Simple question: does February single family home price data highlight an ongoing trend or is it an outlier?
February 2012
Net Unconditional Sales: 497
New Listings: 1318
Active Listings: 3977
Sales to new listings ratio: 37%
Sales to active listings ratio: 12% or 8 MOI
February 2011
Net Unconditional Sales: 488
New Listings: 1276
Active Listings: 3714
Sales to new listings ratio: 38%
Sales to active listings ratio: 13% or 7.6 MOI
Average price
Feb 2011: $610,975
Feb 2012: $579,985
YOY difference: -5%
Difference from peak (August 2011): -11.2%
The shine has definitely come off the Victoria market. Any attempt to suggest the market is balanced isn't supported by the data. Prices are falling - almost 2% per month. On an average property price of $580K, that's over $10,000 per month.
February 2012
Net Unconditional Sales: 497
New Listings: 1318
Active Listings: 3977
Sales to new listings ratio: 37%
Sales to active listings ratio: 12% or 8 MOI
February 2011
Net Unconditional Sales: 488
New Listings: 1276
Active Listings: 3714
Sales to new listings ratio: 38%
Sales to active listings ratio: 13% or 7.6 MOI
Average price
Feb 2011: $610,975
Feb 2012: $579,985
YOY difference: -5%
Difference from peak (August 2011): -11.2%
The shine has definitely come off the Victoria market. Any attempt to suggest the market is balanced isn't supported by the data. Prices are falling - almost 2% per month. On an average property price of $580K, that's over $10,000 per month.
151 comments:
perfect. I will wait 16 months, then.
I also have the sense that the sharp drop has not happened yet - perhaps later spring or early summer once the glut of listings arrive and people realize that the buyers have mostly left the exits - especially if the govt decreases the amortization down to 25 yr as expected on March 29.
This could get interesting (yes, Introvert, that is what we say every spring but we are helpless optimists!)
The way down will also not be smooth. If you look at the seattle prices, they dropped 20% from peak, and then plateaued for over a year and a half before dropping another 15% (and still dropping).
For those with very long patience, I would expect the bottom to be another 5 years out. For those with less patience (likely ourselves), I hope that once we buy it will be at least another 10% off of current prices.
If you look at the seattle prices, they dropped 20% from peak, and then plateaued for over a year and a half before dropping another 15% (and still dropping).
That's because of the big drop in interest rates at the end of 2008 which also stopped falling prices north of the border.
That remedy is not going to be available going forward.
Good point patriotz. The plateau in Seattle prices started right around when interest rates hit zero and lasted about a year and a half before falling further.
How about being PAID $15,000 to take over a condo in Langford ? Individual circumstances vary, but still doesn't seem like a really strong market when this shows up on UsedVictoria.
It will be interesting to see how March pans out.
interesting on the condo. I wonder what their scenario is?
Probably mortgage is close in amount to the value of the condo?
Probably mortgage is larger than what the condo is worth... Otherwise why not just sell the place?
Well if the condo is worth $250,000 realtors fees alone would be $11,760 HST included (based on 6%+3% commission) so mortgage might be worth less than condo but more than take away after commissions.
Can anyone please tell me how much
This house originally listed for?
Thanks.
Originally list for $499,900 (probably including HST)? Now it is $439,900 but the listing agents notes it is PLUS HST.
^Thanks.
My spidey senses tingle when looking at that condo deal. Is it a scam?
Oh I don't think it's a scam per se, I think the guy really does have a condo that he really does want to sell. Now there may be an assessment coming down the pike but I wouldn't call that a scam in itself since many people sell condos with pending assessments.
The problem that he doesn't seem to understand is that a buyer will not be able to assume the mortgage (or get a new one, it makes no difference really) without equity, which means either he or the buyer is going to have to pony up to pay down the existing mortgage.
Looks like that $15K bonus condo has been sold in just one day, with over 370 hits in usedVictoria. That is fast ...
I guess it wasn't a scam.
Sorry, it was me posted too fast :-)
Seems like the person marked the old ad as sold, but then opened a new ad (with same thing) again today. Maybe he/she just wants the ad to be on top, then, why not pay a few dollars to mark it as top ad? A bit strange ...
MLS 305208 (2721 Asquith) looks pretty appealing and seems far nicer than something I might have come across in that price range 1-2 years ago. But only 2 bedrooms in 1800 sq ft -- that just seems silly.
MLS says 3 bedrooms.
@ Leo S: Interesting! My PCS definitely says 2 beds.
Monday, March 5, 2012 8:00am
MTD
March 2012 2011
Net Unconditional Sales:
52 622
New Listings:
186 1,501
Active Listings:
3,731 4,100
Please Note
•Left Column: stats so far this month
•Right Column: stats for the entire month from last year
A couple of interesting articles in today's G&M:
Flaherty gets upbeat outlook from economists
"Mr. Burleton recommended that Ottawa move to return the maximum mortgage amortization periods to 25 years from the current 30 year maximum."
Home sales seen rising, prices dipping in 2012
"Sales are predicted to rise 0.3 per cent in 2012 to 458,800 nationally, up from 457,305 in 2011, said CREA. The modest increase is attributed to rising demand in Alberta, Saskatchewan and Nova Scotia which is expected to offset declines in British Columbia, Ontario and New Brunswick."
I would be really stunned if they did not return the mortgage amort. to 25 yrs. There have been so many signals that they will. I have even heard suggestion in a few places that they will change it before the budget comes down.
Agreed, simple man.
How much of an effect will lowering the amortization period have on sales? I figure it would be substantial, but maybe I'm just being overly hopeful?
I think it will have a big impact on sales as long as the banks don't pull some of their funny tricks like skip a payment that basically negate the changes.
I would like to see some tighter control on these bank teaks, such as the skip a payment and the cash-back mortgages.
I think what we all want is a level playing field for prospective buyers. You shouldn't be able to get a hundred thousand dollars more by going through a mortgage broker than a chartered bank. And I think there should be serious penalties for those lenders or brokers that try to skate around the lending guidelines.
Those that originate the loans should always carry a portion of the liability for that loan. I guess what I am speaking about is accountability and responsibility in the mortgage business.
...Because I know the group of folks here have a better sense of 'value' than most folks. I'm wanting your opinion on the W household's recent acquistion and whether or not we got "good value".
Location: Dallas Road between Moss Street and Bushby
Lot Size: 7371 sq ft.
Style: Single family, built in 1939 some renovation since then, awkward kitchen. 3/4 bedrooms, 2 bathrooms. Approx. 2000 sq ft. Faces south-southwest
Previous Sale Price and Date: $740,000 October 2004
Current Sale Price:
$850,000 May 2012
Long-range plan (5-10 years): tear down and rebuild. (possibly a duplex)
"Deal" or "Dog"
Probably a deal. Assuming it's the house at the corner of dallas and Busby (the others between Moss and Busby are worth way more thank $850K) the land value in 5 years (as a duplex) will be $1M minimum.
