Monday, May 28, 2012

Monday market update


MLS numbers courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.

May 2012 month to date (previous week in brackets)
Net Unconditional Sales: 551 (448, 286, 140)
New Listings: 1437 (1148, 761, 382)
Active Listings: 4728 (4649, 4444, 4451)
Sales to new listings ratio: 38% (39%, 37.5%, 36%)

May 2011
Net Unconditional Sales: 572
New Listings: 1524
Active Listings: 4857
Sales to new listings ratio: 37.5%
Sales to active listings ratio: 11.7% or 8.49 MOI

Listings are piling on at a similar pace as last May. Sales will very likely eclipse May 2011. I suspect it could be by as much as 10 per cent, which you know will quickly become the media story: "Sales spike in Victoria." If I was writing the headline, it'd be "Sales volume barely eclipses decade low." 

The G&M has been running an interesting "blogger" series about buying in Canada for the past month. It's surprisingly decent. The Vancouver couple concluded now's not the time to buy; <sarcasm> which is SHOCKING I tell you! </sarcasm> There's a pretty good collection of resources with a fair amount of perspective balance; a nice change from the "now's always a good time to buy" meme of the recent past. 


167 comments:

totoro victoria said...

The blog actually points out that there is plenty in their price range in Victoria and they are contemplating relocating here or to Nanaimo because of this. They are priced out in Vancouver.

They don't conclude that now is not the time to buy, they conclude that they might have to wait for a correction in Vancouver because their budget of $500 000 is too low for a 3 bed 2 bath home. I would agree.

a simple man said...

The problem with moving here is the lack of well-paying jobs. I know several very well-educated professionals who are scrounging for any work they can find right now.

totoro victoria said...

Victoria's jobless rate is 5%. Vancouver's jobless rate is 4%. I don't know anyone in my cohort of well-educated professionals who is scrounging for work - but maybe I am older (40)? Might be harder for folks who are just starting out.

I think the hard part is transition. Once you are established somewhere moving is hard.

totoro victoria said...

Also, this particular couple makes $127 000 a year combined. She is a mechanical engineer and he is a landscape architect.

A believe that two well-educated professionals in Victoria could make a similar comibined salary.

I do agree that some professions pay more in Vancouver.

Just Jack said...

We are in full swing of the Spring Market which is generally considered to be the best market to sell your property.

Just in the core municipalities there are some 822 condominiums for sale with about 110 units selling in the last 30 days. Roughly 7.5 months of inventory. The typical price for a condominium being $266,500 or about $282 a square foot.

Last year, during the same time period there were about the same amount of sales (116) but the median price was $294,500 or about $307 per square foot.

Generally 3 to 6 months of inventory is considered a balanced market with stable prices. More than 6 months of inventory would be a "buyers" or bearish market that favors buyers with the sellers making concessions in both prices and terms.

At 7 to 8 months of inventory and lower prices than last year we are in bear territory. And yet, at 7.5 months of inventory it is possible for the condominium market to return to a balanced or stable market. However, it is highly unlikely that the trend can be reversed to a "sellers" or bull market.

And yes, individual condominium sales may differ from the market.

omc said...

totoro victoria,

I generally agree with most of your statements, but have to strongly disagree with the engineering one. If you work for a private company (if you can find one) here you make about 20-25% less than the mainland, and about 35% less than Ottawa or TO. This is from first hand experience. There are a few better paid government positions, but these are very much in the decline and won't be hiring any time soon. There is virtually no industry here. The last time we put out a want ad I had to practically hide under the desk. engineering jobs are pretty much as rare as hens teeth in this town.

As a landscape architect I am pretty sure that couple would be also behind the eight ball.

My impression on the Victoria jobless rate is that it only represents those actively seeking employment through the Ei system. The people that simple man is talking about would not show up as unemployed, but I sure know a lot of them too. Victoria is NOT a place to come to find a decent job.

Leo S said...

Actually the income seems on the low side to me. No idea what a landscape architect makes but a PEng mechanical engineer with her claimed 10 years experience in the private sector should be making 90-120k herself. Also only 50k down? Why not avoid the CMHC and go 20%. Again after 10 years in the workforce as an engineer they should be able to scrape together the 20%.

Not surprising they cant find a suitable place. We have almost the same criteria and budget and can't find anything good here, let alone Vancouver.

a simple man said...

Both people I know are in their 40's looking for work - very highly educated, but both also relatively new residents - both looking for 2-3 years with no luck yet in their fields.

Leo S said...

@omc. I would tend to disagree. The tech industry is relatively healthy here. Maybe more on the software engineering side though. Salaries are lower, but I wouldn't be too concerned about finding another job if I had to.

dasmo said...

budget of $500k for a 3 bed 2 bath home in Van? Where have they been...
Victoria rewards the entrepreneurial and the flexible. There are not plenty of large corporate jobs abound...that said a lot of people don't even know where to look. I mean how many people know that this company's digital design department is here in market square?

Just Jack said...

Tricky business being a landscape architect. You're generally the last to get paid and one of the first to go broke.

Although some landscapers have tried to collect by going back to the site and rolling back up the lawns and pulling out the trees and shrubs.

You can put a lien on the project, but if the property goes into foreclosure, the bank has first position to be paid out and there is nothing left for the tradesmen.

I think both of them should be looking a re-training for different careers. The engineers that I know are either real estate agents or financial planners.

omc said...

She said she was a mech engineer, not software. Cant say I know many engineers in this town making over $100k, except govt. which isnt hiring. With the combined income they quoted, I assumed she would be in the $75-85k range. That is about what private industry is paying in Van. Can't see a landscape architect making much these days.

What would someone working as a programmer get hired for in Vic? $60k? pretty poor money if you ask me.

Just Jack said...

Here's a general question for homeowners on this blog.


Let's make the assumption that you are going to sell your home.

What would you be looking at as indicators that it is a good time to sell?

Like a lot of "For Sale" signs?
Bill Goode moving to Halifax?
Gas venting from Mt. Baker?
Pamela Anderson moving here?

totoro victoria said...

omc

I never said mechanical engineers make the same in Victoria. I said that some jobs do pay more in Vancouver.

I do believe that a couple with professional designations can make $120 000 here. That means they each have to get to the $60 000/yr mark.

Maybe there is no market for mechanical engineers here - don't know. My cousin is a civil engineer here though and makes well over $100,000 but might be the specialty.

Relocation is the big issue. Most people that I know with good jobs here worked their way into them. There is probably a ladder that has to be climbed again.

totoro victoria said...

dasmo - i would agree that if you are entrepreneurial and flexible you would do well in victoria - but you would probably do well anywhere :)

totoro victoria said...

dasmo - i would agree that if you are entrepreneurial and flexible you would do well in victoria - but you would probably do well anywhere :)

DavidL said...

@Just Jack
Gas venting from Mt. Baker?

The prevailing winds would be blowing from the west, so Victoria would be a great vantage point! BTW - nice jackfruit!

Animal Spirit said...

interesting - friends have a 1M+ house on the market, offer from first couple to view only a few days after listing. Inspection is good. Fails on financing. Why? Family from China couldn't get the $ over here.

Could our high end market have recently been skewed by HAM? I haven't been a fan of the HAM theory (especially because of some of the racism shown by people on both sides of the debate). Anyone have more examples?

Leo S said...

Interesting. I thought that HAM was supposed to be cash from all those newly minted billionaires there. It's not supposed to be HAF.

DavidL said...

Prior to switching careers (to IT), I spent close to fifteen years working in the landscape industry in Victoria. From personal experience, I know that if you work for very well-to-do clients, it can be very profitable. The problem is, Victoria has a limited supply of such clients who are willing to pay a premium price. Therefore, many landscapers (and thus landscape architects) manage to survive on a modest income in Victoria. The "City of Gardens" also has many "fly by nighters" who lower the prices and quality of landscaping. Unfortunately, many clients get fleeced.

