Monday, September 10, 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. 

September 2012 month to date
Net Unconditional Sales: 97 
New Listings: 359
Active Listings:  4690
Sales to new listings ratio: 27% 

September 2011
Net Unconditional Sales: 458
New Listings: 1303
Active Listings: 4940
Sales to new listings ratio: 35%
Sales to active listings ratio: 9% or 10.8 MOI

It's ugly out there. If you were trying to sell your house last month, your agent probably told you things would pick up after the Labour Day long weekend. With just under 10 unit sales per day thus far, it's safe to say the "picking up" is closer to dropping off. 

Over yonder in the YYZ, the Competition Bureau is hearing a case against the Toronto Real Estate Board. It remains to be seen whether or not the case will have implications for all Canadian real estate boards or not, but suffice to say, this is a huge case. 

In one corner are agents who want to innovate and essentially automate the home buying experience, giving users the ability to bypass agents to access information they currently can't without a physical action by an agent. 

In the other is a bureaucratic board dominated by a few bloated brokerages with over $2 billion in annual commissions at stake. These folks believe you should have to call an agent if you want to know what your neighbour's house sold for--using the ridiculous claim that somehow knowing what your neighbour paid for their bungalow is "sensitive personal information" and that only a licensed agent is capable of determining whether or not you should know what they can easily look up with three clicks of a mouse. In other words, are you buying or selling anytime soon, or as they prefer to say to one another when we're not listening in: am I going to make 3 and 6 from these jokers or not? 

While I agree that there is a responsibility to protect homeowners for the industry, the reasoning of the TREB is well and truly the most egregious attack on common intelligence I've read in some time. 

Case in point: in B.C. every year, you can look up on the BC Assessment website what your neighbour's house sold for, if it sold last year. Otherwise you can see what the state thinks it should have sold for last July. Why does a real estate board feel this information is a breach of personal privacy? Here's the truth: they don't.

What's really sad in this whole pathetic affair is the fact that the TREB and their member agents believe their services are so devoid of consumer value that they have to resort to fear mongering in a pathetic attempt to protect their inflated commissions.

In case you were wondering, I'm wearing the Competition Bureau jersey in this playoff game.   

127 comments:

Al + TOH said...

In Ottawa, anyone can walk into city office and ask the sold price history record of any houses, as long as the sale was reported to the city (by the lawyers when they registered the title for the new owner).

I believe that you can do the same in Saanich as well.

So the sold price should a piece of public, not private, info.


It would be hard to believe that the city of Toronto doesn't hold this record.

Just Jack said...

I find it absolutely fascinating watching a market from beginning to end. Thanks for keeping your site alive HHV. Much appreciation from the Just Jack household.

S2 (JJ's wife)

patriotz said...

It would be hard to believe that the city of Toronto doesn't hold this record.

In Ontario land titles are public domain and can be accessed for a nominal fee by anyone, like in BC. Also assessment rolls in Toronto can be inspected at city hall or accessed on-line by any homeowner.

As HHV said, the real estate boards are fully aware of this. They're not trying to protect anyone's privacy, just to try to give their agents an edge.

Just Jack said...

It would have to be a pay as you go system for at least $300 to $400 a month. With rules on data mining. That means allowing your PC to be monitored. (It already is with your PC account)

There is no such thing as a "free lunch", you pay for the system through agents fees or as a user.

a simple man said...

New listing on Eastdowne for $719K. While it is a house that caught my interest, I am sure not going to buy it now that the price went up from the private sale price of $700K last week (which was too much as well).

Assessment is $635K. Start there.

It seems that in Oak Bay a house that has had all of the reasonable upgrades done and is well maintained now sells for around assessment. if not, start discounting from assessment.

a simple man said...

and it looks like it was recently converted to all electric baseboards - I really dislike when they do that.

dasmo said...

Curious to evaluate the listing Simple. Link? I went looking in the high 6's thinking I could find the final family home, move in ready in a nice neighbourhood close to the core and big enough for the family. No such luck. $690k and you still need to dump a 100k into it?! forget it...

DavidL said...

Over at the Globe and Mail, there is an interesting week-long debate between Ben Rabidoux and Eric Lascelles about household debt and the threat is may have on the Canadian economy.

http://www.theglobeandmail.com/globe-investor/great-debate/welcome-to-our-debate-on-household-debt/article4525989/

a simple man said...

Here you go, dasmo.

http://canadafinds.com/SharenWarde/h/49160

dasmo said...

The dasmo evaluation gives it a $629 tops. Looks a bit like a flipper with the reno choices (-20K). Backing on the ball park has it's irritations (-20k) no fence (-15k). Asking too much to start (-15k). Not strolling distance to the village or beach (-20k). Listing the lot size as 394,000,200 sq. ft (-10K).

a simple man said...

Which is right around assessed value!

Alexandrahere said...

DavidL: Thanks for the link. I will be reading the debate each day. Did you read the comments....and did you vote?