Wouldn't the place on the corner of Busby be facing southeast?
Seems like a ton of money to me. Yeah it's waterfront but when there's a busy road between you and the water it kind of takes away the charm. I guess given the neighbouring places the lot value is most of that.
Sorry, don't mean to be negative, but you asked! :)
Deal or Dog, "depends". Everything (Dallas Rd incl) will near rental value in 5-10 years. Less if we overshoot. Value = potential net annual rent divided by fair return for property (7%). So to maintain a value of $850,000 it must be able to receive $60,000 in annual rent after expenses.
Just Janice,
I think that is a good deal. The closest comparable would be 1114 Dallas Rd which went for $839,000 in April of 2009 and it doesn't have nearly as good of a lot in my opinion.
I think you probably got it at 50k or more under market value; however, the seller saved a ton in commission so probably okay deal for both parties.
Dallas road water view properties range in price from $420 a finished square foot for the larger 2300 square foot homes to $500 a square foot for the smaller 1500 square foot properties (excluding basement area). So, $850,000 seems to be a fair price for both you and the seller.
But ouch! The previous owners bought the home for $740,000 in 2004! They bought the sizzle not the steak back then.
I understand your thoughts about re-developing the property with a duplex later. However, that is rarely economically feasible. The current home contributes value to the property as a whole and with the cost to re-develop properties being so expensive it will probably always make better economic sense to sell the home as it is and find a vacant site to build upon later.
Because, if it was economically feasible, most of the properties along Dallas road would already have been re-developed by now. And that just isn't happening.
And good luck trying to find a builder with a heart of gold who will give you a good price on construction. To a builder you have deep pockets so expect to pay a premium every time you mention Dallas road to a contractor.
But, why should you worry about cost anyhow. Few properties ever come up for sale along Dallas Road in a year. Obviously, people enjoy their homes along that stretch of road and live there for a long, long time.
Even builders get caught up in the location when they re-develop one of these sites with a duplex. Like the side by side duplex at 1520 Dallas road. The developer initially listed one side for 1.5 million but after almost a year on the market sold one side for 1.3 million. I think the original home and land on this one was bought for around $845,000 in 2006. 1.3 million is a fantastic price for a half duplex, most other newer half duplex homes along Dallas road are just a bit over a million.
Building the maximum sized duplex along Dallas road might cost a million dollars (including demo, etc.) today plus your land value. That's a lot of work to see only a 5 or 10 percent profit upon selling the two sides. And so many things can go wrong during construction.
But, if it were easy - everyone would be doing it.
Single family homes are still selling very well in the City of Victoria with under 4 months of inventory. In fact most of the core districts (except View Royal) appear to be doing well at under 5 months of inventory. The inner core districts commanding some 56 percent of the total sales for all of Greater Victoria.
The Western Communities have some 7.5 months of inventory and roughly 30 percent of the total sales despite having an almost equal number of home listings as the core. Sooke of course has the worst months of inventory at around 9.5 with only 21 sales in February when compared to 197 listings.
And lastly the Saanich Peninsula including Sidney has around 5.8 months of inventory, scoops up about 17 percent of the total sales.
Saanich still remains the most popular spot to buy a home with more than double the number of home sales over any other urban core district.
Of course the more homes in an area, the more sales than can occur. So how about looking at popularity in regards to the population and the annual sales of all types of residential properties.
2,120 people over 17 dwellings sold last year would be 125 people per sold dwelling in the Highlands
125 Highlands
117 Metchosin
76.2 Saanich
72 North Saanich
70.6 Colwood
64.8 Esquimalt
63.2 Oak Bay
57.9 Victoria
57.5 Central Saanich
47 View Royal
44.8 Langford
39.4 Sidney
39.2 Sooke
Generally, it seems to show that the most active areas or greatest turn over in relation to population is Sooke, Sidney and Langford. The most contented people live in the Highlands, Metchosin, Saanich and North Saanich and are the least likely to move.
And those that live in Oak Bay, Victoria and Esquimalt are just the middle of the road being happy to stay where they are.
Just Janice,
I don't think it is a great deal (my definition for a great deal is 10% or more under market value), considering it is a private sale. But it is fair for both you and the seller in the current market condition. It is quite a location, and if you love the view, it worth the money for you, deal or not.
To take everything down and get a permit and then build a duplex with good quality, you probably look at another $1M to $1.2M to spend. Considering mortgage interests payment, inflation, etc, you probably end up spending more than $2.5M or more when you are ready to sell the other half in 5 to 10 years time.
Make sure to build the duplex very sound-proof, double the code if you plan to live there as well.
Or you could put in $200K to reno the house, and live there happily until your next move. If you don't gain much more by doing the duplex, why bother the time and the inconvenience and the efforts?
There is a small island off Sidney that has always intrigued me, and that is Piers Island.
Accessed by a 5 minute water taxi ride from Sidney, just enough water to keep the Oak Bay rabble away.
Where $730,000 can get you 2/3rds of an acre of waterfront and and a 15 year old 1700 square foot rancher with a private dock. Which is about the same price the previous owners bought the home for, in 2006. An island with almost zero cars and zero crime.
Did I mention the property taxes are only $2,500 a year!
Of course for a similar property in Oak Bay your into it for over 2 million and $8,500 in annual property taxes.
Must be the weather.
Just Jack -
I imagine a 5 minute water taxi ride is a huge pain in the bum with very limited service. So to live on Piers Island you still have to buy a boat (or forego any evening commitments in Victoria). You then have the half hour commute to Victoria from Sidney and if whether is inclement - forget about going anywhere. I imagine access to healthcare is also not a picnic on Piers. As such, I can see why a place on Piers is worth so much less than a place in Oak Bay - for the same reasons a place in Mill Bay or Sooke is worth less.
It is always good to get the perspective here - it's refreshing as it's not all rainbows and unicorns about real estate. I'm guessing the rebuild will likely be at least 5 years off (financially I can't see it happening before then) - at which point we will likely build a SFH as the need to have the additional resources a duplex would bring is likely to be diminished at that point.
-edit above poster is Just Janice
You should always build to the highest and best use of the property - and that is a strata titled duplex. Otherwise, you should just sell the property and buy a single family zoned lot.
If you build a single family home on a duplex lot, the land value will drop dramatically. It's not just the location and the view that you are paying for - it is also the potential to create two homes. I'd guess that you would loose a third of your land value if you developed the site with just one home.
Just something for you to ponder.
As for Piers Island, a Cigarette boat would make living there easier. If you're a sickly person then living close to a hospital is very important. But if you have to be within 5 minutes of a hospital all your life - what's the point.
Are you sure that maybe the reason for high prices in Oak Bay isn't the weather or the hospitals but simply bragging rights. And that's gotta be worth a million alone.