I suspect that a landscape architect could do a bit better in Vancouver than Victoria, as there are a larger number of rich people... after all, the population is about six times greater.

a simple man said...

Can you actually get a sub-specialty in architectural school for landscaping?

Or is it like picking your specialty in medicine where you have to go and do a few years residency to learn the craft?

caveat emptor said...

"What would you be looking at as indicators that it is a good time to sell?"

Sea level rise from global warming floods Ross Bay Cemetery cutting off my shortcut to Fairfield Plaza.

DavidL said...

In BC, to legally call yourself a "landscape architect", you must be licenced. Many who work as landscape "designers" or "consultants" and are not licenced.

Introvert said...

Let's make the assumption that you are going to sell your home.

What would you be looking at as indicators that it is a good time to sell?


I would start following the listings and sales closely, and when houses very similar to mine (roughly same size, number of bedrooms, condition, neighbourhood, etc.) started frequently selling in under a week on the market, that would indicate a very auspicious time to sell.

(Mind you, I don't plan on selling my home in the next 25 years.)

a simple man said...

DavidL - thanks for the clarification.

A good time to sell? Now.

Marko said...

201 - 65 Songhees Rd, waterfront condo just sold for $760,000.

Previously purchased, November 2011, for $695,400. Current sellers added some flooring and granite but nothing crazy.

totoro victoria said...

Why would I sell? Personal reasons only. It is not a market-driven decision for me because I would be rebuying high or low. Transaction costs are too high to turn over frequently. I don't plan to sell until retirement. I will pay lower taxes on the capital gains.

Rhino said...

Interesting Marko, seems like the market is starting to heat up again?

DavidL said...

CBC News: Aging Vancouver Island has fewer children, census confirms

Excerpts:
* The latest census figures show the number of children in many parts of B.C., particularly on Vancouver Island and the North Coast, is dropping rapidly.
* There were fewer children in Powell River, Campbell River, Courtenay, Nanaimo and Victoria
* Three other B.C. communities were also ranked in the top five oldest communities in Canada — Sidney, White Rock and North Saanich.


I know many older and elderly family members who are considering selling ... I expect that there will be more and more as the population continues to age.

Just Jack said...

Sale today of a property in Fairfield on Bushby. Sold almost 2 years ago for $709,000 and re-sold today for $799,000. That's almost a 13 percent increase in two years. Despite the fact that there is now close to seven months of inventory in Fairfield alone.

$355 per finished square foot for a renovated character home half a block from the ocean.

It sure seems that Fairfield and parts of Oak Bay are bucking the trend as these recent re-sales prices show. Could this be the start of the market reversing and prices once more increasing throughout Greater Victoria?

Leo S said...

Well Seattle is bottoming, so Victoria is probably as well. I was starting to think this crash would never end!

Just Jack said...

Two of my neighbors have recently retired and both expressed an interest in selling their home and moving into the BC Interior. One actually listed but quickly cancelled the listing when he thought someone would actually put an offer on their property.

The fiction is that when someone turns 65 they sell their home. My opinion is that most will stay in their homes until they are forced to leave for medical reasons or die. And that goes for people in other cities too. They may want to move to Victoria, but it rarely happens.

Victoria is not a Mecca for 65 year and older people from across the country. Although it may be for the back end boomers aged 45 to 55. But, that puts us past the peak of the wave of baby boomers moving to Victoria. (Baby boomer generation peaked with the introduction of the birth control pill and then declined thereafter). Indeed any condominium complex that has an age restriction of 55 and older, sells for less than the similar complex without age restrictions.

DL said...

Re: 210-65 Songhees

I looked at that one last year. Whoever bought it was trying to cater to royalty. They must have spent a fortune on built-ins and staging alone. With all the high end material and labour for a complete makeover - flooring, all fixtures, hardware, moldings, granite, 6 mth payments, commission,,, guaranteed they lost money. I'd guess 30 grand.

DL said...

that was #201 -65 Sonhees

Just Jack said...

If that is true Leo_S, it would be to your advantage to buy today.

If I was so sure, as others are on this blog, that prices were to rise, I would not hesitate to buy the best home in the best neighborhood and fully leverage that purchase.

Maybe some people already are doing just that?

It would be interesting to look back at past booms to see, if just at the end of the cycle there was an uptick in prices.

-The straw that broke the camel's back?

DavidL said...

@Just Jack wrote: Although it may be for the back end boomers aged 45 to 55

If you are aged 30 to 50, you are Generation X - not a Boomer.

The fiction is that when someone turns 65 they sell their home. My opinion is that most will stay in their homes until they are forced to leave for medical reasons or die.

Agreed. Most people will stay in their home as long as physically possible. However, in some cases the ongoing costs of ownership (particularly major repairs) will be too much, and will lead to downsizing or property sale and then rental.

totoro victoria said...

I don't know too many people who will have trouble with the maintenance costs in retirement. Costs were never a factor for my grandparents and are not for my parents.

This is not because they were or are rich, not the case. This is because their homes were paid off and they have pensions and some savings. Reverse mortgages seem like a more likely next step for my parents if they need it down the line.

I would prefer to stay in my home as long as possible. I have planned for it already and would happily hire a live-in caregiver if need be before moving.

Must be a bunch of folks who feel the same.

totoro victoria said...

I don't think prices will rise much. The cycle is probably at its peak if history is a good predictor.

What is unusual are these really low low interest rates. That keeps the momentum going. If they rise, prices will likely start to come down. That is my best guess anyway.

I'm happy to buy now, not because I think prices will rise short-term, but because the rates are low and I believe that they will rise eventually to higher than they are today - ie. seven or more years from now.

If I was a cash buyer I would be waiting for the drop though :)

Just Jack said...

From the end of WWII to the wider use of the birth control pill. 1946 to 1964.

Although when you look at the graphs, the increase in births started about 1940 when parents were getting pregnant to differ entering the war for a year or two. And the full affect of the birth control pill wasn't until the late 1960's (probably during a Jim Morrison concert).

But its not exact as it varies slightly with the frame of mind of the individual.

Say your on the cusp at 48 years old, are your spending habits more in line with someone 38 (generation X)or 58 (boomer). The point being that it isn't a tap that shuts off at age 50.

Because kids today can have one parent who is a boomer and one who is a generation X.

Say your 48 years old and live in Oak Bay - then I'd call you a boomer. If you lived in Bear Mountain, your buying habits would be like a Gen X'er. And if you lived in Fernwood, you would just be in menopause.

DavidL said...

The "cost of ownership" is not just financial. I've seen a quite a few seniors overwhelmed by having to get repairs done (such a a new roof). The worry about finding a reputable company to do the work, not getting ripped off, and getting the job done in a timely matter - can be a daunting task. Some elderly owners become "sick and tired" of being an owner, and would prefer to rent accommodation where the repairs and maintenance are looked after.

Is this want I want for myself - no. It's just that I've seen this frustration with ownership many times, particulary when a house falls into disrepair.

omc said...

I doubt very much that we will see any measurable increase in prices for a number of years. The affordability just isn't there in this town. The interest rates will eventually rise, emphasis on eventually. I don't know if any one caught this in the G&M

http://www.theglobeandmail.com/globe-investor/markets/markets-blog/bank-of-canada-looks-trapped-on-interest-rate/article2446350/

More of the same. Ho hum. Not a bear or bull, but a halibut market.

chris said...

The Eighties saw interest rates, resource prices and home prices (western Canada) all fall hand-in-hand more or less 40%. A very similar episode has now begun.
No big deal. We had Madonna in the Eighties, now we have Lady Gaga.

omc said...