DavidL said...

@Alexandrahere

Re: Household Debt Debate
Yup, lots of interesting comments. Currently, 71% of people who have voted agree with Ben Rabidoux that debt is a major threat.

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

It would be so much easier if more data was available for both buyers and sellers. It would really weed out a lot of REALTORS® as consumers would look to those that can offer beyond the data.

The industry is slowly changing but it will take time. For example, we are up to approximately 50-60 flat fee MLS® listings in Victoria (out of 5,000) but I think in 5 years it could easily be 500 or 10% of market share.

Fun times to be a REALTOR®, or not.

arfenarf said...

In the "purely anecdotal" department:

I have *never* seen a string of price drops on my PCS feed (400-600k, OB, ESQ,VIC, Saanich panhandle) like I've seen in the last 48 hours.

Hmmm.

a simple man said...

@arfenarf - the sellers are starting to believe that there will be no bounce back in the near future, so they need to sell asap.

CS said...

To the prospect of an eventual interest rate rise can be added the fear of increased unemployment as Canada's trade gap widens sharply.

A more transparent housing market would probably be more volatile, as expectations would adjust more rapidly to current conditions and apparent trends. This would, in general, be a good thing. Instead of many vendors waiting futilely in a declining market for last year's price, they would either list at today's price or not list at all.

dasmo said...

But then the other dimension is all this QE and debasing of currencies might cause the value of your saved dollars to decline such that you can't save enough for that down payment to buy the cheap houses because milk and cheese will be so darn expensive.

dasmo said...

I should have broken up my run on sentence before publishing....

DavidL said...

@arfenarf

Ditto! I have similar criteria (SFH $350K to $650K, Vic, VicWest, Esq, Saanich East and West). I have 385 listings of which there are 16 price drops and 8 new listing in the past three days. The average drop is $18K. The amount of listing is down from a month ago when it was 412.

Just Jack said...

There are 27 homes for sale just in the Uplands neighborhood of Oak Bay! Asking prices are between 1.1 million to 8 million.

In August there was only 1 sale in Uplands. During the same time 5 new listings were added.

The median price over the last 12 months was 1.3 million. That bought you a well maintain 5,400 square foot home, circa 1970's, on a well landscaped half acre lot.

For the about the same price you could buy a custom 2007 built home with panoramic water view in Dean Park.

Or a 10 year old custom built waterfront home with an all year round dock along Squally Reach in Central Saanich.

Or a new 3,800 square foot home on a 5,400 square foot lot in Fairfield.

Or an Equestrian farm on 6.5 acres in Metchosin with a 1996 custom built home with over 4,000 finished square feet, barns, paddocks and a water view.

There are a lot of choices out there.

Marko said...

Best day of the month so far, sales coming in briskly today.

dasmo said...

JJ, I wish I was in the $4 million house market right now. I think I'd take the one with the car elevator on Gonzo beach.

DavidL said...

@Marco
Best day of the month so far, sales coming in briskly today.

Any theory why?

Just Jack said...

I suppose for a some people 27 listings may seem normal, but for the Uplands neighborhood that is somewhere between two to three times what is normally listed in this prestigious hood.

That's a lot of people trying to sell. Historically, Uplands has been the "it" neighborhood of Grater Victoria. But, that has been mostly due to the lack of alternatives for buyers. I don't see that anymore and I think the this and the next generation of buyers are going to be driven more by the amenities of the property and a healthier quality of life than a city location.

Just Jack said...

I bike past that home every week and always wondered what the inside looked like.

But alas, no boat house for my cigarette boat.

dasmo said...

True, No boat house! What were they thinking. This is why it's still on the market.

Alexandrahere said...

As most of you probably know, my pcs criteria is also for Vic,Esq,OB,SE&SW, min 2 beds, 2 baths priced between $375K & $775K.
During the past 4 days I have 15 new listings & 31 price changes.

My inventory is currently at 421. That is the lowest since the week of 28 May - 3 June, 2012. Since that week however the inventory has always been in the 400's. Inventory from the beginning of the year til the week of 28 May was entirely in the 300s. The peak inventory week for this year was 23-29 July at 474.

So far this week I have 9 sales with the average price at $534K.

patriotz said...

debasing of currencies might cause the value of your saved dollars to decline such that you can't save enough for that down payment to buy the cheap houses because milk and cheese will be so darn expensive.

Doesn't that mean that house prices will have to come down even more?

Think.

dasmo said...

I think house prices have gone up with inflation and not the opposite. So I wouldn't be so sure about that Patriotz. It would make the burden of my debt less though. I will have good reason to raise my rates along with inflation....

Just Jack said...

Housing prices on the fringe of a marketplace continue to roll back. Parts of the Gulf Islands are now back to 2005 price levels.

And our prices have also been eroding as the market contracts from the outside areas to the inner core.

But what happens to rents when buying a home becomes cheaper than renting the same home?