Just Jack -
The property is currently zoned single family but has a duplex to the east of it and one to the west of it...so rezoning would be relatively painless.
We'll wait and see - we bought it because we love the location, close to work, close to good schools, and at a price that was competitive and reasonable given income and expenses. I'm sure when we build, we will look to design something that can accommodate what we want and need both in the near term and in several decades from now.
It is not a buy and sell in 5 or 10 years kind of move for us- we're here for the long haul (40 plus years, health permitting).
From our perspective $850,000 is likely 10% off market price - BC Assessed value was $937,000...
BC Assessment has a difficulty in pricing these properties. For example when the previous owners bought the property for $740,000, the BC Assessment was $569,000.
Because BC Assessment doesn't look at each property individually, but on a mass basis. In fact the prior purchase at $740,000 could have triggered a high current assessment of the property as that price set a benchmark for an adjustment for changing economic conditions. In other words, it is likely that BC Assessment just added a percentage of the general market increase to the last price of $740,000.
The good news, is that BC Assessment will now re-evaluate next years assessment and likely revise your assessment downwards to near your purchase price. And if they don't - you should immediately appeal.
Whether you got a deal or not is immaterial. You're not going to be selling the home tomorrow, so any profit or loss is only on paper. If past performance is any guarantee of the future, then it is likely the property will be worth more in 40 years from now in terms of either nominal or real dollars.
Of course if your planning to stay there for 40 years, your most likely going to be carried out feet first by then, so it still doesn't matter.
We normally only think about the question "if it is a good deal" when buying rental/investment properties.
When we buy a house to live ourselves, we have to love it first and then it has to pass our marking system (mark 85 or more out of 100: max 40 for location, 30 for the lot, 30 for the house). As long as we can afford it, a fair price is good enough for us. :-)
Are you sure that maybe the reason for high prices in Oak Bay isn't the weather or the hospitals but simply bragging rights. And that's gotta be worth a million alone.
----------
Really? Do people actually brag about living in Oak Bay? Who do they brag to - and why don't they get their lights punched out after doing so? I just moved here and I had never heard of Oak Bay before and I can't imagine anybody who doesn't live around here being impressed by someone being from Oak Bay. Seems like a bunch of old houses on small lots for the most part. Some nice old houses but some crappy old houses too.
Didn't their mothers ever teach them that its not nice to brag?
My mother taught me not to brag and she also taught me not to punch someone's lights out.
As an adult, one is annoying and one is criminal.
Your thinking is so, un-Oak bay.
tea time!
Just Jack -
At 33 - I would hope not be carried out feet first in 40 years...
Location: Full marks
The Lot: Full marks
The house: Half marks (note: a full marks house would have been $200,000 to $400,000 more expensive assuming that lot and location were to still have full marks)...
Yep it meets the scoring criteria.
Agree about any gains or losses being "paper losses" at this point. I do think that there's something about waterfront that cushions it a bit from market corrections - I could see the spread between waterfront and non-waterfront homes increase. Right now it seems like there really isn't much of a premium in percentage terms for waterfront. Historically (2004) - a house in Fernwood would go for $350,000 and waterfront would be $650,000 (85 percent more). Now the fernwood box is fetching $600,000 and the Dallas waterfront we just bought was $850,000 (assume market would have been $900,000) or between 41% and 50% more than the fernwood box...
and the Dallas waterfront we just bought was $850,000 (assume market would have been $900,000)
If the property was publicly listed and you were the high bidder, you paid market, by definition.
Property wasn't publicly listed - private sale between us and the landlord...
Itty bitty point here. Your water view - not water front.
Glad to hear you're 33. Now how's that blood pressure?
A knowledgeable buyer and a knowledgeable seller acting in their own best interest would be market value. It doesn't have to be publicly listed. And just because its the highest price paid doesn't make it market value either. People do overpay for real estate, just as some get a super deal too.
I think both parties in this transaction were equally knowledgeable about Dallas road properties and both acted in their own interest.
Which is in contrast to when the property was purchased for $740,000 in 2004.
Congratulations Just Janice. Does it matter now if it was a good deal - it is a sunk cost. Make the best of it - given your insights and knowledge (and hoping that your other half has the same) I'm sure the decision is well thought out and with long-term intentions.
Our family lives a few streets away - if I see a family in a yard with a baby, I'll stop by and say hi - I run or bike past every other day.
If I find the time (which won't be for a week) I'll share our experiences on a decision on a dream home/lot for us in the Prospect Lake area. We chose not to buy due to what monthly carrying cost in relation to our net family income.
List price to assessed price is fairly flat - reverted back to August/September number in January and is starting to inch down. Will be interesting to see what happens when the listings hit in the next month or so.
Here's the updated charts for my sale/assessed.
under $550k
550-900k
Love the new photo, Animal Spirit!
@Leo S
From your charts, I notice that under $550K houses have slipped from an average high of $320/sq. ft. In May 2010 to currently less than $285/sq. ft.. This represents an 11% loss in less than two years. Very interesting!
The price/finished space measure is pretty volatile. Even with a 100 sale moving average, it tends to go on extended walks in either direction. Just a couple months ago it was near 300 again. I think there has been a decline there, but likely more like $15-20/sqft rather than double that.
It's interesting that it hasn't really budged for the higher price properties.
I would like to echo the thoughts of others on this blogg, Janice. Congrats on the house.
Funny, I too - bike and run along Dallas road. So if you should seem someone huffing, puffing and grasping their left arm running by your home - it's just me.
hmmmm, is there a central theme to all of us.
Just Janice - I run/walk past your house three times a week. There is a common thread.
Just Janice
Welcome to the neighbourhood. (if that makes sense since it sounds like you were already living in the house:-) I live quite close.
Within the context of Victoria's overpriced market I would say you got a pretty reasonable deal.
$/sq ft is wild probably because it doesn't take lot and location into account. Small house on a big lot in Oak Bay will fetch a lot more than a large house on a small lot in Langford.
Within the context of Victoria's overpriced market I would say you got a pretty reasonable deal.
I think you got screwed, Just Janice. Why would anybody buy a house in Victoria today? We all know that, at some point, the market will crash, resulting in houses in Oak Bay, Fairfield and Fernwood selling for $300,000, which is exactly what they're truly worth.
Introvert - I tend to disagree. The houses in Oak Bay are not typically worth $300,000 (except for new builds and Uplands). But the lots are.
A simple man, I'm pretty sure Introvert is trolling...
As the size of the home increases the price per square foot rate will decrease. An economic principle known as diminishing returns.
So for example, a 1500 square foot home would sell at $500 per square foot. While a 2300 square foot home would sell at $420 per square foot.
