Thursday, September 27, 2012

Slow times at Victoria High

It's a sales-free zone out there folks.  The only hotbed of activity is the comments section of this blog where we've managed to rack up 60 comments a day this week.

Just how slow is it out there?  Well last week I saw 12 SFH sales in the core areas under $550k and 17 from there to $900k.  So far this week I'm at 3 and 5 respectively.  Some more will come of course.
From the depths of page 2 in the comments come similar reports:
I've got one sale on my main PCS in the last four days - SFH <575 core areas + Brentwood. Are others seeing the same in their PCS accounts, or are there higher end sales happening? - Animal Spirit
We might have close to 125 house sales in the core districts this month, compared to 163 for the same month in 2008. There are about 835 active house listings now.  The Western Communities had 77 home sales in September 2008 and should have around 55 this month with an inventory of 635 listings.  The Gulf Island have some 410 listings and are on track to have 25 sales this month. - Just Jack 
Made a lowball offer on a place but after a bit of back and forth we were still miles apart.  We're offering 2013 prices and they're still in 2008.  Near as makes no difference to 5000 listings out there but there really isn't much that's interesting.  The stale listings are showing up as rentals instead on craigslist.  Wonder how that vacancy rate is going to look?

291 comments:

1 – 200 of 291   Newer›   Newest»
koozdra said...

I don't think its low ball time yet. Reality just hasn't sunk in.

Marko said...

We've had ridiculously low sales almost every single month since May 2010 - that is almost 2.5 years ago, the market is not going to tank overnight.

September will be slow but still will easily exceed 2010 and be close to 2011. People are watching too much TV and getting a bit too excited....

Marko said...

"Many of you are looking to buy in Oak Bay. 1017 Monterey just lowered their price by 20K to 529K.

This one is getting ready to leave the dock. Delay and you will miss the boat!"

Hmmmmmm....638 Victoria Ave sold a year ago for $500,000? Similar size lot, closer to the water.

Just Jack said...

I doubt that a low ball offer is going to work in the core areas of Victoria. Although it may be worth while for prospective buyers to educate themselves on how to present an offer on a distressed property.

Marko, have you had any experience in marketing court ordered sales? That information may be helpful for some of the members of the blog.

I doubt that the market will tank too. Although, the affordability numbers that DavidL provided were an eye opener to me. I had not crunched any numbers using a 25 year amortization, so I was surprised at how much that 5 year difference affected affordability.

"May you live in interesting times"

Leo S said...

September will be slow but still will easily exceed 2010 and be close to 2011. People are watching too much TV and getting a bit too excited....

September 2010 had only 395 sales, but also only 4323 active listings (10.9 MOI).
We're going to be at ~430 sales with some 5000 listings. If so, we would be the highest MOI since Jan 2009. We'll see in a couple days.

a simple man said...

the fact of the matter is that the market has been staggering for 2.5 years now and the gov't is shutting the tap on cheap credit. The market just does not have the legs to stay off the mat for too much longer.

JustWatching said...

My PCS accounts have a total of 779 listings. This week (Mon-Thurs) there have been 17 sales. Market looks weak to me...

H.Peter said...

Vancouver island and the city of Vancouver were the only canadian options when we wanted to leave Calgary.

I am glad we came to Europe. Though not all is golden that shines, our lives are better now. Mostly because Europe forces you to choose between wants and needs more.
No 4.00 lattes in a paper cup. 1.50 Espressos more lik it.

http://theceliachusband.blogspot.fr/

totoro victoria said...

I think it is actually a good time to go in lower in Oak Bay if you are ready to buy and don't want to try to wait longer. You have a higher number of homes on the market and lower sales volume. There will always be folks who have to sell and consumer confidence will be lower for some sellers right now.

As far as vacancy rates go, I had absolutely no problem leasing two properties for fair market value for well maintained units. I had several competing offers.

dasmo said...

There are a LOT of un-maintained crappy rentals out there. I just rented our place and they were describing the nastiness of their last place... This is more good news for the renters out there.

The market has been staggering for five years.

My theory is the lending restrictions are in place because a rate cut is coming....

koozdra said...

@dasmo

Why would lending be restricted prior to a rate cut?

dasmo said...

So that it doesn't push real estate values higher.

koozdra said...

After the rate cut, do you think credit will also be restricted?

Leo S said...

There is no indication of a rate cut. All the messaging is the opposite. Economy still growing.

dasmo said...

In what way?

DavidL said...

In the past 3 days, my PCS show 9 new listings, 1 sold and, 19 price changes. Anyone want to guess if any of these price changes were increases? ;-)

dasmo said...

"in what way" was for koozdra...

for Leo; Uncertain economic outlook in China, benign inflation, a high
dollar and "Continuing high household debt levels in Canada could lead to a sharperthan-expected deceleration in household spending. Relatedly, if there were a sudden weakening in the Canadian housing sector, it could have sizable spillover effects on other areas of the economy." It's in the best interest to drop rates, to hold the line.

PD said...

dasmo,
I think you are forgetting how quickly house prices dropped when interest rates dropped in late 2008.
http://www.fin.gc.ca/pub/report-rapport/2009-2/images/eng/capc1_1.13-eng.gif

JustWatching said...

Today's RE news....

Globe & mail - B.C. property prices a lesson for provinces

Jacques Marcil, senior economist at Toronto-Dominion Bank, points to British Columbia as a signpost that the rest of the country should pay attention to because the province’s average resale home prices have fallen this year – the only province experiencing a decrease from last year’s average.

In a new provincial economic update, TD forecasts that average prices for existing homes in B.C. will decline 8.9 per cent this year. It is a steeper drop than TD’s previous June prediction for a 4.6-per-cent decrease in 2012, driven by a slowdown in Greater Vancouver’s housing market.

hap pychucky said...

PD

2 had nothing to do with each other

Try looking at what happened to the unemployment rate, gdp, stock market and the confidence in the economy. That is why house prices dropped in 2008.

Interest rates fell to stimulate the economy out of the mess.

PD said...

hap pychucky,

Interest rates fell because people fled from risky stuff (real estate and stocks) to safe stuff (bonds). You might want to brush up on how bond markets work.

Try looking at what happened to the unemployment rate, gdp, stock market and the confidence in the economy. That is why house prices dropped in 2008.

The same thing that's happening now. Unemployment rising. Gdp and stocks falling.

JustWatching said...

Seems like deja vu when it comes to the comments made by new "happy owner" posters on this blog. The names change but the theme remains the same.

- Prices won't drop that much because the government will do something to prop up prices (interest rate cuts, change the mortgage rules etc.)

- Victoria is the best place in the country. Sometimes this is accompanied by favourable comparisons to world class cities. This is usually followed by dissing other cities in Canada (Edmonton, Calgary, Ottawa etc.).

- I am in it for the long term and prices will go back up and reach new highs. Usually accompanied by I am secure in my job, health and personal affairs so I won't sell until I get more than I paid.