Interest rates rose sharply causing the housing crash of the 80s. Can't see the correlation with today. I can see a correlation to the 90s correction when home prices dipped ( already happened) and stayed flat for 7 years. We're about 5 years flat now.

totoro victoria said...

Yes, I can see getting tired of repairs and maintenance.

I can't imagine a 40% drop unless interest rates rise really a lot - which could happen. Mortgages will probably be relatively similar - cheaper house higher rate.

I agree that affordability is a big issue in this market. Can't see it rising much because of this.

patriotz said...

"Mortgages will probably be relatively similar - cheaper house higher rate."

But you will get a bigger reduction in monthly payment for a given down payment - i.e. putting $100K down will get a smaller monthly payment at cheaper house higher rate. Higher interest rates give savers a bigger advantage in the market.

chris said...

Interest rates rose sharply causing the housing crash of the 80s. Can't see the correlation with today.

Rates may have helped trigger a correction although it was more likely peaking household formation of the boomers. Same thing that's happening now with their children. Vancouver prices (in 1980 adjusted $) fell from ~142k in 1981 to ~75k by late 1986 at the same time 5-year posted mortgage rates fell from 20% in 1981 to 10% by 1987.

Same thing is haappening now. Rates have been falling in synch with Teranet prices for almost two years now.

totoro victoria said...

Higher rates do give savers an advantage. I'm somewhat of a saver but I'm leveraged at low rates. This is more risky than paying a big down payment, but as long as I am cash flow positive and have a 10 year term then I feel fine.

We all have to start somewhere. The salary to save several hundred thousand dollars as a down payment is much less common that the ability to leverage your way there through a mortgage and subsequent appreciation/paydown on principal.

Leo S said...

The fiction is that when someone turns 65 they sell their home.

I don't think that's the fiction. However based on a very extensive study of buying behaviour in the US, the Journal of the American Planning Association has shown that people become net sellers at age 65. That selling is partially due to downsizing, and partially due to forced selling for reasons of health or no longer living.
However retirement destinations might have an older net seller date.

If that is true Leo_S, it would be to your advantage to buy today.

Where's that tongue in cheek emoticon? :)

Just Jack said...

Mortgage rates did rise sharply in the 1980's but they also fell and prices continued to drift lower.

For home owners it was a difficult time and interest rates were crushing at renewal time. But people made it through, it sucked the life juices out of our economy as the money went to a mortgage rather than job creation.

BUT, it was the investor who owned several properties that was devastated. Not by interest rate resets at renewal time, but by their homes going vacant as people left for jobs in Alberta.

They needed that $XX a month coming in. They couldn't drop their rent because they didn't earn enough to make up the difference to the bank. But, back then they could make a deal with the banks and short sale their properties.

Unlikely to happen today with the CMHC insurance.

CMHC will just garnish your wages for the rest of your life.

I am so glad I don't own.

omc said...

The posted rate went from 14% in 1980 to 19% in 1981. This caused the crash. The rates were jacked sky high in order t quell rampant inflation. You are the first prson i have heard to make the argument that FALLING rates were the problem that cause dthe housing crash of the 80s. I remember som e people paying upwards of 25% fro variables, and the sudden poverty it bought to my street.

Rates have been bouncing along the bottom for years now. They have no where left to go down, and the govt can't put them up. Inflation isn't a problem now a days.

totoro victoria said...

Vacancy rates in the 80s were much lower than today even (ie. less than 1%).

I'm not sure where you are getting your information: http://www.docstoc.com/docs/4570514/Presentation-Outline-METRO-VICTORIA-HOUSING-MARKET-OUTLOOK-Peggy-Prill

My understanding is that interest rates were a killer upon renewal and that was tough on everyone.

I'm glad I own.

Leo S said...

Anyone still think housing isn't emotional?

Saw this last night on TV..
"What's your aversion to renting? I hate it! (50s in)

Marko said...

http://ca.news.yahoo.com/blogs/dailybrew/census-2011-canada-age-pyramid-shows-country-may-143404749.html

totoro victoria said...

That age pyramid is a little morbid. Just slide the button and you age yourself out of existence... to be replaced but the next colour band.

Just Jack said...

I can't find the CMHC published vacancy rates for the early 1980's.

Too bad.

But not necessary because my information came from speaking with people actively buying and selling multiple properties when that boom went bust. I'm sure the vacancy rate and net loss of population and unemployment figures will support any statement that I have said.

The vacancy rate is for purpose built apartment blocks not condominiums and basement suites. To the best of my knowledge there are no figures for vacancy rates for basement suites and homes for any time during the 1980's. That leaves you with researching those that got caught in the housing recession of the 1980's. Listening and learning from them, so that you don't make the same mistakes.

That's were I got my information.

And in my opinion, it could happen again. When you look at craigslist, kijiji and used Victoria there are a lot of homes and suites to rent. Yet the rents seem quite high. As I said, the owners could not drop their asking rents as the could not make up the loss from their income. As one fellow who had 8 houses in the early 1980's and then had to turn them all over to the bank as each one went vacant. "It's like the 1980's all over again"

-And he was there.

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

Rates have been bouncing along the bottom for years now. They have no where left to go down, and the govt can't put them up. Inflation isn't a problem now a days.

Inflation wasn't a problem in the early Eighties either. CPI fell from the teens to under five percent. Lumber, oil, land fell precipitously. Falling rates are always a problem for risk assets. Governments have little to do with it. Falling rates mean money is flowing out of things like resources and land, and into safe havens like bonds. Rates could easily fall in half again. They certainly haven't been bouncing along the bottom (zero) for years. The talking heads have been saying that rates have no where else to go but up for years - dead wrong. The worst-case scenario is if our rates start rising for the wrong reason. If bond markets begin to cluein how in debt Canadians are at all levels, then we have something to worry about. What masked our indebtedness over the last five years was our wealth of resources. Those fortunes have now turned.

chris said...

I should correct something. I said rates are always a problem for risk investmnets. UNless, you get a bubble forming. Then it's still a big problem, it just takes longer to see how big a problem.

totoro victoria said...

Just Jack,

The link I posted is from CMCH and includes the historical vacancy rates for Victoria and what happened to prices in the early 80's - ie. two year huge spike and then huge drop. This is not the same scenario now. Interest rates are way different as is the economy. The data is interesting to look at though.

For perspective, in 1983 new condos in the West End were selling for $40 000 -which was considered outrageously expensive... Unemployment was 13% nationally (now 7.3), Government bonds were 18.3% return! Interest was 13% for a five-year mortgage.

http://www.bankofcanada.ca/rates/interest-rates/selected-historical-interest-rates/
http://www.chba.ca/uploads/Policy%20Archive/1983/1983-11-08-PreBudget.pdf

CS said...

"Inflation isn't a problem now a days."

Considering prices, oil is up three-fold over the last decade and all energy related costs are up sharply, food, for example.

And then there's real estate, gold, works of art, all up a bit too.

What has kept the cost of living index within reasonable bounds is the import of cheap Asian-made stuff. Cars are cheaper now than 15 years ago -- and that's before you make any "hedonic" adjustment for the extra air bags, etc.

Clothes are much cheaper. Just before Straith's closed their Gov't St store, I contemplated buying a sale-priced (half off) sports coat for a thousand dollars. Today, I mostly buy sale priced blazers, etc. from Moores two for the price of one at $150.

So in relation to energy and most assets, there has been massive price inflation. But global wage arbitrage has kept wages down and has lowered the price of many manufactured goods.

Overall, these trends do not improve affordability of housing, which is why the condo end of the market is relatively strong. Many people have surely given up thinking about owning a house in Victoria.

patriotz said...

You forgot the big one - rents are by far the largest component of CPI and they inherently can't outpace incomes.

VP said...