Will renters jump in to buy, causing our vacancy rate to skyrocket. Or will renters hold off from buying as property values continue to slide, giving them a larger down payment?

As I have said before, the rental market is the wild card in this game. If our vacancy rate continues to increase that will have an immediate affect on home owners. A change in the interest rate only affects home owners at renewal time. That means those areas that are heavily weighted with basement suites, like Fernwood/Oaklands could suffer more than others. As those suites had ballooned prices more than areas that did not have suites like Fairfield.


It can still get interesting in the next few months. We are seeing how a market unravels in real time. In the past, most of what we are seeing wasn't known, until some economic professor studied and wrote about the market years later.

Sure we make some wrong guesses about what will happen. But we don't have access to million dollar computer systems and an army of highly paid analysts. But we do get it right a lot of the time too. We were blogging about CMHC a lot sooner than the economists and media started to clue in.

dasmo said...

JJ, I read your posts with an old school radio reporters voice in my head.

patriotz said...

It would make the burden of my debt less though.

Only if wages keep up with inflation. That's the point you're missing.

Just Jack said...

"...it's a terrific crash, ladies and gentlemen. It's smoke, and it's flames now ... and the frame is crashing to the ground, not quite to the mooring-mast. Oh, the humanity..."

Herbert Morrison (May 6, 1937)

Marie Edwards said...

I dreaming of a house that will suit to my style but If I gonna mean to stay a house for 10 years I will not probably buy it.

chicago il condos for sale

dasmo said...

LOL JJ...

omc said...

The US fed has just anounced that it will keep rates unchanged till at least mid 2015.

Alexandrahere said...

Also, Google: Wall Street rises on Federal stimulus action.

"Stocks rose farther on Thursday after the U.S. Fed. Reserve launched another aggressive stimulus program saying it will buy $40 billion of mortgage debt each month and continue to purchase assets until the outlook for jobs improves substantially."

a simple man said...

And this from the Financial post - wow:

"The Federal Reserve launched another aggressive stimulus program on Thursday, saying it will buy US$40-billion of mortgage debt per month and continue to purchase assets until the outlook for jobs improves substantially"

a simple man said...

sorry for the duplicate post.

SilverSurfer said...

re:Fed printing (again!)...And some people still don't get why investing in precious metals er... real money makes sense.

dasmo said...

I have some gold, but the same principle applies the real estate (bubble and prices aside). Having something real is better than a stack of paper that the power that be can simply devalue at a whim. That said, you Shouldn't overextend to buy a home because of that. Better to buy gold until you can afford a home;-)

Introvert said...

The US fed has just announced that it will keep rates unchanged till at least mid 2015.

So glad I happen to be highly indebted right now, rather than desperately trying to attain returns on investment that barely exceed the rate of inflation.

Of course, the circumstance in which I find myself is not as a result of my economic acumen; it’s a matter of dumb luck.

CS said...

Yes, continued money printing means rising prices, but not all prices rises will be equal. Over the last few years fertilizer has done better than gold. In the next few years gold may do better than real estate, if rising inflation pushes up interest rates and limits housing affordability.

Likely, also is that housing prices will diverge according to segment. The price of a bung may stagnate or fall with inflation whereas the Oak Bay waterfront spread, purchased with spare cash or hot money, may increase in price. In the UK house prices are generally falling but the house of a Former Lebanese Prime Minister has just gone on the market for half a billion dollars.

John Williams makes a good case for US hyperinflation beginning by 2014.

But what does this mean for Canada? The loonie is strong at present. Will it remain so, and even become a haven for US investors? Or will we replicate the American program to dispossess the middle class?

Leo S said...

So glad I happen to be highly indebted right now, rather than desperately trying to attain returns on investment that barely exceed the rate of inflation.

In summary, a highly leveraged investment that is devaluing is better than non-leveraged investments that are growing slowly.

Got it.

Introvert said...

In summary, a highly leveraged investment that is devaluing is better than non-leveraged investments that are growing slowly.

Got it.


Devaluing, right now. Growing slowly, right now. When? Right now.

And if inflation ever becomes a problem, which it someday might, then it is advantageous to be a debtor, not a saver.

totoro victoria said...

Yes, if you are invested for the long-term in an asset that has historically appreciated over the long-term and if you would rent it anyway.

totoro victoria said...

and extra yes if your gains are tax exempt upon final sale. another yes if you have rental income.

totoro victoria said...

I buy a house for $600 000 with $120 000 down. In year six it finally appreciates 6% over purchase - or $36,000in one year.

That is $6000/year or 5% per year on my initial investment tax exempt even though it depreciated first and then appreciated back up again. Gains compound if prices continue to appreciate.

Historically, real estate has appreciated 6.52% in Canada per year (between 5-9% depending on region).

Of course, if you have sell after one or more depreciation years, the calculations work in reverse.


a simple man said...