- Suite rental income is the answer to falling home prices. Get the renter to pay the mortgage while my equity drops. Leverage is your friend?

Over the years many "happy owners" have kept long-term readers entertained. I truly miss one of the best "Sitting Pretty" from Oak Bay. Newcomers might want to read the archives and get some pointers on writing style and bear poking techniques. Really great stuff.

hap pychucky said...

PD

OMG if you are comparing now to 2008, you have lost your marbles.

GDP is 2%, stock market is not down
and unemployment is 7.3 in Canada. Stable Get the facts right bud.

Second of all I was referring the overnite rate controlled by the bank of canada, not bond rates.

http://www.tradingeconomics.com/canada/unemployment-rate

dasmo said...
This comment has been removed by the author.
hap pychucky said...

Justwatching

Facts are average sales price is still 600k for a SFH, even with all the crashing of prices on here.

Outstanding listings is the same as last sept. Sales are still the same.

So all the wishfull thinking of crashing prices have not materialed in Victoria.

dasmo said...

It's interesting how all those things have held true for the last number of years...
It is true though this is a very repetitiousness discussion. But that's because there has been no answer one way or the other, just a saw tooth flat line. That's one for us Halibuts!

(edited to fix auto spell check)

dasmo said...

well, not all of them...chuckle.

JustWatching said...

Forgot to add this one to the list..

- DENIAL Prices haven't fallen. Look at the average SFH price.

Please keep it up "happy owners". We all need laughter in our life...

PD said...

hap pychucky,

OMG if you are comparing now to 2008, you have lost your marbles.

GDP is 2%, stock market is not down
and unemployment is 7.3 in Canada. Stable Get the facts right bud.


Let me introduce you to a view of the Canadian Venture Exchange, what used to be Vancouver’s Stock exchange, now headquartered in Calgary. Would you say that’s up or down lately?
Wow, a whole 2% GDP. The worst post-recession showing in a century. I wonder which direction it is heading now that house prices are falling? I’m quite sure Victoria’s unemployment rate went up last month but feel free to correct me if I’m wrong.

hap pychucky said...

JW

http://www.vreb.org/pdf/vrebgap.pdf

Having a hard time seeing the falling prices. To me this looks like the typical movements over the past 5 years.

Marko said...

Another viewpoint ->

http://www.theprovince.com/business/Vancouver+housing+bubble+doesn+exist+real+estate+expert+says/7208209/story.html

JustWatching said...

I am currently tracking SFH in the range 390-620K in Saanich (East, West, Central).

247 listings
130 have one or more price reductions
7 sales this week

Most of the price reductions are around 15K to start. A quick scan showed some with high DOM have dropped prices by 60K

hap pychucky said...

JW

These are the facts off of VREB

Greater victoria mean SFH prices for the aug month
2008 -527k
2009 -540k
2010 -548k
2011 -547k
2012 - 530k

We have had a flat market for 5 years and continue to. These are the facts and not the wishful thinking.

hap pychucky said...

JW

You can have all the price droppings you want it is the sales numbers that matter. These price dropping are still creating a flat market.

JustWatching said...

hap pychucky,

Anyone that has been reading this blog for more than a few weeks knows that average price graphs are pretty well meaningless for determining market conditions. VREB knows this but keeps on publishing them.

Take another look at Leo's graphs on median prices and the Teranet data. They provide more insight into what is happening to property market values.

DavidL said...

@PD

Victoria's unemployment rate went up slightly in August: http://www.timescolonist.com/business/leads+Canada+growth+Victoria+unemployment+rises/7211808/story.html

hap pychucky said...

JW

The median number are what they are. 5 years of nothing. Sales are the same as the last 2 Septembers. Listings same as last year but 400 higher than 2010.

The numbers do not lie. We are in a nowhere market where buyers have lots of time to shop.

Leo S said...

Somerville said it would take “some negative shock,” such as an ­economic meltdown or mortgage interest rates jumping from four per cent to nine or 10 per cent, to trigger lower prices.

Sorry, but this guy is an idiot. Funny how prices in Vancouver are already dropping without a doubling of interest rates.

koozdra said...

Somerville will join the ranks of people in the states that said everything will be fine in 2006.

Just Jack said...

All those lawn signs with "REDUCED" stickers aren't helping things either.

That has to have a psychological affect on both buyers and sellers.

hap pychucky said...

PD

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/lfss04l-eng.htm

According to this Victoria Unemployment rate .4 better than last year. So yet again mis information.

Leo S said...

The median number are what they are. 5 years of nothing. Sales are the same as the last 2 Septembers. Listings same as last year but 400 higher than 2010.

I agree with you. Prices are slowly deteriorating since 2010, but the rate is glacial ($10,000/year if you take the yearly average). The trend is clearly down, but so shallow it might as well be flat.

hap pychucky said...

"Let me introduce you to a view of the Canadian Venture Exchange, what used to be Vancouver’s Stock exchange, now headquartered in Calgary. Would you say that’s up or down lately?"

So Victoria housing market is partly determined by penny resource stocks!!! Must be depressing if that is how you gage your wealth.

Introvert said...

That has to have a psychological affect on both buyers and sellers.

OK, I think it's time for another quick grammar lesson for JJ. Seen this error for the 14th time...

Today's lesson: affect vs. effect.

"Affect" is a verb; "effect" is a noun.

For example, X affects Y. But A has an effect on B.

DavidL said...

Some are saying that prices have been flat for 5 years. In that time, the CPI has increased by 9%. If the median price stays the same, wouldn't that effectively be a drop?

DavidL said...

@Introvert

"Well, affect can be used as a noun when you're talking about psychology--it means the mood that someone appears to have."
http://grammar.quickanddirtytips.com/affect-versus-effect.aspx

Introvert said...

Somerville will join the ranks of people in the states that said everything will be fine in 2006.

This type of statement has provided me a lot of laughs over the years.

"Something happened in the United States, so that same something has to happen in Canada."

koozdra, never let nuance encumber your thought process!

reasonfirst said...

Happy: "According to this Victoria Unemployment rate .4 better than last year. So yet again mis information."

Victoria Metroplitan Area Employment:

Aug/2011: 187,600
Aug/2012: 184,400

3200 less people working.

http://www.bcstats.gov.bc.ca/Publications/PeriodicalsReleases/LabourForceStatistics.aspx


Introvert said...

@Introvert

"Well, affect can be used as a noun when you're talking about psychology--it means the mood that someone appears to have."


For sure, DavidL. There are other little oddities, too (like "to effect change.") But I thought it was best to keep things simple for JJ! Didn't want to overwhelm him.

CS said...

""Affect" is a verb; "effect" is a noun.
"

As already note "affect" may be a noun.

In addition, "effect" can be a verb.

No wonder both Introvert and JJ are confused.

dasmo said...

You are all idiots, now can we get back on topic!

Just Jack said...

It seems my blogs are effectively affecting you.

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

Seems like deja vu when it comes to the comments made by new "happy owner" posters on this blog. The names change but the theme remains the same.