"Considering prices, oil is up three-fold over the last decade and all energy related costs are up sharply, food, for example. And then there's real estate, gold, works of art..."

I checked into your claim and oil, food, gold and real estate are up three-fold. Maybe it’s that simple. Those 4 things are the mainstay of our economy. Begs the question, what happens if the first 3 give back their gains? Does real estate follow?

CS said...

@Patriotz

"rents are by far the largest component of CPI"

Rent accounts for 5.5% of the CPI. Food, I believe is a larger component and clothing is comparable.

But yes, it is true, the basic cost of existence "inherently can't outpace incomes," indefinitely.

The point is, though, that if the basic cost of existence rises until it matches income, then all other expenditures, e.g., on houses in Oak Bay or other assets, must go by the board.

totoro victoria said...

Rents can outpace income. People have to live somewhere and will downgrade their living space/area if necessary - look at New York.

It is largely about vacancy rates (supply and demand), local economy and landlord mortgage and expenses which are tied to the real estate market.

There is a reason that there are many initiatives to legalize and encourage secondary suites in places like Victoria and Vancouver or other low vacancy bc towns.

totoro victoria said...

What is the true cost of existence? Are you looking at welfare rates or middle class expectations?

In many countries people don't expect 2000 square feet of living space for a family of four. The basic cost of existence has a lot of flexibility built into it.

Expectations as to what this is vary. Lose your job or become disabled and you will find these change. There are many ways to cut costs if rents become more expensive.

CS said...

@VP "what happens if the first 3 give back their gains? Does real estate follow?"

Probably, because we would most likely be in the mother of all recessions, aka, the second great depression.

However, the price of oil might fall without a negative effect on the economy if new technology/discoveries were to bring on new, cheap supplies. But if the price of oil fell because the Chinese stopped buying cars, the outlook would be grim.

Either way, falling oil prices would lower food prices.

If oil and food prices fell, the price of gold should fall whether we were in a depression or a cheap commodity-based economic recovery.

In the former case one would expect property prices to fall, in the latter case, they might or might not rise.

CS said...

@totoro

"
In many countries people don't expect 2000 square feet of living space for a family of four. "

I don't know about the family of four, but the boom in condo sales in Victoria, suggests space expectations here are not what they used to be.

a simple man said...

Family of four does not need 2000 sq ft. Read Susanka's "Not so big house" for a great perspective:

We need less space than we think we do.

Just Jack said...

Can condo prices increase this summer?

The Office of the Superintendent of Financial Institutions (OSFI) is likely to have concluded what changes are to be made to CMHC at the end of June.

If all of those changes are implemented at that time, will this cause a rush to buy condominiums for those that have been pre-approved with 90 or 120 day bank guarantees? Thus drawing demand forward and prices up?

a simple man said...

How much more can we draw demand forward?

What follows?

patriotz said...

"Rents can outpace income. People have to live somewhere and will downgrade their living space/area if necessary - look at New York."

What about New York? Are you saying that on average there are more people per square foot of dwelling space than decades ago? In fact the reverse is true. The population of NYC is hardly changed from 50 years ago but there is more dwelling space today.

patriotz said...

"I don't know about the family of four, but the boom in condo sales in Victoria, suggests space expectations here are not what they used to be."

IMHO people are buying condos because they see that as the way to move up to a house later. The "housing ladder", you know.

They don't expect to raise families in them, but they may well end up doing it.

totoro victoria said...

A simple man - I have all of Susanka's books. I agree that we don't need so much space - we need good design. Her designs cost as much as larger spaces to build tho. "A pattern Language" by Christopher Alexander is also a great book on homes and what is needed.

Patriotz - As for New York - nothing to do with change over time. I was considering living there in the early 2000s for work. The apartments that were available were tiny and very expensive relative to what my income would have been - and happily occupied by professionals who would have houses here. It was about how high rents and availability make small spaces more attractive because expectations are adjusted by monetary limits. The rents being kept in check by incomes is not the whole picture.

totoro victoria said...

I know of one family living in an apartment with children in Victoria. They are divorced and each bought a unit in the same building. This works for them.

It is definitely not the norm for my childrens' peers - all other parents have houses that they rent or own. I would be very surprised if this changed in Victoria in the near future given the availability of housing.

Condos in Victoria are generally not well suited for pets and kids. Soundproofing quality seems low and, if you are going to buy, a townhouse or duplex is a better option where you have some outdoor green space.

VP said...

“@VP "what happens if the first 3 give back their gains? Does real estate follow?"

Probably, because we would most likely be in the mother of all recessions, aka, the second great depression.”

CS, I’m sure I remember oil being $13 a barrel around the turn of the millenium. Gold was around $200 an ounce. No recession. If we turned back price only ten years, I don’t see depression. Or “mother of all recessions“ as you said.

Just Jack said...

The months of inventory for single family homes ins Sooke is now up to 16. That's 272 homes up for sale with only 17 selling in the last 30 days.

Looking at the sale/list history of the sold properties giving my best guess that home prices for the last month are back to 2006 price levels.

Meanwhile, on the planet "Oak Bay" the months of inventory is 3.9 with 29 sales in the last 30 days and 112 current listings. And a guess based on past sale/listing prices may be that prices in Oak Bay are the highest in history.

So, is it a good time to buy or to sell?

patriotz said...

"Patriotz - As for New York - nothing to do with change over time."

Your reference to New York was in respect to your claim that "rents can outpace incomes", which means a change over time.

Leo S said...

Rents can outpace income. People have to live somewhere and will downgrade their living space/area if necessary

That doesn't make sense. Rents in New York are not outpacing income. You say yourself people are making do with less, for the express purpose of keeping rents affordable.

The statement that rents can't outpace income has nothing to do with what you get for that rent, it's just that the rent people are actually paying has to be affordable to them. If it isn't they wouldn't live there.

Leo S said...

So, is it a good time to buy or to sell?

Yes.

totoro victoria said...

Not sure about the debate about what I said except I am sure what I meant to say is that affordability is relative to what you set your expectations at - or what they are set at for you. You have to live somewhere. The amount of space and location can be changed in relation to rents rising to keep costs in check - and that is what you see happening. It is not just income that sets the limit, but supply and demand.

If you only earn so much and rents rise, you will downgrade your expectations. Whereas someone here might expect a nice-ish full home and 2000 ft square for $2000/month, in new york you would get a one bedroom apartment for $3100/month. A four bedroom townhouse? Not sure how much that would be but I would expect people would be paying a lot more of their income for rent on average than here. In 2006 the average weekly wage in Manhattan was $1,453.

http://www.nytimes.com/2008/04/20/realestate/20COV.html?pagewanted=all

totoro victoria said...

Rents can outpace income when you look at the square foot cost is what I meant to say. When rents rise/square foot people will reduce their space accordingly to compensate.

If rents for a house in Victoria rose to $4000/month people would start living in condos or having roommates more frequently.

totoro victoria said...

My responses were to the statement:

"You forgot the big one - rents are by far the largest component of CPI and they inherently can't outpace incomes."

Maybe I misunderstood what was being said but rents can rise/square foot a lot more than incomes do if there is demand.

Leo S said...

It is not just income that sets the limit, but supply and demand.

Ok, I think we agree. It's just a difference of perspective. I would say income of the renters dictates the demand.

Certainly expectations are different. For example, the expectation that an average family can own anything in Victoria may have to change. Ie, Ownership rate in San Francisco is only about 35%

Just Jack said...

A look at the last 50 home sales in Oak Bay shows that

28% of them were previously bought within the last 3 years.

50% of the homes were bought within the last 8 years.

70% bought since the year 2000

Only around 15% of the home sales were previously purchased more than 25 years ago.

