole home.

When the market was on the way up. Half duplex homes lag the market. Now that prices are on the way down - the half duplex leads the market.

Such as the recent sale of a half duplex on Wright Road in Sooke.

The past sales history goes like this.

$177,750 bought in April 2003
$244,000 bought in August 2004
$291,000 bought in September 2006
$312,000 bought in September 2007


And now in November of 2011
bought for $256,500

That's a BIG roll back in prices probably to the first quarter of 2005.

If the marketplace continues to contract into the city (which is what happens) at the rate it is in the outlying areas (and it will) that would mean a drop in the city from the current median price of $578,000

to

$387,750

or 33% off current urban home prices.

And that will $%#@ up most people's lives who bought in the last three years.

Leo S said...

Good sized drop on 1602 Kenmore as well. The description for it says: "Addition was done without permits."

What does that mean for a buyer?

Al said...

"What does that mean for a buyer?"

Guess if you buy it, you have to go to Saanich to get a permit if you want to or if someone complains/tells the city; or you could wait and state the same when you sell it. Your house insurance might not like to cover the part though if they know the truth, and if you don't tell them the truth, they wouldn't cover anything if there is fire/water damage and they found out the addition via inspection.

Leo S said...

Any comments about the sale for $537,000 at 1640 Earlston? Seems like a good solid house in a decent area for 95% of assessed.

Did you drive by the place? Yes, the area as a whole is decent, but that particular street is some sort of redneck bizarroland. 3-4 houses down are a couple meth-lab looking places with tons of old broken down vehicles and a bus on the front lawn.

Leo S said...

Thanks Al.

Dead quiet on the PCS this week. Only 2 SFH sales under 550k so far

Animal Spirit said...

Leo - no, I hadn't drive past it - just looked at the pretty pictures on line.

Kind of interesting looking at Google Earth Streetview at the one down the street. All told there is:

1 bus on a side lawn.
1 bad ass pickup truck
at least one car, some furniture and something else under white sheets roof that desparately needs replacing
god knows what lining the top of the roof (anyone know what it is
A marine chain coming out of a rock pile on the ground
A monster boat under a blue tarp

and three really run down vehicles parked across the road, 2 of which look like people live in.

CRD Natural Areas Atlas shows at least four more vehicles parked ni the back yard of the lot and the adjacent undeveloped one.

The next house has a tarp instead of a garage door.


Wild.

Leo S said...

Leo - no, I hadn't drive past it - just looked at the pretty pictures on line.

It's a funny street, because as you said overall that neighbourhood is quite nice.

Used to live across Shelbourne from there, so walked by a fair bit. That one nice white truck there on the streetview is an exception, usually it was nothing but wrecks.
Maybe a good investment though. Given the area, it will probably eventually be cleaned up.

Chickinvic said...

Just Jack - Wow, that duplex on Wright Road in Sooke has sure changed hands a lot of times in such a short period. Holy smokes.

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