From the TC:

"The B.C. government is going to have to slash spending, freeze hiring and review its bargaining mandate with already-unhappy unions to make up for more than a $1 billion in revenue that has disappeared due to low natural gas prices, says the finance minister."

Introvert said...

"The B.C. government is going to have to slash spending, freeze hiring and review its bargaining mandate with already-unhappy unions to make up for more than a $1 billion in revenue that has disappeared due to low natural gas prices, says the finance minister."

Not enough revenue? The province could always raise taxes (gasp!). Our personal and corporate rates are among the lowest, if not the lowest, in the country.

patriotz said...

And if inflation ever becomes a problem, which it someday might, then it is advantageous to be a debtor, not a saver.

What were interest rates like last time inflation was a problem? What were house prices compared to incomes and rents?

Introvert said...

What were interest rates like last time inflation was a problem?

Quite likely, I'll be locked in to an extremely low interest rate when inflation goes bananas. And if interest rates are still high when my term expires, at least my principal will be a fraction of what it once was.

As for house prices, there will always be another boom. It's just a matter of time. And believe me, I got time: I'm on a 25 to 30-year time horizon for selling my house.

DavidL said...

Let's look at a scenario where interest rates remain low but annual wage/salary increases are below the consumer price index (CPI). Imagine also that consumable items such as food and energy steadily increase - significantly outpacing the CPI (which are conveniently not included in the calculation). In this case, the basic costs of living (consumables plus shelter) continue to increase each year - as a percentage of your income. Does this sound familiar?

* According to the Bank of Canada inflation calculator, $100 in 2002 is worth $120.80 in 2012 - so almost 21% inflation over 10 years.

In contrast:

* In 2002, BC Hydro was charging 5.40 cents/kWh - but now is charging between 6.80 cents/kWh (tier 1) 10.19 cents/kWh (tier 2). In my typical 1970's baseboard heated house, I currently average 8.79 cents/kWh - so a 63% increase over ten years.
* Eight years ago, gasoline cost ~80 cents/liter and now hovers around $1.28 - for a 60% increase.
* Food is much harder to estimate, but in 2002 wheat was being purchased by the CWB for about $198/tonne while in 2011 is was averaging $340/tonne - 72% increase.
* Real estate in Victoria has essentially doubled in the past 10 years - 100% inflation.

Long-term fixed rate mortgages are backed by long term bonds. Variable rate mortgages are set by the "overnight rate" determined by the Bank of Canada. Hyperinflation is not going to happen - because it doesn't need to. Each year, the cost of living increases - meaning that you'll have less cash on hand to return to the local economy. Devaluation of currency can (and does) occur without further inflation. Why do you think all the big corporations are hoarding cash? They must be on to something ...

Sources:
CPI: http://www.bankofcanada.ca/rates/price-indexes/cpi/
Inflation calculator: http://www.bankofcanada.ca/rates/related/inflation-calculator/
Gas prices: http://www.GasBuddy.com/gb_retail_price_chart.aspx?city1=Canada%20Average&city2=&city3=&crude=n&tme=96&units=ca
Wheat: http://www.cwb.ca/public/en/farmers/producer/historical/

Leo S said...

Devaluing, right now. Growing slowly, right now. When? Right now.

??

I buy a house for $600 000 with $120 000 down. In year six it finally appreciates 6% over purchase - or $36,000in one year.

Sure, but that doesn't make it necessarily sensible to buy. Many investments are now above their 2008 levels, and yet 2008 was still not the time to buy them.

Historically, real estate has appreciated 6.52% in Canada per year (between 5-9% depending on region).

Source?

patriotz said...

Quite likely, I'll be locked in to an extremely low interest rate when inflation goes bananas.

In other words you're not locked in now. Actually nobody in Canada can lock in even 10 years at extremely low rates today. Well good luck anticipating a jump in interest rates ahead of the rest of the planet.

totoro victoria said...

Source: http://2020groupinc.com/properties/five_advantages.aspx

referencing CMHC report - not sure where this is and may be biased given the website.

Other studies say between 5 and 9 - will try to find again.

LeoM said...

Demographics may play a huge role in the future of real estate prices in Canada. I read an article last year (can't find it now)where the author postulated that Canada's housing prices were going into a nosedive over the next 10 years as the baby boomers change their lifestyle by selling their home and their rental properties and cottages and move to small accommodations. The article stated that it would be almost impossible to prevent such a nosedive unless the immigration floodgates were opened to highly educated entrepreneurs who would work to create a new Canada based on global economic business. Apparently the baby boomers and the old industries and the socialist system in Canada could not be supported beyond about 2020 without major changes throughout all Canadian society. But the baby boomer demographics alone was deemed to be serious enough in itself to sink the real estate boom for the next 25 years.

The following link is not the article I read last year, but this articles does touch on the same issues, just not as eloquently as the article I read last year.

http://canadabubble.com/bubble-article-list/1345-primer-5-the-role-of-demographics-in-canadas-coming-housing-bust.html

I don't read this blog every week, so my apologies if this has already been said before.