The way I read this data is that the typical home buyer in Oak Bay will own their home for 8 years. Homes that are bought and sold in under 3 years are typically "flips" and some 15% of Oak Bay home owners are carried out feet first from their homes.

totoro victoria said...

Not sure if we are talking about the same thing but income is only one factor that affects market rent/square foot which is driven by supply and demand.

There are many many other factors that affect supply and demand such as population growth, income inequality, zoning, vacancy rates, density... whole paper on it here:

http://digitalcommons.iwu.edu/cgi/viewcontent.cgi?article=1007&context=econ_honproj

totoro victoria said...

I think the way people buy houses has changed. HGTV would not be so popular if it hadn't. A lot of people upgrade the home and resell and move up or along the property ladder a few times until they get one they love. Could also explain the stats.

Leo S said...

You're talking rent/sqft while I'm talking total rent. Income sets a hard limit on total rents that can be sustained.

As for the property ladder, it is my firm belief that at these values it is a mistake to try to climb it. Better to rent and save, then jump up to a rung you can be happy at for 15 years

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

According to CMHC, The vacancy rate for Victoria has increased from a low of 0.5% in 2008 to 2.1% in 2011.

The last time the rate went over 2.0 percent started in 1995 the rate peaked at 4.1% in 1996 and did not recover until the year 2000 when the vacancy rate fell to 1.8% eventually falling to its lowest level of 0.5% for the period of 2005-2008.

There seems to be a relationship between increasing vacancy rates and decreasing property values.

The vacancy rate for Victoria has usually been 1 to 2 full percentage points below the Canandian average. Which stands to reason as Victoria is a nice place to live especially during an economic recession.

Yet in 2011 the spread has substantially tightened, with the Canadian average at 2.2 percent compared to Victoria at 2.1 percent. The harsh realities of a now very expensive city to live in.

The higher the city vacancy rate compared to the Canadian average, also seems to indicate which cities are having housing declines.

For example, the vacancy rate in Windsor was 8.1 in 2011. While Vancouver clocked in at 1.4% or almost a full percentage point under the Canadian average.

Source: CMHC

Just Jack said...

Back in the year 2000, Victoria's premium in rents had fallen to one of its lowest levels being just 13 per cent over Canada's average. In 2011 that premium has increased to 22% above the Canadian average ($856 a month). With Victoria at $1,045 per month.

Nominal rental rates have not decreased since 1992 in Victoria. Yet the premium above the national average will fluctuate with the economy. Adjusted for inflation rental rates would most likely show declines but the choice of which price index to apply baffles me.

Suffice it to say that since 1992, nominal rental rates have increased 53% from $684 to $1,045 per month. While property values have increased some 189 percent from $201,000 (1992) to $581,000 (2011).

source: CMHC Apartment rents

totoro victoria said...

I'm confused as to how total rent is different from rent/square foot. Total rent? I can squeeze my family into 1000 square feet if necessary. That gives me a lot of room to downsize if I was a renter.

There has to be a benchmark to compare to. Income does not set a hard limit unless you are at your absolute limit already ie. welfare limits.

Just like you can economize on food you can economize on housing.

If you are not using /square foot what is total rent? Median rent?

totoro victoria said...

I'm confused as to how total rent is different from rent/square foot. Total rent? I can squeeze my family into 1000 square feet if necessary. That gives me a lot of room to downsize if I was a renter.

There has to be a benchmark to compare to. Income does not set a hard limit unless you are at your absolute limit already ie. welfare limits.

Just like you can economize on food you can economize on housing.

If you are not using /square foot what is total rent? Median rent?

totoro victoria said...

Leo - I agree that there is not much room in the market for the "property ladder" approach right now.

Appreciation will likely slow and fall - def if interest rates rise. Add in transaction costs and you could quite likely lose money in the next five years or so.

My approach is a bit different. I'm longer term and not just primary residence appreciation but also rental property. If you have a good rate for ten years you mitigate the risks a fair bit.

totoro victoria said...

"Suffice it to say that since 1992, nominal rental rates have increased 53% from $684 to $1,045 per month. While property values have increased some 189 percent from $201,000 (1992) to $581,000 (2011)."

It was much better to own and use leveraged dollars to get 189% increase in value plus pay down on mortgage over nine years.

Not sure what will occur over then next ten.

chris said...

Did any notice how much interest rates fell today? I just checked and the 5year rate fell 5%!
SO, was it:
A) a good day for RE prices, or
B) not a good day
Sooner or later people will catch on - possibly even GT. I sympathize with all the people who believed the media and banks and refinanced, locking in over the last few years.

CS said...

@VP
"I’m sure I remember oil being $13 a barrel around the turn of the millenium. Gold was around $200 an ounce. No recession."

But now the money supply is several times greater, so a return to those prices would almost certainly mean a catastrophic collapse in money supply. In the thirties, US money supply fell 30%, which was enough to cause the great depression. A sixty percent plus fall in money supply now, which a reduction in the price of oil and gold by 80-90% implies, would mean a catastrophic depression.

Leo S said...

I'm confused as to how total rent is different from rent/square foot. Total rent?

I mean what you actually pay every month. Your actual rent. Rent/sqft can change from city to city, but if you make X dollars a month, then clearly your maximum affordable rent is X*Y, where Y is some percentage less than 100.
Therefore incomes set the hard limit on rents. Rents are paid from the income of the renters, so clearly they cannot be unaffordable to those renters.

However I think we are somehow arguing past each other. I see your point about how rents can increase faster than incomes, meaning that people will have to make do with less. I think it's an unavoidable consequence of densification.

VP said...

@CS
“A sixty percent plus fall in money supply now, which a reduction in the price of oil and gold by 80-90% implies, would mean a catastrophic depression.”

Sure, if the money supply contracted that much. However you overlook that the 80-90% in the oil and gold bubbles could simply find there way into a different bubble, without any contraction in money supply. Maybe something tech again. Facebook? Ok, maybe something else.

Marko said...

Bear Mountain is picking up a bit, 955k sale on Nicklaus drive today.

Bitterbear said...

Thanks Marko....anything else at Bear Mtn besides this sale to indicate an uptick?

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

Woodhampton sale of 944k earlier in the month. Two 900k+ sales on the mountain in one month is rare.

Also a sale on Players Drive and two in Echo Valley.

Overall still slow; the way things have been going up there the last two years, a bit of an uptick, relatively speaking.

SilverSurfer said...

VP: Oil and gold bubbles? Thanks for starting my morning with a good laugh.

Just Jack said...

And the price of homes in Oak Bay continue to show unprecedented highs.

Such as today's sale on Hampshire Road in North Oak Bay at $1,015,000 for 2,462 finished space ($412/sft.)and a finished basement.

Which is a 34% increase over the previous price the property fetched in July 2006 when the property sold for $760,000.

Compare that to the recent sale on Bear Mountain for $955,000 ($282/sft) which had been listed at $1,150,000 around the same time as this Oak Bay home originally sold. That's $282 per square foot for a 3,386 square foot custom built home with a golf course view and a finished basement.

So you have to ask yourself.

Is this normal for a marketplace to act like this?

Or is this marketplace showing signs of irrationality and is becoming dysfunctional? Like a rope that is starting to fray and come apart.

dasmo said...

Prices aside, (sticking around or not they are ridiculous and I agree with that without argument), Oak Bay as a location that offers many lifestyle benefits which is why it fetches more $. One of which is it's established, so less chance of something undesirable popping up next door. It's on the right side of the crawl. which saves on stress, time and also gas $$. The list goes on... If you are a buyer looking for that the options are more limited.

patriotz said...

"For example, the expectation that an average family can own anything in Victoria may have to change. Ie, Ownership rate in San Francisco is only about 35%"

But the city of San Francisco is just the inner core of the Bay Area with 10% of its population. That ownership rate would be normal for the inner 10% of any metro. And as I've already pointed out areas with a high proportion of multi-unit rentals have to have a low ownership rate because it's not possible for the apartments to be owned by their residents.