Here's what I hear "happy renters" consistently saying/implying, contrasted against what "happy owners" say (in italics):

Prices won't drop that much because the government will do something to prop up prices (interest rate cuts, change the mortgage rules etc.)

Prices will drop a lot because the government won't do anything to prop up prices any more. I know this with absolute certainty.

Victoria is the best place in the country. Sometimes this is accompanied by favourable comparisons to world class cities. This is usually followed by dissing other cities in Canada (Edmonton, Calgary, Ottawa etc.).

Victoria is a satisfactory city that is only changing for the worse. All cities in Canada are equal in nearly every way (which is of course why Fort McMurray draws as many tourists as Victoria every year). It's best never to judge or compare any city at any time for any reason.

I am in it for the long term and prices will go back up and reach new highs. Usually accompanied by I am secure in my job, health and personal affairs so I won't sell until I get more than I paid.

Once a price correction happens, all conditions that led to the original price increase will never happen again. Ever. No job is ever secure; even single people can get divorced; and cancer waits for no one. Therefore, it's always best to rent.

Suite rental income is the answer to falling home prices. Get the renter to pay the mortgage while my equity drops. Leverage is your friend?

Landlords receive rent payments in Monopoly money and therefore this money cannot be deposited or counted as real income.

Marko said...

SFH Median still at 520k, strongly supported to the lower end at 519k, 518k, etc....;however, 530k on the upper end. Looks like it will come down to probably the last sale of the month to determine whether we finished at 520k or 530k.

DavidL said...

@Marco

Thanks for the sales data and the link to the article in The Province. Even if I disagree, it is useful to consider alternate viewpoints.

PD said...

is partly determined by penny resource stocks!!!

You may want to consider how new ventures acquire capital in our country. I will leave you the November 2010 market capitalization of $60,811,203,235 of the exchange and a blurb from last weeks CBC Business inferring how important it is to our economy.

“It’s likely that the early days of Confederation were one of the only periods where the percentage of investment dedicated to natural resource extraction was as high, or higher, than it is today,”

You get to decide if it has any relevance.

Just Jack said...

I think you would first have to get Mr. Sommerville to define what he believes makes a "bubble". And he's too smart to get trapped in that discussion.

And this should make Introvert's head do a Linda Blair, but I don't think we have a "bubble" either.

That doesn't mean that we will not have a major correction in prices - that's inevitable.

Just that the economics are not there for real estate sales and prices to drop off a cliff.

Why do prices have to come down? Because, you can't say to all of the next generations "I own a home - and you can't have one"

Because if prices don't come down the only other option is that the next generation will just take it from you!



koozdra said...

@Just Jack

Well said. A revolution perhaps.

What do you think about the demographic shift factor? I see a large concentration of seniors in Victoria. Many will be retiring in the next couple of years. I see listings ballooning at that time. Even now I can imagine every financial advisor on the island counselling their senior clients to sell now to make money on their investment.

Alexandrahere said...

Introvert said, " Prices will drop a lot because the government won't do anything to prop up prices anymore. I know this with absolute certainty"

Google: "Jim Flaherty ready to act, if needed. Globe & Mail 14 Sept 2012

What will be done if the economy weakens further?

"We have contingency plans. If we need to create more stimulus in the Canadian economy, we will.

How likely is it that Ottawa will have to take action?

"Things are slow & growth is modest in North America, but it is not without growth. If we get a shock from Europe or the U.S., then we will have to be pragmatic & flexible. We will have to do what we need to do."

On the overheated housing market?

"We were concerned about the level of indebtedness related to residential housing including condominiums [so] four times we intervened in the mortgage insurance market in the last 4 years. And it is working. Even the Toronto & Vancouver markets have calmed. There is a tranquility in the market now that is desireable."

dasmo said...

House prices will go down...and up and down, and up again. That's what they do. The next gen won't have to take the homes, they will inherit them.

Introvert said...

I don't think we have a bubble, either.

Just Jack said...

The listings will not likely be ballooning because Seniors are selling their principle homes.

Listings will balloon because Seniors are selling their investment properties. That has been one of the effects of cheap money and easy financing, people have been hoarding real estate.

The financial advisers that I speak with, have not been suggesting selling of the principle home. There is so much emotion tied up into houses, that I don't think financial advisers, as home owners themselves, could be impartial. It's hard to look at past gains and not extrapolate those gains into the future. No matter how ridiculous those numbers become.




Just Jack said...

Inherit them!

How old are your parents?

Can you wait that long to own a home?

And if your parents decide to sell and enjoy their life? Do you do some midnight alterations to their car brake lines?

dasmo said...

Some are already inheriting them as there parents sign them over to their next of kin's names now (if they are smart and want to avoid tax). Some are even arranging condo swaps as their kids get kids and they want so downsize!

jesse said...

So say that Victoria is back to 2008 nominal prices and that incomes have gone up at 2% per year. That means prices are down -7.6% in real terms. Just saying, if you think that prices are overvalued by 40% in real terms you're already about 20% into a correction.

koozdra said...

The cash back bonuses are back:

"Reduced! Plus a $5000 Selling Bonus !!"

http://www.realtor.ca/propertyDetails.aspx?propertyId=12161979&PidKey=1703965305

SuperBob said...

Time to bring that those "Certified Bubble Pricing" stickers!

Marko said...

http://www.youtube.com/watch?v=VRvVzXswf98&feature=colike

patriotz said...

643 Treanor assessed at $437,000 now listed for $405,000.

639 Treanor next door assessed at $431,000 (essentially the same house one would think), sold 27/Oct/2011 for $422,750.

So they are now asking 5% less than what the house next door sold for last year.

Go to Google street view if you want a laugh. Love that planning in Langford.

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

>> http://www.youtube.com/watch?v=VRvVzXswf98&feature=colike

Wait, so what this mortgage broker is telling me is that now is a good time to buy?

Shocking!

Leo S said...

That is a good example of what kind of nonsense industry insiders will try to pass off as analysis though.

My other favourite rationale from the industry goes something like this:
"Well sure the market might drop by 10%, but if you can negotiate 10% off the current asking price then you're basically buying it at next year's price today!"

I'm never sure if the gaping hole in that logic escapes them or if it's just another sales tactic.

There is plenty of unsubstantiated bullshit on both the bear and the bull side, but the difference is that the odd quality analysis tool does not come from the real estate industry.

koozdra said...

After the 10% decline the market will turn around, we promise.

LWilliams said...

Seems like deja vu when it comes to the comments made by new "happy owner" posters on this blog. The names change but the theme remains the same.
-Introvert

The theme has almost remained the same. However, I've noticed an increase in contempt for anyone who thinks the market is not going to crash and revert back to 1993 prices. Why 1993? Because if the average is going to fall back to 2000 prices ($251,398), it's essentially the same as 1993 ($246,727).

a simple man said...

I don't think many here claim a regression to 2000 prices.

a simple man said...

2300 sq ft rancher on Carrick St sells for $530K. That is a good new low benchmark. Assessed at $620K.

a simple man said...