Leo S said...

@LeoM. There will certainly be a headwind from selling boomers. Ben has covered this in the past.

This idea of boomers becoming net sellers of real estate was explored in a fantastic paper in the Journal of the American Planning Association. It concluded that people become net sellers of real estate after the age of 65, while net buying of real estate is most pronounced between the ages of 25 and 35.

The link to the original paper is broken there, but here it is. Well worth the read. Have a look at figure 3 on page 23.

totoro victoria said...

I wonder about the 65 yr. average selling age. Neither of my sets of grandparents did this until in their late 70s and early 80s. I expect financial and physical health plays into it.

It seems most folks I know do not move out of the their home until as late as possible. My parents have no plans to downsize until health requires it.

Not sure how much personality plays into this as well. I'm a homebody myself and am okay not moving again.

I expect, as the paper points out, there are marked differences in the ages by states. BC appears to be a retiree heavy province and would likely have a higher than average age for selling, as does Arizona (after 70).

Leo S said...

It seems most folks I know do not move out of the their home until as late as possible. My parents have no plans to downsize until health requires it.

I think that's probably the primary reason behind the net selling. Some people will need to sell for the money but most are likely "forced" out due to health reasons.

patriotz said...

I wonder about the 65 yr. average selling age.

That's not the average selling age. That's the age at which the group as a whole becomes net sellers. For example, if nobody aged 65 is buying and 1% of them are selling, they are net sellers.

Marko said...

^I haven't seen this downsizing trend to a great extent personally. I've seen lots of 70s/80s individuals continuing to hang onto their 3000-4000 sq.ft. Broadmead/Dean Park homes.

Leo S said...

And yet people still fall ill or die at the same rate as elsewhere, and therefore sell their houses. The sea air only goes so far!

Just Jack said...

What have all these elderly people done with their rental properties?

They sell them for their retirement. Isn't that the plan?

Most of the baby boomers and generation X'ers seem to own multiple properties in Victoria. I asked 5 couples at a party once, how may properties they owned.

They owned 15 properties combined.

What happens to those properties when they start to retire?

-Actually one has just retired and sold his properties

Marko said...

A lot of them pass their properties on to their kids, or the kids sell and buy something else with the proceeds.

PD said...

The life expectancy of baby boomers is only
66 for men and 71 for women. According to Statistics Canada.

I know someone with close to forty properties who's about to start selling.

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

"The life expectancy of baby boomers is only
66 for men and 71 for women. According to Statistics Canada."

At birth that is...for those baby boomers that are still alive I am sure life expectancy is well over 80 years old. Even at 90 years old your life expectancy is about 1.8 years.

I think at 80 it is about 7 or 8 years.

Happy camper said...

Pd - regarding the stats canada info - yes, at birth that is correct for boomers but it's about survival of the fittest so the 'weak' boomers are pulling the numbers down, but they are deceased. The remaining boomers will surpass those averages.

Leo S said...

The issue is not what some people do or don't do.

A larger group of people are entering into their net selling years. So where boomers used to boost real estate, they will now drag on it.

The shift is in progress. When exactly the crest is for Victoria is hard to tell (as totoro said, likely at a higher age like in other retirement destinations). However the non-growth of retirement destinations like Sidney hints that the influx of boomers has already dropped to the point where it can't replace the people dying off.

It's not a catastrophic effect on the housing market, it's just a shift from an approximately 1% annual boost, to a ~1% annual drag. One of the many additional headwinds that the market faces going forward.

PD said...

A Vancouver realtor shows the net seller crestfrom that study. I don’t know if it will be too big an issue, as long as we can fill in the drop off in net buyers with immigrants.

a simple man said...

Most immigrants cannot afford to buy here at these prices, and the ones that can mostly consider this a backwater locale (ie. Mainland chinese).

DavidL said...

@Just Jack
Most of the baby boomers and generation X'ers seem to own multiple properties in Victoria. I asked 5 couples at a party once, how may properties they owned. They owned 15 properties combined.

But do they actually own them outright - or are they still paying a mortgage on them. I am astounded by boomers I know in their 50 and 60's who have taken out 25 or (until recently) 30 years mortgages.

As a generation X-er, I can report that I own 85% of a single property.

dasmo said...

If you owned forty properties and are planning to sell them all you must have no kids or are planning one hell of a vacation! That's a lot of income, why sell?

Introvert said...

^I haven't seen this downsizing trend to a great extent personally. I've seen lots of 70s/80s individuals continuing to hang onto their 3000-4000 sq.ft. Broadmead/Dean Park homes.

Case in point, my 82-year-old grandmother who lives by herself in a massive house, high up in Broadmead, with panoramic ocean views. Bought in 1986. She tells me she'll never downsize, and with a house like hers I don't blame her.

reasonfirst said...