Compare metro to metro, for heaven's sake.

Introvert said...

@introvert
Thanks for the ROMS info. It looks like a useful resource that I didn’t know about.

You mentioned they provide background and credit checks. Have you used this part of the service? If yes, what sort of info did you receive about potential tenants? Cost?

Do you allow pets?

I noticed they also provide rental unit insurance. Is this something you get from them, or do you get that somewhere else? Do you need a separate insurance policy if you have a suite in your house, or can you get it covered under your house insurance?



backinVictoria,

I apologize for the delayed response.

Yes, I've used the credit and other checks (e.g., delinquent tenants list) that ROMS offers.

It's not so much the results of the credit check that interest me, but rather the willingness of a prospective tenant to allow the credit check to be performed in the first place. The prospect of a credit check weeds out most financially troubled individuals.

I honestly can't remember how much it costs to run the bundle of checks. Maybe $15 or $20? It's in that ballpark.

I allow one dog, upon my approval. If the dog is menacing, enjoys barking, sheds a lot, or worries me in any way, my answer is no. I’m a dog owner myself, and I remember how hard it was to find a rental suite that allowed pets. It's one angle I can exploit in terms of attracting interest.

I haven’t explored the rental unit insurance offered by ROMS. I don't have separate insurance for my suite; however, I do make sure to disclose to my home insurer that I have an illegal suite in my basement. My insurer seems fine with it. (In advance of renewing my home insurance next year, I may investigate this further.)

RealR said...

To be fair Chris, you neglected part of the explanation as to how prices could fall along with interest rates. The reason is *real* rates must be rising. Which is another way of saying that inflation rates are falling faster than nominal rates. RealR=NominalR-InflationR. The formulae are actually little more complicated, but close enough. Whenever real rates rise, hard assets come under pressure. The same thing happened in the 80's and 90's as inflation fell faster than nominal rates.The concern now is, we are approaching the nominal limit. That is to say if the inflation rate goes negative again like a few years ago, we won't be able to lower nominal rates any further to fight it. Sorry for the wordiness but there seems to be a lot of mystery surrounding interest rates and property prices, so remember to keep it *real*.

Marko said...

Another 3 big sales on Bear Mountain in the last few hours....strong finish to the month.

CS said...

Of five new Oak Bay listings on the MLS Website west of Cadboro Bay Road, four appear to be relistings at a new, lower price.

CS said...

I meant East of Cadboro Bay, sorry.

a simple man said...

I just came back from a walk through the Uplands and Estevan area - wow - a lot for sale signs have sprung up.

Rhino said...

Your eyes deceive you simple man. The friendly REALTOR told me things are picking up :-)

Rhino said...

One thing I did notice though. I have a PCS account for outlying areas, like sooke, north saanich etc. Inventory in those areas has been going down, while my core PCS just keeps going up.
At the highest level now I am ever seen for my core PCS, and I have had it at least 3 years.

christa said...

I agree with a simple man. I would love to relocate to Victoria with the income I currently earn in Vancouver, but it's not possible. With our family income of $180K (mostly mine), we could buy a nice house in Oak Bay, even though I am priced out of Vancouver. Yes, we could afford to buy in the suburbs of Vancouver, but I am not interested in commuting 2 hours a day given my job requires long hours.

I salivate over the price of Victoria real estate. Sadly, if I could even find a job in my field in Victoria (law), I would earn half what I do in Vancouver. If Vancouver does not correct in the next year, I will buy an investment property in Victoria and move there when I retire.

Mindset said...

I salivate over the price of Victoria real estate

Only at your current Vancouver wage though? That just about says it all about the Victoria market, doesn't it.

Come here after you have made your money somewhere else. A really good time is after you have retired.

And with all the news stories about our aging demographics causing nothing but future economic doldrums, I have to wonder how the places like Victoria with some of the highest national percentages of elderly are ever going to shake this unfortunate reality.

It also seems that unless Vancouver RE does some serious correcting really soon, the bottom is going to fall out of the youthful labour force there as well.

Where middle-class people cannot afford to live and work, you have a serious economic problem.

Marko said...

"Where middle-class people cannot afford to live and work, you have a serious economic problem."

It all depends on what you think middle-class people should be able to afford. I live in a 530 sq/ft condo and I am perfectly content. Above average educations for my household (two solid masters degrees) and above average income.

Just Jack said...

Throw in a couple of kids, a dog, a cat and a wife Marko and even 2000 sq/ft can feel too small.

S2 (Just Jack's wife)

Leo S said...

I live in a 530 sq/ft condo and I am perfectly content.

You're what, 25? You're supposed to be content in an apartment at that point, you're still comparing it to living at home.

Let's conduct another poll in 5 years.. but this time ask your girlfriend. :)

dasmo said...

Well folks, tech is bigger than even I though in this town. Was at the Viatec tech awards last nigh. sold out, 500 people there (Vancouver's version had 700) Learned about even more tech companies starting up here. Gaming is also having a gravitational pull. Zynga is opening a shop here as well. They estimate that the industry generates 2.65 billion dollars in economic activity...

christa said...

Marko - I commend you for having 2 people live in less than 600 sq. ft. Frankly, that is unrealistic for most people. We rent an 1100 sq. ft. suite for the 3 of us (1 toddler) and the room is tight. We pay for off-site storage. We live in Kitsilano, which is the only reason we live in such tight quarters. We have decided to sacrifice size for location and proximity to work. Since we have to rent, we mind as well rent in the best location.

As an aside, my neighbour just sold his house and is taking his lottery winnings and moving to the Island. I wonder how many Vancouverites will do this? Perhaps this explains housing prices in Victoria? If I had bought a house on the West side 10 years ago, I would be cashing out now and doing the same.

I cannot believe you can buy a house in the Carnarvon Park / Lansdowne / Camosun area for under $700K. I just saw a nice house listed on Newton for under $600K and sold under asking! There is a cute little bung listed on Oliver for under $700K. These are condo prices in Vancouver. A house on Townley near where I grew up sold for $603K! These are CRAZY prices to those living in Vancouver. I would have to move to Langley (at least 1hr commute) to find these prices anywhere close to Vancouver.

Bottom-line, if Vancouver does not correct soon, I think you will see a lot of us professionals who are priced out of Vancouver looking to invest on the Island.

Leo S said...

I would have to move to Langley (at least 1hr commute) to find these prices anywhere close to Vancouver.

Right, now think about that for a second. In Vancouver, you would have to move to Langley to get those prices. 1 hour commute.

However somehow you think buying a house in Victoria would be better (3.5 hour commute to Vancouver unless you're flying) is a better deal?

And if you're talking working in Victoria, then clearly it's not even remotely comparable to Vancouver. Like you said, you would make about half the salary. So what you're really comparing to is moving to Langley and working in Langley.

Marko said...

Friday June 1, 2012 7:50am:

May May
2012 2011
Net Unconditional Sales: 659 572
New Listings: 1,740 1,524
Active Listings: 5,015 4,857

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

Mindset said...

...Above average educations for my household (two solid masters degrees) and above average income.

Perfectly content with just two solid master degrees in 530sq ft?

Whats the housing look like for two people with solid master degrees in Calgary? Plans for a family?

RE: Viatec awards ceremony was sold out

Thats a positive story and great to hear. But comparing Vancouver to Victoria IT by conference attendance is playing it a little loose with statistics. Does anyone have any numbers on the size of the top 10 IT local-grown tech offices in Victoria compared to Vancouvet (private not public sector serving). $ amount of Angel funding per year in each region?

I think tech is a fantastic growth area for Victoria. Would love to see more of it.