Lots for sale in the Uplands - but no-one with money and brains is buying.

LeoM said...

Anyone have any idea how much residential RS6 lots are selling for these days? For example, a lot 60 feet wide and 9500 sq.ft. The house size limit for an RS6 lot in Saanich is about 3300 sq ft.

There is one lot on the main street going up Mt. Tolmie for $529K, but it has been for sale for several months, maybe a year, so that price is obviously too high for a busy street with lots of tour bus diesel exhaust.
http://www.realtor.ca/propertyDetails.aspx?propertyId=12267607&PidKey=-1407608522

So what is a realistic price in today’s market for a 9500 sq ft lot on a quiet street in Saanich East?

dasmo said...

"2300 sq ft rancher on Carrick St sells for $530K. That is a good new low benchmark. Assessed at $620K." sounds like a good time to buy.

koozdra said...

Qualicum beach and Parksville are a sea of red on MLS.

a simple man said...

No, buying now is catching the falling knife, I think.

dasmo said...

Only time will tell...

Marko said...

"2300 sq ft rancher on Carrick St sells for $530K. That is a good new low benchmark. Assessed at $620K"

Cash back realtor too :) under 524k when you factor that in.

dasmo said...

@ LeoM. It's worth what you or someone else is willing to pay for it. Looks like a nice lot in a nice spot. No demo costs involved. I had an property assessment that put my Fairfeild land value at 100/sq. I have seen 60 /sq tossed around for urban land. Again, it's all an individual thing really depending on many different factors. Figure out what you can afford and make an offer that's less than that. That's how it really works....

Leo S said...

Now up to 7 SFH sales under $550k, and 6 to $900k.

What is the price to assessment doing these days?

Under $550k

$550-$900k

Marko said...

Just out of curiosity, how far do you guys predict prices will fall, if any, before they bottom out?

Leo S said...

"Those who are waiting for significant price drops will be disappointed. If you are in the market for a home, do yourself a favour and buy now while inventory is high so you can move in sooner and enjoy home ownership!" - Tony Joe

Leo S said...

Just out of curiosity, how far do you guys predict prices will fall, if any, before they bottom out?

Based on affordability and continued low rates: 11.5% (the bottom will be a bit lower, this would be the annual average in 2014)

SilverSurfer said...

"Those who are waiting for significant price drops will be disappointed. If you are in the market for a home, do yourself a favour and buy now while inventory is high so you can move in sooner and enjoy home ownership!" - Tony Joe

I don't know if I am supposed to laugh histerically at the ignorance or gag and choke at such a blantant attempt at deception. Or maybe, like Obelix, he fell inside the kool-aid cauldron when he was a kid and really believes the nonsense that comes out of his mouth.

Hey Tony, maybe it's time for you to buy some more real estate... somebody's gotta prop this market up, cuz it sure seems to be on a bit of a slide from where I'm looking.

Introvert said...

(Have a cold, woke up sneezing, couldn't fall back asleep, opened laptop to write the following:)

And if your parents decide to sell and enjoy their life?

Believe it or not, owning a home and enjoying life are not necessarily mutually exclusive. However, I don't doubt that you, JJ, would be a very morose homeowner.

patriotz said...

However, I've noticed an increase in contempt for anyone who thinks the market is not going to crash and revert back to 1993 prices.

Really now? From whom?

The US is now back to 2003 nominal and has apparently hit bottom. I don't expect worse for Victoria and don't recall direr predictions. If I've missed them, could the parties please step forward and lay some of that contempt on me.

But thanks for pointing out another hallmark of the "happy owner" - the straw man attacks.

patriotz said...

Just out of curiosity, how far do you guys predict prices will fall

I think Teranet will drop about 40% real from peak. Nominal drop is harder to predict as it depends on when the bottom is - the later the bottom the lower the nominal drop. I do not expect less than 25% though.

dasmo said...

Claiming someone has made a straw man attack usually is the ultimate straw man argument itself.

patriotz said...

"Those who are waiting for significant price drops will be disappointed..."

We should collect Tony's comments and make a Threat-O-Graph

dasmo said...

There certainly is no pressure to buy right now. One should never fell pressure from the industry, it's always there. Whatever prices are, it will be a fortune. In the run up people spent more time deciding on buying a pair of shoes than a half million dollar house. Take your time, use your head, think for yourself, live within your means and you will be fine.

a simple man said...

patriotz - I think that is a great idea!

Leo S said...

Claiming someone has made a straw man attack usually is the ultimate straw man argument itself.

Sorry, you usually make sense, but this doesn't.

When someone says "I've noticed an increase in contempt for anyone who thinks the market is not going to crash and revert back to 1993 prices"

That is by definition a straw man, since no one on this blog have said that prices will fall by 60%, or expressed contempt for people that don't believe this. Even if you found someone that said that, the suggestion that this somehow this is a common theme in the comment is pure nonsense.

So. Straw man by definition. Now you say pointing out an obvious straw man is also one? Feel free to elaborate.

Just Jack said...

断章取义

SilverSurfer said...

Patriotz I'd even donate a few paypal dollars towards the cause. People in positions of authority who blantantly lie or are such nitwits as to be constantly wrong, deserve to be shown for what they are for posterity. It is not so much a crussifiction of the individual as it is a big lesson to the masses to question advice and forecasting from the very same who have something to sell them.

dasmo said...

everything I say is a lie ;-)
I was being facetious...

Just Jack said...

We will bottom out, when house prices fall to the level where a single parent making a good (not great) salary can afford a starter home with out having to rent out space to strangers.

That means they'll not be maxed out in mortgage payments, credit cards and lines of credit. And there will be a reasonable expectation of paying off the mortgage in under 25 years.

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

For the new ones to the site who don't know what we're talking about, see the USA's version.
There, they had David Lereah as the head of NAR (national association of realtors). The chart speaks for itself, and keep in mind it only goes till mid 2007. Imagine the nonsense they must have said from 2008 - present.

I have this strange hunch they all must get their training from this well known expert who sadly is no longer with us.

totoro victoria said...

I don't expect that a single parent making an average wage ($50 000/year) will be able to afford a starter home in Victoria without renting out rooms.

This would push a starter home (2 bed 1 bath) to $350 000ish at current historic low interest rates (I used 2.99 for five years - adjust price radically downwards for any rise in rates), assuming good credit and no other debt, including student loan debt.

This price can be found in outlying areas or less desirable locations, but for Fairfield/Fernwood/OB/and most of Saanich I don't believe this will occur.

I don't know how much prices will drop, but I don't expect huge drops without a rise in rates. In effect, affordability may improve slightly as it already has.


Marko said...

"We will bottom out, when house prices fall to the level where a single parent making a good (not great) salary can afford a starter home with out having to rent out space to strangers."

and those where both parents are working, with a great salary, will be living in a 3,000 sq.ft. waterfront home in Oak Bay??

koozdra said...

PROPERTY IS NOW SOLD - THANK YOU. HUGE $300,000 PRICE REDUCTION FOR IMMEDIATE SALE!!!