BC Govt hiring freeze:

http://www.vancouversun.com/business/projected+deficit+grows+because+falling+natural+revenues/7237291/story.html

Can't be good for Vic RE

Happy camper said...

Age trends are not the same as cohort trends. What an 82 year old does today may not be the same as the behaviour of a typical 82 year old in 20 years. The third factor are the period trends so a major event such as a war would modify behaviour as could an environment change, change to CPP/OAS system, etc.

Just Jack said...

The reality of an 82 year old living by herself can be completely different. It will likely NOT be her decision to sell. Her mental and physical capabilities can drastically change over an extremely short period of time.

Leaving pots burning on the stove. Forgetting to take her meds or over dosing on them. A broken hip where she is left on the basement floor all day.



dasmo said...

But by the numbers it looks like in the next ten years the net buyers will be slightly more than net sellers? The demographic numbers are also deceiving because they drop in the younger ages due to the fact that there are not a lot of 0-14 year old immigrants. I don't buy the baby boomers aging as braking the back of anything except maybe our already broken health care system.

totoro victoria said...

I don't know. I personally plan to hire a trained live-in caregiver if the time comes that I need it so I can stay in my home.
I have bought a house that can accommodate this choice already.

At less than $1500/month, it is cheaper than most care homes and seems to work well. Hopefully my kids will want to stay in one of the units as well if I give them a deal... maybe we can split the caregiver between grandkids and grandparents :)

I do; however, agree re. the rental properties. That is certainly my plan. Sell two, pay off two (one vacation place) and be done with mortgages when I retire. I expect a lot of retirees would not want to continue managing rentals.

CS said...

Life expectancy at 65 in Canada in 2007/2009 was 20.2 years.

Leo S said...

The reality of an 82 year old living by herself can be completely different. It will likely NOT be her decision to sell. Her mental and physical capabilities can drastically change over an extremely short period of time.

This. I don't understand the counterarguments with examples of people not wanting or planning on downsizing. That's completely beside the point.

Some people plan to downsize. For the others, every single person will eventually be forced out of their home because of poor health or death.

The exact average age when people become net sellers is debatable, the fact that they do is not.

dasmo said...

Sounds like the price of condos will be going up ;-)

DavidL said...

@dasmo
Sounds like the price of condos will be going up!

Maybe only ground floor units ... Having to walk any distance with groceries (including to/from elevators) can be daunting when you are mobility challenged.

Leo S said...

Maybe only ground floor units

Or those 55+ buildings that are selling at a nice discount right now.

hap pychucky said...

People in Broadmead do not downside they get taken away in an ambulance upon their death. Alot of 70 and 80 year old refuse to leave their houses. I would not count on that as a driver of lower prices. Pretty amazing to see these people. There will be business opportunities for honest people to help these older home owners.

Introvert said...

People in Broadmead do not downside they get taken away in an ambulance upon their death.

Morbid, but true.

hap pychucky said...

A lot of older people feel their house is their castle and parting with it means they are losing their independance ( not sure that is the right word).

This is not always the case but u just have to watch this in certain neighbour hoods built to the 70`s.

indubidably said...

Wrong end of the scope folks! Net sellers, aka retirees, will eventually overwhelm the market but the immediate threat is on the other end -- declining households formed. The largest bunch of babies ever born in a year was 1959. Recall what happened when these babies finished college, got a job and their own place at age 22? climactic crescendo~
Now the same thing, as the last of their children turn 22. The destabilisation starts from a shrinking gang of renters leading investors to hit the sell button.

Leo S said...

People in Broadmead do not downside they get taken away in an ambulance upon their death. Alot of 70 and 80 year old refuse to leave their houses. I would not count on that as a driver of lower prices.

There is no difference to the market between someone downsizing and someone dying. Except perhaps that the place will go for cheaper in an estate sale.

dasmo said...

There isn't a population cliff after the boomers is there? There is just a spike and then a big blob following them. I really don't see how that is so alarming. Can someone show some graphs or stats that illustrate there will be no more people left after the boomers die?

Just Jack said...

The big drop off in the boomers happened with the introduction of the birth control pill around 1962 or 1963.

Mom no longer had to have 5 children and stay at home drinking Gin all day. She could go and get a job and Dad could stay home and drink Gin all day.

Ten years later the double income family sparked a property boom. That crashed with the Oil Embargo.

Later, the first of the baby boomers began a property boom around 1980. That crashed with run away inflation and interest rates in the high teens. The generation X'ers born after 1963 had only started turning 21 when the market took a dive for a decade. That generation got screwed over.

a simple man said...

Quite a number of properties for sale in Broadmead - who are these people?

Leo S said...

Can someone show some graphs or stats that illustrate there will be no more people left after the boomers die?

The world must look odd in black and white

JustWatching said...

Marko - This is for you...

Croatia gives more perks for real estate investment

dasmo said...