Just Jack said...

Well come on over. I met a person that worked for one of the larger Vancouver firms. She now has her own company in Victoria. She slashed her prices by a third of what others are charging in Victoria to develop her business.

She lives in Sooke.

Marko said...

I really don't comprehend why it is so unrealistic to raise 1 kid in a 1,000 sq/ft condo (decent location, close to a park) or two kids in 1,200 sq/ft townhome?

When my family lived in Croatia we lived in a 600 sq/ft condo...I went to play outside. We moved to Canada, parents rented a small 2 bed apartment in the attic of an old home in Fernwood for 2 years, and then lived in the top floor (805 sq/ft) 2 bed, 1 bath bungalow in Fernwood for 10+ years.

Cat, Dog? I like animals but it isn't like you cannot live without a cat or a dog.

After having lived in 530 sq/ft for 6 months (two people) I don't feel like I am suffering, could easily live in it until kids.

Do I want a low stress job, flex Fridays, a nice house in Fairfield, an Audi S5 and BMW X5 for trips up to Whistler, two vacations a year, well yes I do but reality bites.

^We could afford the above in another part of Canada but than again I am not willing to make the trade off.

Marko said...

"Whats the housing look like for two people with solid master degrees in Calgary? Plans for a family?"

No interest in living in Calgary. Yes, plans for a family in few years; however, I don't see why I wouldn't be content in a condo with a kid. For example, the Duet (640 Michigan) is going to have large two bed units geared towards families in their second phase. 5 minute walk to downtown, 2 minute walk to park, 1 minute walk to school.

I anticipate they will start under 400k when they launch phase 2 presales later this year.

dasmo said...

It was just a point of interest about attendance, nothing statistical. A fellow I was talking to from Van was commenting on it. I don't know the Stat's in Van for tech but it's undoubtedly bigger. EA alone is a huge player. I might dig up some stats though. I'm curious about proportional sizes of the industry.

CS said...

@Marko
"really don't comprehend why it is so unrealistic to raise 1 kid in a 1,000 sq/ft condo"

In 1978, according to Wikipedia, the average urban resident of China had 36 square feet of living space, or about 100 square feet for a family of three. So I guess that comprehending the ability to live with only 333 square feet per person depends on what you are used to.

Under the existing globalist regime, real wages of those in the West will have to converge with those of the Rest, which means living space per person will converge also. So it would be interesting to know how much living space the average urban Chinese has today. Does anyone know?

CS said...

Here it is. According to the People's Daily, by 2004 urban living space per person in China was 24.97 m or 268 square feet.

So at 333 square feet per person Victoria today, the West has achieved living space convergence with the Rest!

totoro victoria said...

Christa - I agree with you that prices in Victoria are affordable compared to Vancouver. I think even when you add the wage differential in you are better off in Victoria though.

Given your income in Vancouver, hopefully you are able to save for a fair bit for a down payment. Maybe you should buy a place here with a suite and rent it out until you save enough again to move over - a cushion to land with.

I work in the same field as you and there are jobs here if you have good experience.

totoro victoria said...

I like living in a smaller space. It is easier to clean and cheaper for heating and you don't collect so much stuff.

What I do find is that with pre-teens the rec room space is used a lot. With kids, I would prefer a house with small bedrooms and a separate space that could be used as rec room - even if it is a converted garage.

As for Oak Bay, I agree it is a competitive market right now. I have been monitoring this area pretty closely and prices are not dropping at all.

CS said...

@tt Victoria

Re: Oak Bay

"and prices are not dropping at all."

Suuuuure. Well except for:
2895 Lansdowne
3230 Ripon
3295 Uplands
2733 Dufferin

All relisted at lower prices this week.

CS said...

Prices in Australia's capital cities are reported to be off 5% so far this year.

The Canadian dollar's off about 4% in the last month or so.

The Dow is off 8% in the last 31 days.

The US economy is stalling--in an election year, which is unusual. GDP growth is estimated at 1.9%, which taking account of uncertainty in the cpi deflator, is close enough to zero.

And US unemployment is climbing.

So the only safe investment, obviously, is OB real estate.

totoro victoria said...

They may be relisted at lower prices, but I believe market value is not dropping - especially in the $550-800 000 range which is what I have been following.

The homes you have listed all appear to be in the high-end category - ie. over $900 000. Different price points have different markets and the "average" Oak Bay home remains a sought after commodity.

CS said...

@tt Victoria
"he homes you have listed all appear to be in the high-end category - ie. over $900 000"

There's a lot of high-end in Oak Bay.

In 2011, the average price of a single family home in Oak Bay was $936,355.

So when you say prices are not dropping below $800,000, you are saying that prices are firm at the low end, which may be true.

It is the more highly financially oriented people dealing at the top end who tend to be the first to sense which way markets are moving. So maybe there is reason for caution at the low end, despite the present firmness of prices.

Just Jack said...

I agree with TotorVictoria it seems that house prices in Oak Bay have never been higher. That the areas surrounding Oak Bay have fallen back to 2008 prices have very little affect on what people are willing to pay to live in Oak Bay today.

Oak Bay remains the last area of Greater Victoria to experience a price drop.

Today there are 110 houses for sale in Oak Bay. And most likely this May there will have been a total of 30 sales in Oak Bay. With the typical home selling for $740,000 or roughly $310 per square foot.

totoro victoria said...

Maybe, hard to know if high end market is more with it with prices or if there is just more volatility because the market is smaller.

I agree that the "low end" in Oak Bay is firm. Given there is such a high high end in Oak Bay (ie waterfront and uplands and mansion-like homes in south oak bay) the median of $730 000 (as opposed to the average) is probably more accurate cause it drops out Uplands and Waterfront.

$730 000 will get you a house on the landsdown slope, in Estevan, and most of South Oak Bay.

totoro victoria said...

FYI the average price in Oak Bay is almost $150 000 above the median...

Rhino said...

who the hell wants to live in Oak Bay, its full of old people (and old houses). I guess I just answered my own question.

Yeah I really want to spend my friday nights mingling with the over 60 crowd at the Penny Farthing...NOT.

It obvious the market makers in Oak Bay are old people with more money than brains.

omc said...

I am not seeing Oak Bay "low end" slipping at all. I see the price corrections as just that; price corrections because they listed too high to begin with.

Anyone notice 2880 EASTDOWNE just listed today. 3 beds up on the slope, even has a suite. Needs updating, but doesn't appear as much as most. $629K. My guess is that they are trying the Toronto bidding war tactics.

totoro victoria said...

omc - I agree this could be a bidding war situation re. 2880 eastdown. The suite has no fridge or stove though...

It seems cheap for a five bedroom home on the slope but I haven't seen it.

totoro victoria said...

I like living in Oak Bay. I like walking to the shops and not using my car. I like no Colwood Crawl. I like my that the kids and I walk to the rec centres and schools and library in a relatively safe area with lower traffic levels and it takes them no more than 10 minutes. I don't even use my car for shopping. I also enjoy the waterfront.

You don't have to be old to like Oak Bay. The Penny Farthing is not the only place to go here - there is Ottavios, Japanese, Chinese... and downtown is 10 minutes away.

As for old houses, I like the fifties houses. I don't love new construction unless it is really modern. The 1910 ones are too old for me though... too many problems.

Where else is better? James Bay is pretty high density, Fernwood is okay but has a highish crime rate near the school and below, Gordon Head is too far out for me...

Fairfield is great with a lot of the same amenities as Oak Bay except the rec centre and library but, it is just as expensive and the high school is further away.

VP said...

Or maybe 2880 EASTDOWNE is paying attention to the '08-like deflation heading our way, and want to protect any equity they have.

CS said...

Some parts of OB are still quite pricey, that's true. For example this at $1,697.46 per square foot.

totoro victoria said...