New reality?

http://www.realtor.ca/propertyDetails.aspx?propertyId=12173909&PidKey=1405534809

DEBRA NORTH said...
This comment has been removed by the author.
CS said...

"I don't expect that a single parent making an average wage ($50 000/year) will be able to afford a starter home in Victoria without renting out rooms.

This would push a starter home (2 bed 1 bath) to $350 000ish at current historic low interest rates"

At $350 K for a starter home, that would be more than ten times the price of starter home in Victoria 40 years ago. In the same forty year period, the average wage has increase maybe four-fold. So a starter home at $350 K still looks pricey, especially when you think that it costs only about $150 to build a new 1000 ft bung.

CS said...

"and those where both parents are working, with a great salary, will be living in a 3,000 sq.ft. waterfront home in Oak Bay??"

No, because OB waterfront is a different market to that for homes for ordinary people.

Forty years ago, Oak Bay waterfront properties cost a few hundred thousand and were mainly owned, I suspect, by Victorians, business people, surgeons, etc.

Today OB waterfront is promoted internationally by Sotheby's and others and thousands of rich people from other places now visit Victoria by cruise ship, etc.

If they come on a nice day, they probably think it's a nice place for a holiday cottage and a place to park some cash while the Canadian real estate market continues to inflate and the loonie soars.

Once the international set realize the Canadian property market is deflating, OB waterfront might again be within reach of a local cardiologist, etc.

CS said...

But when comparing price changes over time, it has to be remembered that Victoria has grown substantially over the last several decades. That means that to compare like with like, you have to compare OB of yesteryear, with Gordon Head today, and maybe Langford tomorrow.

totoro victoria said...

Not sure if you are in the construction industry but it does not cost $150 000 to build a 1000 square foot bungalow in my experience - try $200/square foot.

You have not accounted for the land costs. The land cost for my home is far in excess of the value of the buidling - and this is the same for most. Land appreciates while the buildings on them depreciate.

The housing market is not like any other investment as 70% of Canadians own one. It is far more understandable and desirable in general because of the emotional and practical benefits of a home which appeal to many.

The market is impacted by a variety of factors including interest rates, local employment, general economy, desirability of land, consumer confidence... but, ultimately, if you view the history of the past sixty years you will see it goes up in excess of inflation.

Real estate cycles fall but then rise again. I suppose if they rose even more we would see more renters who are priced out forever, as in some parts of Europe - like Switzerland where on 39% own largely due to astronomical prices.

dasmo said...

but your dream for a starter home under $350 is already here...

Just Jack said...

Why can't a single mom making a good wage have a home for her family too just like other families? Why is this so hard to fathom?

S2 (JJ's wife)

totoro victoria said...

It is not hard to imagine as an ideal, it is just not reality. Our system is based on capitalism with a hit of socialism. Market forces set the benchmarkes, not social theory.

When you stop market forces from working you create artificial conditions which influence human behaviour - like in communist Russia where a doctor earned less than a labourer. You get a system in which there is little motivation to work harder.

The ability to succeed or fail based on your efforts motivates individuals. My mom was a single parent and I never thought it was "unfair" that she could not afford to buy a house. There are always options in our system for those willing to work harder and we do have a social safety net.

a simple man said...

Or a single Dad.

Marko said...

"When you stop market forces from working you create artificial conditions which influence human behaviour - like in communist Russia where a doctor earned less than a labourer. You get a system in which there is little motivation to work harder."

+1

Just Jack said...

A capitalist society would not have CMHC or grants for first time buyers to purchase new homes.

Now with the changes made to CMHC, I think we are about to see how a capitalist society does value housing.

chris said...

Just out of curiosity, how far do you guys predict prices will fall, if any, before they bottom out?

Here is my prediction for Van. How that spills over to Vic, not sure. Vic didn’t bubble as much as Van.

My question to the group would be IF Van falls as much as the dotted line, how much does Vic?

patriotz said...

Land appreciates while the buildings on them depreciate.

Except when it depreciates, as it has in Victoria since 2010. Since construction costs don't change much, when SFH prices go down almost all of that change is due to a decline in the market price of the land.

Some US markets have seen a 90% drop in the price of raw land since 2006.

patriotz said...

When you stop market forces from working you create artificial conditions which influence human behaviour

You mean like guaranteeing that banks will get their money back on mortgage loans no matter what?

Couldn't agree more.

Marko said...

Why is it that a single average working parent should be linked to a SFH in terms of affordability.....what is wrong with a 2 bedroom condo?

a simple man said...

condo with children in canada - should not happen if possible. Kids need to be outside often to appreciate nature and reconnect. In a condo, that is more difficult and then there is always the issue of noise - pain in the butt for both kids and others around them.

Kids need to make noise and have fun at home - not be caged in a concrete, hushed box.

a simple man said...

"My question to the group would be IF Van falls as much as the dotted line, how much does Vic?"

I would say within 5% of the same magnitude drop (in % terms)

Wilshire said...

TV said,

Not sure if you are in the construction industry but it does not cost $150 000 to build a 1000 square foot bungalow in my experience - try $200/square foot.

New houses north of the Malahat with hardwood floors, crown moulding, hardiplank siding built on crawl can be had for $130 per sq. ft. For example 2000 sq. ft for 260K + lot for 130K = 390K including HST. Last time I checked the price of materials was the same in Victoria as the rest of the island.

totoro victoria said...

Having lived in two countries where it is common for families to live in condos I would say it can be good. If your kids are involved in sports and other activities and you do things together outside of the house then I don't see ill effects. I saw quite a bit more "community" feel in these units.

As a child I lived in a condo for four years. I spent most of my time on the playground with other kids. It was right next to my school and we used the grounds as an extended playground. I don't recall issues with noise, but it was a family complex.

Finally, Canada's version of capitalism is tinged with socialism, which I personally appreciate. I like the social safety net. In countries where this is lacking things can get pretty desparate.

a simple man said...

I am sure that there are exceptions where there are condos surrounded by greenbelt (Thetis Lake area?) where there is a lot of playground space and like-minded neighbours beside, above and below. Having a community of parents that can accompany a gaggle of children down to the play areas when younger. Then it could work.

But this is rare from what I have seen.

DavidL said...

@Marco
Why is it that a single average working parent should be linked to a SFH in terms of affordability.....what is wrong with a 2 bedroom condo?

Agreed. Whereas the historical norm has been 2.5 to 3.5 times the average family income - forty years ago, there was typically just one primary "breadwinner" in most families. The prices of that time reflected this. By the late 70's most families had 1.5 incomes and by the late 80's - both parents were typically working.

What changed was the disposable income of the typical family. Real estate prices changed to reflect that, with land becoming much more expensive. (Until recently, the cost to build remained fairly stable.)

Ten years ago, two incomes were needed to buy the typical average SFH. This hasn't changed.

DavidL said...

@S2 (JJ's wife)
Why can't a single mom making a good wage have a home for her family too just like other families?