Your home is say 2000 sq. ft. Then your home would be between $420 to $500, say $450
2000 sq. ft. X $450/Sq. ft. is
$900,000
It takes a lot more data points than 2 - but you get an understanding of why the price per square foot rate seems to dance all over the place - until you rank the rate by house size.
I know, but I half agree with him. My wise half.
From your charts, I notice that under $550K houses have slipped from an average high of $320/sq. ft. In May 2010 to currently less than $285/sq. ft.. This represents an 11% loss in less than two years. Very interesting!
I wish price per sqft was a more available metric in more markets. Averge/median/benchmark prices reflect what buyers are willing to spend on a house (or more directly, what lenders are willing to lend), but does not tell us much much about what they are getting.
A (for illustration purposes) 25% drop in price per sqft is very bad news, even if the average price remains flat. It just means people are getting more for their money, which is defacto price decline. This is how markets work generally; falling prices, rising standard of living through the wonders of science and technology. When you throw land into the mix, which cannot be manufactured but CAN be improved, things get a tad more complicated.
For so many years, prices have been so high that I have become acclimatised to them, so when a "deal" comes along it gets exciting. That is the makings of a "Bear trap" and I have to thump my head real hard on my desk not to jump in.
Like the recent sale of a town home on Dallas road at $454,500 or $337/sft. The previous owner paid $371/sft ($500,000) back in 2007.
Back in 2007, the market was sizzling hot and now those people who got caught up in the irrational exuberance of the time are realizing their mistake. It isn't because the town home is a great deal, it's just that I am being deceived by someone else's past irrationality.
Gawd, I hate "bear traps" they are so enticing. The fresh dead meat just lying there ready to be snatched. Can I outwit the trap?
Just Jack;
With predictions from economists and the like forecasting drops in RE values in Canada from 20-65% (except CREA economists and their ilk), why would you buy now, unless money meant nothing to you?
Because I can smell carrion and I have been hungry for so long.
Real estate is seductive. Especially now that listings are coming up in some of the properties that I like so much.
But that's the "bear trap"
I completely understand where you are. My wife was looking at all the listing popping up around us and was "trying on" a number of the houses with a mortgage calculator clicking in the background.
When prices have been delusional for so long, semi-insane seems like a good deal.
In the end, I always ask myself how long it would take me to save enough money to pay off the house (from $0 savings) and I snap back into reality.
Prices here are still ridiculous.
Even post bust, If you compare actual houses sold in Seattle, they are still expensive
one example
Seattle Actual house prices
Just look it up on Zillow if you want to see more. Prices across the board have dropped but I think the foreclosure sales have weighted and distorted the stats. At a cursory look on Zillow you can see some foreclosure flips. bought for $200k and being sold a few month later for 500k...
so if you are holding out for that house in Oak bay to be 300k in the future, good luck with that.
"post bust" is comical.
That would require Seattle's bust to be finished. Seattle dropped 5.6% this past year and still tumbling. There may be brief upswings, however their bottom is almost certainly another 5 years away. Their bubble began in 1997 when prices started doubling the inflation rate, so in all probability, 10 years up 10 years down.
Thank you for the Congrats - this may not be the "best" decision from a purely financial standpoint - but as wise people are known to say, there's more to life than just money. The gains of waiting out the coming crash just weren't worthwhile for us (when non-economic factors were taken into consideration), particularly given that it would likely mean moving at least once if not twice more before buying. The decision works for us (and as was pointed out, is for all intents and purposes, now a 'sunk cost'). It's a little like waiting for somebody who meets all of your 'perfect spouse' criteria - you might pass up some really good spouses who could have made you very happy for someone who might not ever materialize.
This is a "good enough" for us kind of decision.
I'm glad I can make you laugh, sounds like you need it ;-)
And I say congrats too! see you around the hood...
Just Janice;
You know what you are doing and what is right for your family at this time. You have obviously put a lot of thought into it and are happy in the location you live and plan to be there long-term. You can't lose.
Bring on the happiness and don't look back.
Also Seattle does not have a foreclosure crisis. You're getting confused with other places in the US. Foreclosure rate in Seattle is extremely low (about 0.1%), so foreclosures are not weighing on prices in any meaningful way.
Came across a good line in an article today, thought I would share it.
"A huge disadvantage for people buying first homes is that all the advice providers they encounter – banks, real estate agents – have a vested interest in them buying."
I would say that in the past two years, our government has had a vested interest keeping the home buying rolling as well, with 27% of our jobs associated to the RE industry, and a global recession all around us.
Good thing there are places like this blog around that people can go to for a second opinion.
The article the quote came from is here Buy a Nice House, Forget About Retiring
Holding out for prices to drop so a nice houses in nice neighbourhood will go for $300k is just an unrealistic expectation now... I'm just using the seattle market as an example of that. A correction is happening here without doubt. (I've seen the change start since 2007) but the situation does not indicate that SFH prices will ever drop to price levels of 15 years ago. If it does, rejoice! I'll be buying myself another!
Marko - are sales in Victoria the past couple of days as weak as sales in Vancouver? Wondering if there is a post 2.9% interest rate sales drop
i.e. sales that would have occured in March and April were pushed forward to January and February, making the market seem stronger than it was?
If so, then listings and MOI could climb quite quickly and it would explain some of the questionably high sales prices on a few houses in Jan and Feb. as people had mortgage rate expiry anxiety and competed against others for the same house.
I think $300K for an average house will never happen again here, but $400K might.
Seattle will fare better than we would during drops. They have major industry.
sweet jesus. From the G&M:
"Bank of Montreal (BMO-T57.06-0.06-0.11%) is reigniting the mortgage wars among the country’s major banks.
Canada’s fourth-largest bank is bringing historic low rates back into the market, only a few weeks after it and several other lenders pulled similar discounts, amid concerns over collapsing profit margins. The bank lowered the rate on a five-year mortgage to 2.99 per cent, a drop of a half a percentage point. It also cut the rate on 10-year mortgages to just 3.99 per cent, a level that no Big Five bank has posted until now."
Holding out for prices to drop so a nice houses in nice neighbourhood will go for $300k is just an unrealistic expectation
You're confusing averages with individual examples. A nice house in a nice neighbourhood will not be $300,000 or $400,000. But that has nothing to do with the average. Will the average come down that far? Perhaps, but only with a major interest rate increase I think.
The point is that cherry picking individual houses that are not cheap in Seattle doesn't really mean anything. There are also houses in Phoenix that are still expensive. Nice houses always will be.
But the overall stats still tell the story about what one will pay _on average_. If you want a nicer house, you'll pay more than average, if youre ok with a crappier one, you pay less, but it revolves around that average.
Now this is inflated values
It has everything to do with the individual house! If you are actually buying. But yes, academically it is easier to look at stats and mediums and averages to paint a simplified picture. I don't feel confused at all :-)
I'm moving to Ireland. They have a lot of fun there when they aren't in church.