Trying to protect your equity by pricing too low is a weird strategy. That is more like an equity loss strategy. The market will set the price for you if you are slightly over so pricing low is... not smart.

totoro victoria said...

CS - you picked the oak bay hotel redevelopment which has spa, concierge and heated outdoor pool on the waterfront and is also a high-end hotel and you can rent your unit out for these purposes if you want. This development is not normal in Oak Bay - in fact it is the only one I am aware of. It is like buying a full ownership of something that would normally be sold in fractions (like downtown high end hotel developments).

VP said...

I enjoyed the picture of the couple on the rocks in CS's link. Nothing against spending 4 million on a condo, if that's your dream. I just thought it was a strange marketing photo.

a simple man said...

Oak Bay is terrible. Nothing but old people and old houses. Don't try and buy a house here - it is miserable - I will man the station and make sure everyone gets out ok ;)

CS said...

@tt Victoria,

"the oak bay hotel redevelopment which has spa, concierge and heated outdoor pool on the waterfront and is also a high-end hotel and you can rent your unit out for these purposes if you want."

Yah, right. You get to rent it out and have people scuff the paint and spill coffee on the carpet. Adds a lot to the value. Plus, like some other condos, it has a pool.

Perhaps the concierge is unique. Nice to be saluted on your way in or out, I suppose. But how many hundred per square foot does that add?

Not that I question the price. For people who don't want to live next door to Rhino, it's probably well worth the money.

a simple man said...

Easdowne is assessed at $603K - does not seem like a screaming deal - I guess we will see.

totoro victoria said...

I wouldn't buy into the hotel but I'm pretty sure that people who will are not in my league ie. what is a million or two extra dollars..

As for renting when you are not there, one of my properties is a vacation rental and I can assure you that it works well and makes money. Cleaning fees and damage deposits are good things. A little wear and tear can be fixed up quick when you have the rental income to pay for these minor items.

Yes, saw that Eastdowne was assessed at $603,000 - not sure what is up with that.

omc said...

When was the last time you saw one of the 50s ranchers sell for $600k in that area? The assessment is obviously wrong.

I guess you would have to factor in how may coats of paint it would take to cover up those screaming red walls though. I remember painting a red "feature" wall in my dining room in about 92. I have never seen so many red walls in one house. I wonder if the owner is a n early 90s aficionado?

patriotz said...

Under the existing globalist regime, real wages of those in the West will have to converge with those of the Rest, which means living space per person will converge also.

The EU is far more integrated than the world as a whole will ever be, and not only have wages not converged there, but it's the low wage countries that look set for even lower wages.

There are many factors which can maintain wage differentials under free trade and even under a common curency. You don't even have wage parity within the US, which has been around for over 200 years.

Also even within Canada the areas with highest real wages do not have the highest living space per capita. Never mind comparing Canada with the affluent European countries.

Just Jack said...

As for condominiums in the urban town areas. If you had bought a condominium last year with 95% financing, you have now lost your 5% down payment. As the typical condominium price has dropped from $284,000 to $272,000 yoy.

You should have bought a house in Oak Bay.

CS said...

@Patriotz
"There are many factors which can maintain wage differentials"

Of course. But when you have ten-, twenty-fold differences those with the higher rates tend to lose jobs until their wages fall.

That Canadian wages have not yet fallen enough is, presumably, one reason that Bombardier Recreational is currently transferring 450 jobs from Quebec to Mexico.

"The EU is far more integrated than the world as a whole will ever be, and not only have wages not converged there ..."

The problem within the Eurozone is that wages are more or less uniform throughout although productivity, days worked, and age of retirement differ among nations. Greek public sector employees, for example, earned more than Germans, although they worked fewer days a year, and retired earlier.

To make matters worse, Greeks are skilled tax evaders snd have little productive industry to provide a tax base. But the Greek government avoided the necessity of making wage/staffing adjustments by borrowing 14% of GDP in contravention of the Maastrict Treaty.

Basically, Greece had a corrupt government that bought votes by spending money the knew they could never repay. In the process the scammed creditors and drove the country inexorably toward bankruptcy, but not during the term of the government responsible.

So yes, much though you may wish to close your eyes to it, global wage arbitrage is forcing global wage convergence, which is why real incomes in North America have been flat or downward for years past, and why unions are largely powerless to negotiate wages.

For example, the BC Government is offering the BCGEU 1.9% over two years while the Bank of Canada is targetting 2% annual inflation. In other words, Government policy is real wage reduction.

patriotz said...

The problem within the Eurozone is that wages are more or less uniform

Emphasis on "less":

Look at Figure 1

CS said...

"Look at Figure 1"

Many of those countries are not in the Eurozone! The UK for example, or Poland.

And low wage competition from low-wage eastern Europe is driving down wages and inducing permanent stress in high-wage Western Europe, particularly the least competitive PIIGS.

Germany bucks the trend by snapping together cheap components from E Europe and Asia and selling the exporting the products as made in Germany.

Leo S said...

Marko - I commend you for having 2 people live in less than 600 sq. ft. Frankly, that is unrealistic for most people

I wouldn't say it's completely unrealistic. We have about 600-650sqft and for two people it's fine. Yes the storage cabinet is stuffed full, but we have a lot of outdoor gear and motorcycle stuff, etc.

The space is fine, but only until a point. Eventually you will want more for sure, whether that is because of family growth or just after a few years.

Hence you're far better off renting that space, then buying into a bigger place when you need it*

*unless you're a realtor that can wait 2 years for a pre-sale to be ready and then want to rent the place out when you move.

Marko said...

^^Ha Ha, Leo_S. I must admit, for full disclosure, owning in a building also has strong spinoffs for my real estate business. I am easy going and very approachable with my neighbours which has already resulted in one sale in my building plus as of last night I have 5 listings in the building :) I think my creative commission models also help...

Probably will never sell my unit at 834 unless a smarter REALTOR® buys into the building and starts taking listings from me :)

Just Jack said...

5 listings in your building. Hmmmmm.

S2 (Just Jack's wife)

Leo S said...

@Marko Nice!

patriotz said...

"The EU is far more integrated than the world as a whole will ever be, and not only have wages not converged there ..."

The problem within the Eurozone


Don't know the difference, or do you just think we don't?

Anyway even if you want to stick only to the Eurozone there is a huge difference in wages, e.g. Finland versus Portugal, and as I said that difference looks set to increase, not decrease.

CS said...

"e.g. Finland versus Portugal, and as I said that difference looks set to increase"

The difference is 2.5-fold, which is rather small as compared with the 30- to 40-fold difference between Bangladesh and Italy.

But, yes the difference between Finland and Portugal may need to increase if Portugal is to have full employment, which is what I said. And which is not possible within the Eurozone, which lacks an adjustment mechanism to deal with relative changes in productivity.

CS said...

Talking of apartment size, etc. this comment on the financial crisis as an urbanization crisis is interesting.

The message being that the process of suburbanization, which has driven Western economies since 1945, is reaching physical limits of both land and energy.

The implication is that revival of Western economies may not occur without a trend reversal leading to re-urbanization of suburbanized communities, i.e., Marko and others opting for limited living space downtown, may be at the leading edge of the next economic wave.

DL said...

I bet that old fella was saying the exact same thing thirty years ago, ie. one of the last times every one thought we were running out of land& energy. Here's an entertaining example. Never underestimate how wrong smart people can be.
For the next economic wave I think I will go with the same old same old. Falling energy prices.

CS said...

His point, that without a new construction boom Western economies will remain in recession seems compelling, and the Western World no longer has the demographics for a new construction boom. So unless the floodgates to Third World immigration are opened wide -- but Europe has done that without obvious benefit, and Canada appears intent on greater restriction.