Totally agree ... but what's a good wage? $65/K per year?

In 2005, in Saanich the "married couple" family income was $79K. The average "lone parent" was $41K. That $25K difference between the average and "good" wage makes a big difference.

See page #6: http://www.saanich.ca/parkrec/pdf/WP3-Demographics-Feb1711.pdf

DavidL said...

@CS

At $350 K for a starter home, that would be more than ten times the price of starter home in Victoria 40 years ago. In the same forty year period, the average wage has increase maybe four-fold

Back in '72 - you could buy a nice starter home in Victoria for about $20K. How do I know? ... Well, in 1968 my father bought his Ten Mile Point home (on a half acre) for $32,500. It has appreciated approximately 24-fold.

Also in 1968, a nice starter home was purchased in the Vanalman area for $14,500 (as told to me by the original purchaser). Back in May, this house was listed at $450K, a 30-fold increase. (Note that $14,500 in 1968 dollars is now worth $94,875 in 2012 dollars.)

So what has inflation been during the same time period? According to the BOC, the CPI has risen 541% between 1968 and 2012.

However, my analysis is that wages have increased about 8 times and consumables (food, energy, etc.) have increased about 10 times.

dasmo said...

And my house in Victoria was built in 1933 for $3300

dasmo said...

Sounds like you can count on 5x value every 40 years

DavidL said...

What's happened in 35 years?

The minimum wage has increased 375%
In 1977: $2.75/hour, 2012: $10.25/hour

Energy has increased 500%
Gas in 1977: 24.6¢/litre, 2012: $1.25/litre

Food has increased 750%
Bread in 1977: 40¢/loaf, 2012: $3.00/loaf

Real estate has increased 1000%
SFH average in 1977: $60K, 2012: $610K

However, according to the BOC, the CPI has increased by just 260%. Just think of the wage increases, pensions and programs for the poor that are adjusted according to the CPI - rather than the real rate of inflation.

DavidL said...

@dasmo
And my house in Victoria was built in 1933 for $3300

Yeah, but I bet that the land < $500 at that time.

My 1979 home originally sold for $69,500. With a current resale value of ~$480,000 - that would be a 7 fold increase in 33 years.

DavidL said...

@dasmo
Sounds like you can count on 5x value every 40 years

So your 1933 home (built for $3300) should have increased to $16,500 by 1973 and be worth $82,500 by 2013?!

LWilliams said...

Why can't a single mom making a good wage have a home for her family too just like other families? Why is this so hard to fathom?

I'm not even sure where to start on this one. I have to admit, I do actually find this comment quite difficult to fathom. Owning a house is not a right. Why should a single mother be entiled to own a house just because she is a single mother and families with two parents own a house? So, what about single fathers, or couples without children? Besides, most people on here pontificate endlessly about the virtues of renting over owning. By that logic, wouldn't it be better that the single mom rents?

Leo S said...

Why is it that a single average working parent should be linked to a SFH in terms of affordability.....what is wrong with a 2 bedroom condo?

Gotta agree on that point. Victoria is a relatively desirable city that is densifying. That leads to detached homes becoming expensive, and thus out of reach for the average single earner.
That doesn't mean they can't have a detached house, but maybe it'll be out in Metchosin, or Shawnigan Lake.

Current prices are still too high, but even after the correction houses will still be pricey in the city.

Marko said...

condo with children in canada - should not happen if possible. Kids need to be outside often to appreciate nature and reconnect. In a condo, that is more difficult and then there is always the issue of noise - pain in the butt for both kids and others around them.

Kids need to make noise and have fun at home - not be caged in a concrete, hushed box.


A bit off topic but kids in some countries are starving.....many kids would trade anyday to live in a condo in Canada.

Here, you give some kids a backyard, a "media/play room," a family dog/cat, an Ipad and they still aren't happy. And the costs associated with what you give them could probably feed a village somewhere.

Leo S said...

"A bit off topic but kids in some countries are starving.....many kids would trade anyday to live in a condo in Canada"

Yup, and to think, if we were all happy with condos those poor kids wouldn't have to starve!

dasmo said...

Sorry to get you so excited but I wasn't making a precise calculation. Just saying you can count on it.

totoro victoria said...

I don't think if we were all happy with condos those kids would not starve. The negative side of a capitalist society is over the top consumerism... People would spend money on other stuff if the culture continued to support it.

The research shows that a $200 donation to an efficient charity can save a human life. There is a good book out there called "The Life You Can Save" by Peter Singer if you are interested in more of this research.

And true, some kids have it all and it does not make them "happy". The research shows that fostering connections with others (family, friends, sports mates), giving them responsibility, and helping to entrench a sense of gratitude for what you have creates happiness in kids.
http://www.parents.com/toddlers-preschoolers/development/fear/raising-happy-children/

dasmo said...

I guess it's averaged 5x every 25 years.

a simple man said...

If you have kids someday, Marko, do you want to raise them in a condo?

There are near-starving children in Victoria - over 1100 at last count - partially because house prices here are too high.

a simple man said...

Media rooms and iPads are not what kids need. A safe home, healthy food and time being active in nature is what they do need.

Just Jack said...

I think what you are trying to say is those kids would like to have the opportunities and security that living in Canada has over where they live today.

If they had the same opportunities in there own country, they wouldn't be moving to Canada just for a 2 bedroom condo.

On a deeper note, your saying "shut up, other people have it harder than you. Work hard and you can have what I have, someday."

a simple man said...

Put your prediction in for the median price of SFH in Greater Victoria for Aug 2013 as compared to Aug 2012 at a poll here.

DavidL said...

Thanks simple man... I voted $480K to $505K.

Happy camper said...

Perspective is important on housing. Yes this blog is skewed because we are interested in purchasing homes or learning more. Some of us are also labelled as renter-pontificators (ouch). But nearly 12% of Canadians live in poverty and the #1 reason for a single mother to give up her children is due to inadequate housing. I find the condo/SFH thread to have little credibility (opinion only) and to be missing perspective on what's really important for healthy children. But it also tells me that we are way over the top on our focus on 'buying a home'.

JustWatching said...

OMG - This is a real estate blog. Where is Kevin O'Leary when you need him...

CS said...

"When you stop market forces from working you create artificial conditions which influence human behaviour "

Like zoning bylaws that prevent me from subdividing my 100 ft lot in OB because the damn fool council increased the minimum lot size.

To compound the stupidity, they now put preservation orders on mouldering heaps on half acre and one-acre-plus lots in South OB.

And of course you cannot build a high rise where you want even on OB Avenue, let alone on Beach Drive.

CS said...

And why is it everyone is obsessed with this notion of affordability as determined by interest rates, as though there is some law of nature whereby folks have to pay the highest possible price for shelter?

It's as if we expect car prices to rise because interest rates have fallen, although the exact opposite has been the case.

The reason for the difference, of course, is interference with market forces by OB council, and no doubt other equally benighted political entities.

WorldtravellerPlus said...