It has everything to do with the individual house! If you are actually buying. But yes, academically it is easier to look at stats and mediums and averages to paint a simplified picture.
Sure, when you buy one place it's about the individual property. But your argument of: "Here's a nice house in Seattle that's not cheap, so therefore nice places will always be expensive" does not hold water.
When you point to one particular property, you can't generalize it to anything else. Do you know the neighbourhoods in Seattle? Is the one you're pointing at in Seattle's Oak Bay? What other factors influence it's value?
The averages and medians are not a more simplistic view of the market. They're a more accurate one. Yes, the nicer places in the nicer neighbourhoods are more expensive than the average. Also, if you had evidence that the higher tier of housing was somehow more resistant to price decreases, you might have a point, but the data does not support that theory.
"It has everything to do with the individual house!"
Thats what everyone says when they just overpaid for a house. Its like the first stage of RE grieving
I'm not just looking at one house, that was an example.
look for yourself
It just doesn't paint the same picture... My point is exactly that. You can't just look at the stats when making such life decision. It's not like buying stocks...
I'm not just looking at one house, that was an example.
Sure, and if you can point to some generalizable evidence (like "more expensive houses depreciate less") then I can see the relevance to Victoria's market. But so far all the stats show that the higher cost houses also come down, approximately by the same amount as the lower ones.
I'm good. I bought my first house in 2002 for 192K and now a house two blocks from the water and a 4 minute walk to beacon hill park for $450. I'll rent the first house out to pay the mortgage on the new one ;-)
It just doesn't paint the same picture... My point is exactly that.
I don't see your point. Houses in the core of Seattle are expensive? Well yes. It's a huge city. Of course they're expensive. They're also approximately 30% less expensive than they used to be. That's what the stats say, and unless you have a good reason why the stats are misleading, they are more accurate than individual examples.
However, if you want to talk examples, here's a random one I clicked from your link. Nice house, right in the core of Seattle. And wow, it's listed at over a million dollars. But wait, just a short 5 years ago it sold for 1.6 million.
The observation that something is currently expensive doesn't say anything about how its value has changed or will change.
and just ten short years ago it sold for 97k... I'm just tossing my opinion in the mix and skepticism of relying too heavily on the stats. The market here is in a correction without doubt. If you are thinking of buying It is very wise to be paying attention right now since rates are extremely low and prices are falling. This is what is useful about this debate. Trying to predict the best time to dive in or not to dive in at all. It certainly helped me with my purchase giving me confidence to negotiate hard. I'm not saying the stats should be ignored, they are just one tool to base a decision on...
@dasmo:
Even post bust, If you compare actual houses sold in Seattle, they are still expensive
According the example you posted, that $475,000 house you linked would also rent for around $2240. I think that is starting to sound reasonable, not expensive. At 400k it would be a pretty good deal.
What would a house that rents for $2240 a month cost in Victoria?
The house we're renting for $2200 a month in Kelowna was assessed at $772,000 before the basement was finished. It is brand new, and brand new house 2 doors down built by the same builder was assessed at $810,000 and sold for $841,000 last summer.
$841,000 sounds expensive.
$772,000 sounds expensive.
$475,000 is starting to sound reasonable.
Holding out for prices to drop so a nice houses in nice neighbourhood will go for $300k is just an unrealistic expectation
Maybe not 300k, but I think that houses in Kelowna that once sold for more than 800k will eventually be selling in the 400-500k range again.
How different is Victoria?
@Just Janice
The gains of waiting out the coming crash just weren't worthwhile for us (when non-economic factors were taken into consideration), particularly given that it would likely mean moving at least once if not twice more before buying.
Just Janice, maybe you have thought out the purchase and the actual costs, or maybe not.
Hopefully you have, and I wish you all the best, but I have trouble believing that if most people were really presented with hard cash that they would mind moving once or twice in exchange for tens, if not hundreds of thousands of dollars.
I think that most people would be much better off if they looked at housing as a consumer purchase, much like any other purchase that enriches your life, but is not an investment. Right now it costs x to rent and y to buy. y is much more than x, is that amount worth it to me to own a home?
I understand that for some people it is, but I think that for the vast majority, if they actually understood those numbers they would choose to rent.
Holding out for prices to drop so a nice houses in nice neighbourhood will go for $300k is just an unrealistic expectation now...
Nobody is talking about $300K in a nice neighbourhood except you, and nobody is talking about prices rolling back 15 years except you. For the second time in this thread.
Nobody has to. This city and province have become so addicted to overpriced RE, they are going to be completely hosed if prices just go back to 2004 levels.
Maybe that's what's really worrying you?
I think prices could roll back to the point where the average buyer can purchase an average home with the reasonable expectation of having the home paid off in 15 years.
A quick test is to try your own personal loan calculation using 15 years rather than 30.
I am not convinced that the market has started "rolling back." If we get another set of numbers in March similar to Jan/Feb then the stats are showing a small roll back but I am just not seeing it on an individual home basis yet.
@fatjay
Hands down, financially speaking, renting right now in victoria is a sound position. No argument their what so ever! Now if you were to suggest one should sell and ten rent so they can buy back in once the market rolls back to 1991 levels, well thats a different story.
"I think that most people would be much better off if they looked at housing as a consumer purchase, much like any other purchase that enriches your life, but is not an investment. Right now it costs x to rent and y to buy. y is much more than x, is that amount worth it to me to own a home?
I understand that for some people it is, but I think that for the vast majority, if they actually understood those numbers they would choose to rent."
As someone who started professional career at 34 and retired at 52, has no pensions and no inheritance, I think I properly do understand those number very well. I also think most people who post and monitor on this blog also do.
But I also understand that to buy a house to live yourself, you have to love it. When people love something, it is not easy to keep walking away. Also people can't always live in a calculated life, as that wouldn't a life. Use a marking system (not money, but location/lot/house) to validate your emotion, if all are good and you love it and can afford it at fair market price, then go for it. You only live once and you don't know how long it will be, happiness (sometimes) can be priceless. :-)
I am not convinced that the market has started "rolling back."
Me neither. We've had an extended period of declining prices, but prices can jump quickly.
If we look at the period since the peak in 2010, we were at a median of 530 in Nov 2010 after a similar year of declines. Then prices jumped $44,000 in one month and it took an entire year to come down again.
So I would hesitate about calling a real decline until we've moved a bit lower. Maybe $500k
Two decades ago, in 1991, the typical home in Victoria City was $158,000.
Today, the typical home sells for $570,000.
Of course those higher prices have come at the cost of lower sales activity. 691 homes sold in Victoria City in 1991 as compared to 338 in the last 12 months.
Would that mean if the volume of sales in Victoria City were to fall below 100 annual home sales, prices in Victoria would then be over a million dollars for the typical house?
No, the current low sales volume has stalled price appreciation. A significant drop in sales volume from today's levels would force prices down.