Trust me, I see many shades of grey...My exaggerated point was made to highlight that the rhetoric surrounding the boomers was being repeated here in the land of analysis. When I look at the numbers it doesn't seem so alarming. If I should be alarmed I would like to be so if someone has some alarming stats surrounding this subject please share them.

Doug N said...

So maybe each decade since the boomers has similar baby counts, but will those generations behave the same and buy big houses and investment condos, or is that unique to the initial boomers opportunistic position of being first to the mark and able to profit from it?

The bubble may not be in baby counts but behavior tendencies. IMHO

Marko said...

I made a short video on real estate while I was in Croatia.....not cheap on the coast, foreigners driving up prices.

Video: http://www.youtube.com/watch?v=5pe81KKEjg4&feature=share&list=UUSrYC4Rdl2gbHaAdo-TxMxQ

indubidably said...

Today’s Canadian Business magazine story:

http://www.canadianbusiness.com/article/98306--canada-s-housing-crash-begins

Leo S said...

My exaggerated point was made to highlight that the rhetoric surrounding the boomers was being repeated here in the land of analysis.

What rhetoric? There are links to several in-depth articles. Did you read them?

When I look at the numbers it doesn't seem so alarming.

No one says you should be alarmed.

It's just the facts that a big bulge of people that previously boosted the market are slowing their buying, and are transitioning to selling more than they buy.
That has the effect that they are boosting the market less and less as time goes by, and eventually will put a drag on the market. The academic theory is that the total effect is in the +-1% range.

The author also calculates that demographics alone will have a 1% per year drag on house prices over the next 40 years. This is not to suggest that house prices will fall by 40% over 40 years. We know that house prices are largely influenced by income growth, inflation, credit availability, interest rates, and un-quantifiable psychological factors. Rather, the paper is arguing that even if the underlying fundamentals improve markedly (and we know they are terrible at present), there will still be a headwind of 1% per year simply because of the net selling of homes by the boomer demographic.

So , as an example, where residential real estate might otherwise appreciate at 4% annually, the impact of demographics will drag that down by one full percentage point per year.

Leo S said...

No new info here, but it does link to another rent/buy spreadsheet I haven't seen before.

Financial Post - Why it's better to rent than buy

And the spreadsheet

Just Jack said...

That would make the long term growth potential for real estate to be keeping up with inflation or about 3%. But first, prices have to roll back to pre-boom values in real dollars.

For the long term and in real dollars, your home will never be worth more that it is today.

You have the winning lottery ticket, your just choosing not to redeem it.

Just Jack said...

A question for all of you smarties.

You, own a principle dwelling and a rental property.

You sell your principle home and move into your rental property.

You are exempt from Capital Gains tax on your principle home. And when you moved into your rental, CRA deemed the rental property to have sold on that date. And you now owe Capital Gains tax on the formerly rental property.

Do you have to pay the capital gains tax in that tax year?

totoro victoria said...

A deemed disposition will also occur if you convert a rental property into your principal residence. In this case you can make a parallel election under subsection 45(3) which will defer the capital gain resulting from the deemed disposition until you actually sell the property. You will also be able to designate it as your principal residence for up to four years prior to the deemed disposition. The election is made in the year in which you ultimately dispose of the property. Again it will only be allowed if you never claimed capital cost allowance during the years you were renting it out.

The Canada Revenue Agency provides Form T2091 Designation of a Property as a Principal Residence by an Individual for designating a property as your principal residence. However, the form only has to be filed if there is a capital gain to be reported on the property in the year you dispose of it. If you are able to designate the property as your principal residence for all the years you owned it, there will be no capital gain to report and Form T2091 will not be necessary.

Al + TOH said...

Totoro said: "You will also be able to designate it as your principal residence for up to four years prior to the deemed disposition."

True, but the condition is that you don't have another principal residence at the same time (during this four years).

Animal Spirit said...

Just jack - Queenswood?

a simple man said...

The long-awaited Sandowne flip is one again testing the market waters at $840K (purchase May 20, 2011). They are down from the $880K they tried in the spring for a week or two.

The market has changed a lot since then.

dasmo said...

I have no sympathy for flippers and will gladly join in on that Schadenfreude...

patriotz said...

BC Assessment says 2190 SANDOWNE RD sold for $639K 3/Jun/2011 (that's the closing date).

They must have put close to $200K into those renos: "flooring,bathrooms,gas fireplaces,dream ensuite, windows,roof,stucco,large family kitchen with jen air range and two ovens,on demand gas hot water,roof guard gutters,two large sun filled patios for outdoor living,easy care landscaped private yard with u/g sprinklers,and many other features."

So the question now is how much money are they going to lose.

JustWatching said...

Totoro Victoria,

Does AL+TOH's comment have any tax impact on you?

Totoro said: "You will also be able to designate it as your principal residence for up to four years prior to the deemed disposition."

AL+TOH" "True, but the condition is that you don't have another principal residence at the same time (during this four years)."

totoro victoria said...