Since you asked my opinion I think 25% is a nice number that I think Vic can decline. That probably isnt enough to make it "cheap" but considering the excesses of the last 10 years I believe that a significant reversion to the mean is warranted.

Cindy said...

I am an authority on single Moms buying houses. I was one. I bought 3 homes on my own over the years. The first one I bought was a lovely character home in a prairie town. My BIL was a realtor and he got the owner to accept his commission as a downpayment. He provided me with a fake gift letter. My son was 7. I took in a boarder to help pay the mortgage. I never did have enough money to buy furniture for the living room or the dining room.

I sold it a year later and made $11,000 after all expenses. I couldn't believe my luck.

No creative financing needed the next time. I bought a small duplex in an upscale suburb. That time it took 7 years to make any money but I ended up making just over $50,000. Again, I took in boarders to help with the mtg.

The third house I bought was another character home here in Victoria. I owned it for 9 years and I made just shy of a half a million. I sold it in early 2011. It had a suite and I rented it out - again - to help with the mtg.

My son never wanted for anything but I often did. He played every sport known to man and is now a university educated professional living in Vancouver.

I'm now a small business owner. I make a good living.

I would never want to go through those years again as I was so poor.

Housing got me here. No question about it. I don't recommend creative financing but it was the only reason I could buy a house.

Wouldn't touch housing in BC (or Canada) right now for all the tea in China. 40% haircut coming is my guess.

Enjoy reading the comments - interesting group, especially JJ, whose opinion I quite agree with.

Just Jack said...

As September comes rushing to a close, don't forget rent cheques are due on Monday. Maybe we can take a pause and look back at the month.

We may finish the month with slightly more than 173 homes sales for the Victoria core, Western Communities and all of Saanich Peninsula.

The least expensive home to sell clocks in at $286,000. Not a big surprise - except it's not in Port Renfrew or the wilds of Langford - this sale took place in one of the core areas, namely View Royal!!

On the flip side, looks like 13 sales over a million Canadian petro bucks for September. The honor for highest price paid was tied between Oak Bay and North Saanich at 1.9 million. Rumor has it that one of these went to a young couple who sold their Marpole two bedroom condo because they were expecting a baby and needed the room.

The average sale price came in at $600,000 less the cost of a two-four pack of Lucky Lager.

Average days on market at 67. That is a bit spooky for agents as it gets close to either make the sale or loose the 90 day listing.

The average property selling at 102% of BC assessment's figures. The difference between original asking price to sale price at 93.6%. The under paid government worker wins on accuracy. Yeah, team assessment!!

Average sale price per square foot came in at $270. Which is almost the cost my #%^%$# contractor quoted me on repairing a 150 square foot back deck.

And the median at $530,000 for all areas.

Re-sales were hard to follow this month and gave some wild results. Hopefully, Teranet can make sense out of them using their sophisticated mathematical calculations (run on a $7.99 home depot calculator).

On the news this month, one agent said that you have to know your target market to make a sale. I would also say that you need to know your target seller. Looking at when the property had sold previously suggests to me, that an agent may be wasting their resources marketing homes that have been bought in the last five years. Most of the homes bought this month were purchased more than 10 years ago.

My biggest surprise was from DavidL, when he demonstrated how the change from 30 to 25 years gave a serious hurt to affordability. Which suggests more hurt to come for October.

These numbers will change - they always do. The month ain't over yet. But at least you'll see them before Carla does. And before she rattles a box of chicken bones over top of the stats to write her column.

LeoM said...

Marko asked, "how far do you guys predict prices will fall"

It depends on how high mortgage interest rates increase, subject to no radical changes in unemployment levels or 'government stimulus'.

For the next 7 years, an average single family house price will decline 9% for every 1% increase in the 5 year fixed rate mortgage, at current inflation levels. But, if annual inflation rates exceed 3%, then house prices will decline only 7% for every 1% increase in the 5 year fixed rate mortgage.

Due to the psychology involved in house prices for both buyers and sellers, these changes I predict will only be apparent when viewed in hindsight on a six-month moving average graph.

Leo S said...

And why is it everyone is obsessed with this notion of affordability as determined by interest rates, as though there is some law of nature whereby folks have to pay the highest possible price for shelter?

It's simple.
1. Real estate is generally bought with credit, not cash.
2. Most people are more concerned with the monthly payment than the total amount, so the interest rate is critical.
3. Interest rates do not look to be going up anytime soon.
4. Bubbles do not correct sideways. House prices have gone sideways, so they cannot be in a bubble.
5. Looking at affordability shows that it has behaved in much clearer cycles than house prices. We had a big runup, a peak (worst affordability) in 2007, and then a correction in the past 5 years.

Given the above we have three options:
1. Interest rates stay low and affordability corrects like it has in the past, which means prices will come down another 10% or so.
2. Interest rates rise, which will cause a bigger decline.
3. Interest rates stay low and prices decline a lot. I'm not saying this is impossible but it would be unprecedented. I only see this scenario if there is a large increase in foreclosures.

Just Jack said...

You're right. A single parent should be happy to live and raise their family in a condo.

I thought these condos being built downtown were for young, urban professionals. I guess I was mistaken.

S2 (JJ's wife)

dasmo said...

Nice sock puppet JJ. The "especially JJ, whose opinion I quite agree with" was a dead giveaway.

koozdra said...

Just Jack have you considered starting your own blog?

koozdra said...

Someone pay my mortgage!

http://www.realtor.ca/propertyDetails.aspx?propertyId=12143167&PidKey=1974866408

http://www.usedvictoria.com/classified-ad/-Heritage-Home-3-Bedroom--2-Bath-Gorge-Road-CraigflowerTilicum_18228338

chris said...

3. Interest rates stay low and prices decline a lot.

I liked your options, although I believe #3 is the winner. It's only unprecedented for most readers...and our political leaders, since they have no recollection of a period where rates have been this low. History is ripe with crashes caused from low interest rate environments. Low rates always pull forward too much demand and supply until a 'tipping' point where there are simply too few buyers left to absorb the escalating supplies. Affordability becomes a less important factor once that demand has reached a tipping point amidst burgeoning supplies. I was in Toronto last month, and I think we are collectively at the tipping point.

patriotz said...

Interest rates stay low and prices decline a lot. I'm not saying this is impossible but it would be unprecedented

It's what's already happened up Island, in the Gulf Islands, Whistler, Okanagan and Southern Interior.

You can throw in Sooke too, as JJ has kindly informed us.

nan said...

@totoro: If Canada was a capitalist country, this blog wouldn't exist because there would be a clear relationship between effort and reward. The primary source of wealth for Canadians over the last 10 years has been a government instigated housing bubble. To get rich in Canada, just buy a house! This is NOT an capitalist value proposition. If Canada was a capitalist country, Instead of trying to game a system to get the best possible price after all the political machinations, we would all be simply talking about how best to add value in society to earn that roof over our head.