Historically speaking, when the real estate market has hit this low level of a sales activity in the past a significant market correction occurred.
The reason why I see the inevitable has been forestalled is the economic stimulus package of low interest rates and CMHC guarantees. But even this stimulus has a finite life span.
And just continuing the current stimulus package will not keep market prices stable. The stimulus package has to be increased to draw in the last of the prospective purchasers. But that may spell political suicide for Harper and Flaherty. And the one truth about politicians is that they are more willing to save their own political ass before the welfare of the country.
So much fewer home sales in Victoria city. But aren't there also fewer SFHs total now as the core shifts more to condos?
How much more stimulus can there be?
Interest rates could conceivably go a little bit lower, but not much (and they could definitely go up)
Amortization periods are likely to be made shorter rather than longer.
The government could make mortgage interest deductible like in the US - that would be a stimulus for housing all right. But that is also stupid policy and not one that Harper will implement I think.
The feds could hand out bags of cash or a tax credit to first time homebuyers (supplementing the provincial bag of cash). Not too likely at the moment, but things could change.
There were 721 condo sales in Victoria in 1991 at a typical price of $118,000.
The last 12 months have had 689 condo sales at a median price of $285,500
What the Feds may try to do, is let the air out of the national home market. This is good for average Canadian cities, but not so good for those cities that are double and more the price of the national average.
There trying to change the behavior of the national market by tapping the beast on the nose. Unfortunately, the same policy on overzealous cities like Vancouver and Victoria may have the affect of bludgeoning the beast to death.
FatJay - the cost of moving twice depends who are and where you are in life - there are times (for example when you have small children and a pet) where the costs and hassles of moving are far more onerous than other times (when your single, pet-free or older). Right now we are at a time in our life when moving just isn't a pretty prospect...and as a result we are willing to pay a fairly hefty premium not to move. The last time we moved (1 fewer kid ago - albeit we still had a dog) it took 3 months to find a suitable rental in a neighbourhood we liked. We now have a toddler and another baby on the way, and we still have the dog. Moving would be a nightmare. Add to it that my husband has a significant opportunity cost associated with missing work, and a move - from one rental to the next is likely to cost more than $15,000 right now. It's not a cheap prospect. Given that we aren't planning on selling now, or even 10 years from now, or even 20 years from now - the current price becomes less of a concern - it is what it is and in nominal terms (barring deflation) will become more managable with the passage of time. Furthermore, I asked my husband not to buy 5 years ago - and he is not keen on waiting any longer and I place a great deal of value on the wants/needs of my husband...
I note that if more people do choose to rent, the price of rental housing will increase - just as the price of owned housing increased with an increase in demand. As such there will come a time when rent vs. own will again become more of a coin toss. However, as long as there is more demand for owned housing than rental housing (really a cultural thing) - I think there will always be a bit of a premium to owned housing.
We have come to the conclusion that building is pessimistically 10 years off - as such we are going to make some minimal improvements to the place (really just so it will last 10 more years) and focus on paying down the mortgage over the next 10 years.
Economically speaking - I think there's a tough pill that has yet to be swallowed in Canada. I think if we're lucky the US will be in a stronger recovery when it finally becomes inevitable and that will hopefully take some of the sting out of it. I could see a policy of dollar devaluation in that context - to spur exports and inflation. I don't think deflation is really in the cards (although the owned-housing sector may deflate somewhat, with the largest hits being felt in Toronto and Vancouver). In terms of Victoria, I think the correction will be limited to 25 percent, and that we've already had 7-10 percent of that from the peak and have another 15 percent to go.
From your comments, methinks Victorians under estimate the shift upon us. Older cities like yours, shall only be magnified. We are already seeing the shift in my home provinces retirement belt -- Niagara region. Only the youngest, job-producing areas, shall escape the shift -- for a while. One things for sure, no repeat of 1971.
It all depends on the economy. I think our unemployment rate is around 6%. Could that rate double to what Windsor is experiencing?
Tough call, because we have the three pillars of support, namely government, tourism and construction in Victoria.
The problem with the statistics is that they are for the entire population. But the entire population is not buying and selling properties. Only 3 percent of the population is active at any time in the real estate market. What you need is statistics on just those 3 percent.
And that is where the subjectivity comes into play. That's where myths start to form, like its the Chinese, the Americans or the Albertans causing high prices. Because the majority (97 percent) are not buying or selling real estate, so it can't be us it must be them.
I think the correction will be limited to 25 percent, and that we've already had 7-10 percent of that from the peak and have another 15 percent to go.
Pretty much my thinking as well.
Also hear you on the lack of desire to move. When we need more space than our appartment, we will likely buy.
Perhaps, if the market is decreasing strongly at that point, we could look into moving to a rental house, but at the price range we are looking at ($450-$550k), I would want to see a stronger decrease to offset the cost of renting a whole house.
The government could make mortgage interest deductible like in the US
As you've said, this would be very stupid, but that's not the reason the government won't do it. They do lots of stupid things.
The reason is that such a deduction would cost a very large amount of current revenue (i.e. higher deficit), while providing very little stimulus to the housing market per $ cost.
Reason is that the great majority of the benefit would go to people who already own.
You are much much more likely to see off budget measures such as increasing the amortization again, or increasing the amount for the RRSP home buyers plan, or targeted on-budget items such as the new buyer's credit that BC just brought in.
@Al
But I also understand that to buy a house to live yourself, you have to love it. When people love something, it is not easy to keep walking away. Also people can't always live in a calculated life, as that wouldn't a life. Use a marking system (not money, but location/lot/house) to validate your emotion, if all are good and you love it and can afford it at fair market price, then go for it. You only live once and you don't know how long it will be, happiness (sometimes) can be priceless. :-)
I agree, but I think that too many people think that their happiness, or perhaps their family's stability requires owning a home. Not many weigh the impact that cost of home ownership will have on the rest of their life (retirement planning, disposable income, etc.). In fact, buying carries a lot of risk that people don't account for, and may detract from their happiness in the long run.
My wife was strongly opposed to renting, but after a couple years we are moving (by choice) to house we love in a new neighbourhood and during this move she has mentioned that she has really come to realize that owning isn't as an important priority like she once thought it was.
Renting has given us the freedom to live off of one income and my wife has the choice on how much she is going to work next year. We find that many friends with young kids MUST go back to work to afford their mortgage, and any bump in the road would be stressful and derail their financial security entirely. We value the choices we have and the financial security much more than owning a home right now.
Eventually we will buy, but only when it makes financial sense, and right now it doesn't, even if you do plan to stay 15-20 years.
Way to use your head fatjay! Buying is a commitment and it needs to be right for you on many levels.
@Just Janice
I understand the qualms about moving. When we sold a couple years ago we had a cat, a baby and a 2 year old.