Nope. I knew that. I'm not too worried about capital gains. No plans to sell for seven years at which point. The market is not currently appreciating. When prices start to rise again I will determine which residence to deem principal and move there for some time prior to selling. I will have to pay capital gains someday for some years on some property but I will be pleased to have that problem. The bigger the better :)

a simple man said...

@patriotz - add property transfer taxes ($10,780), legals fees (twice ~$2500) and realtor fees (~25K) and you are already at $38,000 in expenses without considering renos and holding costs.

Alexandrahere said...

JJ: You don't have to pay capital gains until after you actually sell the property. When you do move into the rental property, you should get a few appraisals at that time and keep them on record. Also make sure you keep records of any reno's, upgrades to the property afterwards. When you do sell, you must pay capital gains by the year after the sale. You keep the records incase it becomes "fishy" that you sold the house for so much more than what you deemed the capital gain was... say a couple of years earlier. This way you can prove that you did the upgrades after you moved in. Always keep your proof.

totoro victoria said...

I would agree. An appraisal is peace of mind for locking in gains prior to converting to a rental.

Al + TOH said...

WRT principal residence destination: for people with multiple properties, you could chose to declare which one is principal residence, only if none of them have (long) rental history, say between your city house and the cottage. But if there are rental incomes reported on a property for a few years and you own and live in another house in the same city, CRA may question your choice of the principal residence status if you declare it on the rental house for the rental years.

We owned a house and rented it out for 3.5 years before we moved here and then sold it one year later after we bought and moved to another house. I called CRA and had multiple lengthy discussions with them wrt how to report the CG on the sold house. There are more to it than what you read on their web site.

So don't assume that you can declare principal residence at will for a property with rental history for the rental years, ask CRA first.

TOH

totoro victoria said...

You have to "ordinarily inhabit" the reidence. If you rent it out this caLls into question this aspect of the test. There is a CRA bulletin on this.

totoro victoria said...

Bulletin: http://www.cra-arc.gc.ca/E/pub/tp/it120r6/it120r6-e.txt

Marko said...

Monday, September 17, 2012 8:00am

MTD September
2012 2011
Net Unconditional Sales: 208 458
New Listings: 671 1,303
Active Listings: 4,716 4,940

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

JustWatching said...

In the first four business days of September there were 97 sales. (Labour Day made for a short week). In the last five business days there were 111 sales. At this rate we should hit 430 sales for the month.

Looks like there will be 6% fewer sales than last year and 2011 was one of the lowest years in the last decade.

What happened to the fall bounce the REALTORS® were talking about a few weeks ago?

a simple man said...

The bounce?

The ball has turned into an anchor.

reasonfirst said...

It's not a bubble, it's not a balloon, it's a leaky ball...

JustWatching said...

Sooke REALTORS® must be buying Kraft Dinner these days. There are 35 of them and only 11 sales last month (9 SFH and 2 townhouses)

Sooke Newspaper - Housing market slow

JustWatching said...

Today's RE news...

BCREA says BC Home Sales Continue to Trend Lower

The British Columbia Real Estate Association (BCREA) reports that the dollar volume of homes sold through the Multiple Listing Service® (MLS®) in BC declined 25.4 per cent to $2.6 billion in August compared to the same month last year. A total of 5,337 MLS® residential unit sales were recorded over the same period, down 17.9 per cent from August 2011. The average MLS® residential price was $491,145, 9.0 per cent lower than a year ago.

Mortgage rules cause Vancouver real estate slump

Vancouver home sales and prices are plunging due to tighter mortgage lending regulations imposed by the federal government, the British Columbia Real Estate Association announced Monday.

Just over 5,300 homes changed hands through the Multiple Listing Service in August -- a nearly 18 per cent dip compared to the same month last year.

Prices were also down about nine per cent over the same period, with the average residential home fetching just over $491,000.


But BCREA's chief economist says don't worry

"Tighter mortgage credit conditions introduced in July appear to be taking a toll on an already tentative market. However, with home sales slower than improving economic conditions suggest, a rebound may be in store before year-end."

But Cameron look at this graph you published comparing this year to 2011. Looks downhill to me. And didn't the BC Finance Minister sound the alarm on the economy last week?

JustWatching said...

More RE news this time from the CREA...

Canada home sales drop in August, forecasts cut

Sales of existing homes in Canada dropped in August from July, notching the biggest month-over-month decline in more than two years, the Canadian Real Estate Association said on Monday as it cut its sales and price forecasts for this year and next.

The industry group for Canadian real estate agents said sales were down 5.8 percent in August from July. Actual sales for August, not seasonally adjusted, were down 8.9 percent from a year earlier.

The drops prompted CREA to cut its sales and price forecasts for 2012 and 2013, saying a move by the Canadian government to tighten mortgage lending rules to cool the red-hot housing market had effectively dampened demand.

totoro victoria said...

http://www.huffingtonpost.ca/2012/08/08/house-prices-down-decade-scotia_n_1756792.html