We were looking to sell and buy a bigger house, but couldn't find what we wanted for a reasonable price. I had thought renting made more sense for the past 5 or 6 years, but my wife was very opposed to it. In the end we agreed to rent for at least a year and see how it went.
We found a rental that fit our needs in the neighbourhood we wanted, and in the end we overpayed for it because we were in a "must move" situation (and we were very picky), but even overpaying we are saving about $900 per month vs. owning (accounting for accumulation of principle if we owned, taxes, maintenance, interest earned on our down payment and savings while we rent, etc.).
If we had bought we wouldn't have moved by choice for another 15-20 years, but we now have a cat, a baby, a 2 year old and a 4 year old and we are moving again.
We decided that we weren't as enamoured with the neighbourhood as we thought we would be, and with 3 kids now, we wanted something even bigger. Luckily, renting affords us that choice, and deciding to move again before our oldest starts school was a no brainer, whereas if we owned it would have been a very difficult decision (probably would have sucked it up and stayed in a smaller house in a neighbourhood we don't prefer).
I think we only stayed here 2 years instead of 1 because we dreaded moving again, but the other advantage of renting is that the cost of moving is low. We have hired cleaners, movers, etc. and the cost of moving across town is still nowhere near $15,000. Maybe 1 to 2 thousand. And I still hate packing, but once it's all said and done I think we'll look back at it and realize that it is worth the ten's of thousands we are saving, not to mention the unrealized amount we're hopefully saving as prices here correct and the financial security that it currently affords us.
However, as long as there is more demand for owned housing than rental housing (really a cultural thing) - I think there will always be a bit of a premium to owned housing.
I don't think there is usually a premium to owned housing. When we first bought in 2002 it was actually cheaper to own than rent. We also owned a cabin that was cash flow positive. Imagine that!
The ownership premium is probably more of a bubble thing than a cultural thing.
@dasmo
Way to use your head fatjay! Buying is a commitment and it needs to be right for you on many levels.
Thanks dasmo.
I just realized I've spent an hour reading this and a few other housing blogs!
I was addicted to this blog among others a couple years ago when we were agonizing over whether to buy again or rent, but I'll have to watch myself or I'll start spending all day on here again :)
Thanks to all for the insight here, and hopefully my story will help some others make an informed decision.
thanks fatjay. I was actually talking with my wife this morning about the whole rent vs buy subject and how the new BMO rates will bring a lot of people to the buying table.
In that discussion we talked about a lot of the things you brought up - that we cherish the time with each other and our kids and that if we bought a house right now at these prices that our quality of life would take a hit. We know so many families that are working really hard (both parents) just to keep there head above water. We are lucky in that only one of us works and the other is free to raise our kids. Further, we are looking to take some risk by starting couple new ventures this year that would not even contemplate if we had a big mortgage right now.
We both agreed that renting is getting easier as time goes on as compared to owning. We have moved a bunch and it rarely costs us over $1000 ($200 for beer and pizza) - are there are many of us in the house.
But right now it all comes down to quality of life - ours right now is absolutely fantastic with so much opportunity to exercise, eat well and spend time together as a family and with friends - all with absolutely no debt in the world and no financial stressors whatsoever. Why would we change that?
Just Janice
Totally agree with your reason and logic for buying.
We went through much the same decision-making 3.5 years ago and ended up buying a place. In our case it was my wife lobbying for buying and me "waiting for the crash".
In the end we bought in the fall of 2008. The logic for us was - We could comfortably afford a house we liked, we got an OK price, and we only live once.
Certainly prices haven't gone up since we bought, but I had no expectation that they would.
In some ways it has been a good (lucky) financial decision as through the spring and summer of 2008 I sold a lot of stocks and mutual funds to help pay for the house. Most of that stuff crashed hard shortly thereafter, although I guess by now a lot of it would have bounced back.
Lifewise it has been a good decision. We love the hood and know we can put down roots for the long term. We also lucked into the nicest neighbours I have ever had.
PS - Seems likely that I might meet your family some day as we live at most a few hundred metres from your new place and have a 2 y.o. toddler and a newborn.
Congrats on the purchase and the pending addition to your family
Caveat - your family is much like mine then - my toddler is 20 months and the Newborn is expected in September. If you see a very pregnant woman in the yard this summer - say hi! Always good to know the neighbours.
I'm still a bear - and know that there's a very good chance that the house will be worth less than what we bought it for...but my car is worth less than what I bought it for, and that doesn't seem to bug me. Further, I know my kids will cost me far more than I'll ever get in return from them. But as I get a lot of use out of my car and a lot of satisfaction and happiness from my kids, that doesn't seem to matter. So as long as I'm getting the use out of the house, and value for being able to do with it as we please and not having to move - all is good.
Not everything in life needs to make a person money in order to make them satisfied - although its always a bonus when such things do happen. And for many, the housing boom has been a windfall - one I certainly am not expecting to experience.
Just Janice - you have your priorities in order.
Don't look back, just forward.
This discussion is great, as I think it emphasizes the difference between people that post here and those that fuel the housing boom: keeping your eyes open. Every major purchase, especially a house, should be weighed as a value proposition, and not all that value is fiduciary (ba-dum-ching). Happiness, quality of life etc. are great things to factor into the equation, so long as you know what's on the other side of the equation. Hell, even "it gives me the warm fuzzies" is good thing to factor in if your eyes are open.
The ownership premium is probably more of a bubble thing than a cultural thing.
It's a bubble thing by definition. That's what a bubble is - an asset is priced higher than its fundamental value, i.e. its earnings (rental value in the case of RE) cannot cover the purchase price.
Which means that it cannot continue indefinitely. Eventually there will not be a buyer who will pay enough to make up the losses to the previous owner.
And it doesn't matter whether owner-occupiers are willing to take a loss over renting indefinitely. Investors aren't.
Regarding the joys of home ownership.
I was a home owner for most of my adult life. I must say that it's easier to be happy about owning a house and putting up will all the chores involved when you got it for a bargain price - as I did in the mid-1980's. It was the best financial decision I have ever made and I'll still enjoying the benefits.
However now that I have better things to do than play Mr. Fixit I'm not going to buy back in until the numbers make sense. I'm just as happy now as a renter as I was as an owner. Buying in at today's prices would simply give me less money to spend.
For Janice and others I wish you the best of enjoyment as homeowners. You'll get the same intangibles as I did, whatever the financial outcome.
Happiness, quality of life etc. are great things to factor into the equation, so long as you know what's on the other side of the equation. Hell, even "it gives me the warm fuzzies" is good thing to factor in if your eyes are open.
It also illustrates the diversity of opinion on the subject. Just because we are posting on a "bear blog" doesn't mean everyone has the same opinion on the value proposition of buying. It's something that some "bulls" don't seem to process.
For example, this comical summary of our recent conversation by Skeptic on VV. For Skeptic, we're all militant and absolutist bears, and any polite congratulations must be just a mask for despair, jealously, or what have you over this supposed violation of bear rules (whatever those are).
Funny how things can be interpreted.
I agree with Skeptic at VV on the $7000/month.
Everything always reverts back to it's investment value after periods of under- or over-valuation. Whether you're buying a business, company stock certificate, or a house, it’s "potential" earnings should be able to pay for itself in 10-15 years. As a result, you should only buy something if it’s potential profit is minimum 7% of the price you’re paying. Put another way, if inflation is 3%, why would you take any less than a 4% real return for your risk?
If we use Janice’s new place as an example. For her to be certain it will hold it’s value of $850,000, the home must be able to "potentially" earn after all expenses $60,000 per year (7%). Therefore, it would have to be able to rent for approximately $7000 per month before expenses as Skeptic mentioned. I don’t know the house, but rents may possibly have to rise in Victoria for it to maintain value over time.
It depends on how you value an asset:
"Definition of 'Intrinsic Value'
1. The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value."
or
"In finance, intrinsic value refers to the value of a security which is intrinsic to or contained in the security itself. It is also frequently called fundamental value. It is ordinarily calculated by summing the future income generated by the asset, and discounting it to the present value. Simply put, it is the actual value of a security as opposed to the market or book value."
So the "future income" is the key to that calculation not the present monthly income.
Also "intangible factors" is a valid aspect when evaluating a purchase.
intangibles on both sides.
Okay I'll turn over a new leaf, because skeptic thinks I'm too nasty.
Congratulations to the people who just bought a home on Wilmer in Fairfield for a remarkably good price of $450,000. Because, the last time a home sold on Wilmer for that low of a price was way back in April 2004.
This time around it took 97 days to sell, starting at $499,900.
Which is different than the home that in 2004 only took 25 days to sell with only a $7,000 price reduction from list. Or when the home was purchased 22 years ago and it only took 25 days to sell then.
Wilmer is a street with similar homes to the one that just sold. And yes you could almost call this one, lot value - except that there hasn't been a new home built on this street since Winston Churchill was Prime Minister. So much for the idea of it being lot value as there is not a developer to be seen.
Previously bought in 1990 for $135,000 it took the entire baby boomer generation, low interest rates and lacks lending policies along with 22 years to get this home up to $450,000.
Wonder what will happen now that the baby boomers are exiting the market and interest rates will be going up over the next 22 years.
So the "future income" is the key to that calculation not the present monthly income.
Absolutely. What's special about residential RE is that we can estimate that future income better than for any other investment.
In plainer language anyone who thinks that real rents are going anywhere is deluded.
So Ten years from now Rent will be the same? I doubt it. eventually Landlords will realize they have to raise the rent 2.9% every year and they will.
I am trying to decide which to buy. Any advice is appreciated.
EITHER
This 2bedroom appt here
OR
Britney Spears 7453 sq foot Beverly Hills home for 60% less than it was bought for 5years ago.
"Ten years from now Rent will be the same?" I don't think it will be the same. I think it will fall. Teehee ;0)-
eventually Landlords will realize they have to raise the rent 2.9% every year and they will.
You mean that rents will track inflation? Well that's what I said too.
Britney Spears 7453 sq foot Beverly Hills home for 60% less than it was bought for 5years ago.
What a country. Where someone worth 155 million can default on their property with apparently no repercussions.
Not sure how the banks even make money there. 30 year mortgages for 3.88% and people can just walk away (in many states).
When my spouse was a student at UVic around 89/90, the rent for a single room in a shared house was around $200/m, one bed suite/apt was around $350-$400/m. Rent has been relatively stable comparing to the housing price change. BTW, this year the allowed rental increase is 4.3%.
Sorry didn't catch the "Real". Can't say I see a lot of upward pressure on rents right now beyond the allowable increase either.
Forgot to mention (in case someone doesn't know), current rent for a single room in shared house is around $450/m, and the one bed suite/apt is around $800/m. So rent pretty much follows the inflation on average (about 3-3.5% over 22-23 years). I guess that is why some people count rental income as inflation protected part of their retirement income.
Hm, 4.3 eh? I might take back my last statement...
The rent for this house has not moved in 4 years and the landlords are begging us to stay. Not a lot of fear of increases for us.
The landlord of our apartment guarantees no rent increase for as long as you live here. Or taken another way, our rent decreases about 3% a year for as long as we want to stay.
I have experienced declining rents myself. Our last three places have not only progressively fallen in rent, but have gotten nicer too.
I believe the overriding reason is population growth, or lack thereof. If you look at the most recent Census data released last month, you can compare city growth rates. You will notice our CMA is growing at less than 1 percent per year, while many other cities are growing between 2-3 percent. Add in construction, tourism and government downsizing to come, and I can only see continued downward pressure on rents. Am I missing something?
Overall, rents are still increasing (as measured by CMHC). However with the increasing vacancy rate people that know how to haggle are likely getting better deals. Certainly rents are not increasing anywhere near the max allowable rate.
If you are looking at the rent for just past 3,4 years, yes they are mostly flat in Victoria area (as they were pretty high relatively in 2008/2009), also the allowed rent increase rate has been just around 2% for past few years until this year.
longer term, rent should follow inflation rate in general, as rent increase is part of the inflation after all.
Also the landlords do tend to keep rent in check to keep good tenants for sure, the real increase normal comes when new tenants move in, to match up with the market.
I work for a property management company. There is only so much rent the market will bear. No matter what the allowed increase is, it is better to have a rented unit than one that will sit empty. Rents are based in the real world of what people can actually afford (unlike housing prices have been in recent years).
Where someone worth 155 million can default on their property with apparently no repercussions.
The article says she's selling the house, not that it's being foreclosed. Now apologise to Britney.
Regarding your other comments, virtually all high ratio mortgages now made in the US are backed by the USG in some way, i.e. FHA/Fannie/Freddie. Just like here.
If you compare the recourse/non-recourse states in the US, you'll find that there's not a lot of correlation with foreclosures and walkaways. Those who are underwater on their houses usually have no other assets anyway.
From the article:
Although the singer has listed the property at a low price, the small print does say that this will be a 'probate sale' and 'subject to court confirmation'.
Is that not a foreclosure?
Those who are underwater on their houses usually have no other assets anyway.
Well some of them don't. But there are also lots of strategic foreclosures happening.
True, plenty of old places that make money with low rent. That said, My brothers apartment block is now refurbishing apts when someone leaves and jumping up the rent for those... That said, I don't see much upward pressure right now. Too many people wanting nice tenants to rent their basement suites to pay for their large mortgages...
Is that not a foreclosure?
A probate sale is a sale by a trustee. LA Times notes that her father is selling the place off.
Oh. My bad. Sorry Britney!
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