You are a very dangerous person as you are clearly very convincing in your prose, which makes you the most dangerous kind of socialist: the kind that convinces others that you are a capitalist. Canad is not a capitalist economy "tinged with socialism.' iI is a socialist economy that pretends to be capitalist, and based on your comments, I think you are too. In all likelihood, you have benefitted from good timing and entitlements and like it that way. But like many ignorant socialists, you enjoy pretending that you 'earned' it. given your stance on the idiotic real estate prices in this country, please tell me what value you added in society to afford your piece of it?

That being said, carney et all know this charade cant continue on forever. Canadians are maxed out and debt needs to be paid back at all levels. Financing is drying up and prices are heading down. Whether prices come down nominally or in real terms, the relative valu of real estate has to come down in Canada. Don't believe me?

Take the time to do a little math to figure out how many years it would take you to earn, after tax the value of your house at a non gov't salary level without a defined benefit safety net. How entitled to that high market value do you feel now?

Leo S said...

@chris: History is ripe with crashes caused from low interest rate environments.

Can you given an example where a housing correction proceeded past the expectations of affordability without high foreclosure rates?

@patriotz It's what's already happened up Island, in the Gulf Islands, Whistler, Okanagan and Southern Interior.

What does the affordability look like there? Yes they are declining more, but that's only half the picture.

So let's take a 25% nominal correction from our current levels.
This is what affordability will look like.
Is it realistic to expect a return to 1985 values for affordability of single family homes? Decide for yourself, but I suspect that will only happen if enough people get tipped into foreclosure, at which point affordability ceases to be important.

Renter said...

@Nan

Please share some of whatever it is your smoking. I've always enjoyed the tongue-in-cheek comedy stylings of JustJack but you've just blown his routine out of the water. Brava! Please continue posting.

A request for your next post: please tell us what marvelous country does meet your standards for capitalism and nonexistent government regulation. Somalia, perhaps?


patriotz said...

So let's take a 25% nominal correction from our current levels.

The problem with your measure of affordability is that it focuses too narrowly on cost of owning versus median incomes and assumes other factors are the same as in the past.

Which they are not. Personal debt is the highest ever. Job opportunities for young people are the worst they've been for decades. Never before have there been so many people becoming net sellers with so few potential buyers. Never before have so many people been so poorly prepared for retirement.

Which means IMHO that the market bottom will be at a more affordable (by the simple metrics) price than in the past. That's exactly what has happened in the US for the reasons I have given.

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

Got the baby sitter for last night an hit the town without a reservation. All our favourites were flat out. Brasserie would not have a table until 10:30. We slid in to Zambris just before it filled up. What's my point? If you look around in meat space, the general population here doesn't seem on the brink of financial ruin.

Marko said...

If Canada was a capitalist country, this blog wouldn't exist because there would be a clear relationship between effort and reward. The primary source of wealth for Canadians over the last 10 years has been a government instigated housing bubble. To get rich in Canada, just buy a house! This is NOT an capitalist value proposition.

I've experienced nothing but a clear relationship while I've been in Canada. It is not perfect, but the harder you work the luckier you get.

When I was a teenager I worked for my father (stone masonry business at the time) mixing mortar, carry rocks, pay was $10/hour. I did a three year diploma in Respiratory Therapy after high school; pay was $70k/year with a few overtime shifts. Then while working night shifts, stat holidays and all I did a master’s degree and I had a 6 figure job offer in Ontario.

Left my 70k/year union job, now I work ridiculous hours, sometimes 70+ per week, and you know what, I make more than at my union job.

Last year I was doing 2 open houses per weekend, this year I am doing 4 open houses per weekend and guess what, doing more business this year.

Find me another country with opportunities like this? If I was in Croatia I would probably have some kind of degree making $1000/month while my rent would be $500. My parents grew up in Croatia under communism/socialism and my father as a naval architect at a shipyard was making equivalent to cleaning staff because he wasn't part of the communism party at the time. This is NOT an capitalist value proposition.

dasmo said...

Leo, You need to start a blog to collect all your graphs in one easy to find place. At the very least this blog should have a permalink to them at the side bar.

Marko said...

You're right. A single parent should be happy to live and raise their family in a condo

I am happy in 530 sq.ft. with my significant other, I don't understand why a single parent can't be happy in an older 900-1000 sq.ft. 2 bedroom condo? How much space does one need.

a simple man said...

dasmo - those great restaurants will be the last to feel the pinch - look at the ones that are not at the top of the list. What kind of business are they doing? Plus, downtown is still in tourist season.

Marko said...

I was in Yaletown (Vancouver) a few months ago and I was surprised how many baby strollers/kids I saw...it is possible.

totoro victoria said...

I feel so dangerous. Maybe the most dangerous of all the posters.:).

And yes, I must just be lucky and entitled. Of course starting to work at 12 and working and saving ever since while paying for my own way and 13 years of higher education have had nothing to do with it.

I'm pretty happy with Canada. It allows new immigrants and kids who grew up in poverty to buy a home and do better just by luck and socialist ideals.

Marko said...

It allows new immigrants and kids who grew up in poverty to buy a home and do better just by luck and socialist ideals.

I totally agree :)

Anyway, enough time on the blog for the day....back to work.

Leo S said...

Which means IMHO that the market bottom will be at a more affordable (by the simple metrics) price than in the past. That's exactly what has happened in the US for the reasons I have given.

Perhaps. I agree that things are different now. They are never exactly the same as in previous cycles.

However I'm not sure if the US decline can be attributed to general debt levels. Many countries have much higher levels of consumer debt than the US and did not collapse.

patriotz said...

Many countries have much higher levels of consumer debt than the US and did not collapse.

More like "have not collapsed yet". Which ones were you thinking of?

patriotz said...

However I'm not sure if the US decline can be attributed to general debt levels

I didn't say that the US decline was due to debt levels. It was due to excessive prices, like all RE busts.

What I said is that debt levels led to a lower bottom than one would expect simply from affordability.

LWilliams said...

More like "have not collapsed yet". Which ones were you thinking of?

The bears have become as bad as, if not worse, then the bulls they chastise. You continue to speak with absolute certainty of the coming armageddon. Last I checked, housing prices still haven't collapsed. However, unlike you, I won't say they will never collopse, only that I think it is unlikely now that we are in year five of flat prices. Maybe it's time to use words like "maybe" and "perhaps", and remove words like "unquestionably" and "guaranteed".

Just Jack said...

254 house listings in Sooke with only 18 sales in the last month equating to 14 months of inventory. Average days on market 130. Sale price to assessment ratio 92%.

"O: No, no, 'e's uh,...he's resting. C: Look, matey, I know a dead parrot when I see one, and I'm looking at one right now. O: No no he's not dead, he's, he's restin'! "

koozdra said...

Scroll down to the second chart. We are currently in the denial stage. About to enter the "bull trap" as prices sag. The bulls with their appeal to history and unfounded optimism rush in to take advantage of the "discounts".

http://retiringboomer.wordpress.com/2012/07/18/why-a-crash-in-canadian-housing-prices-is-certain/

a simple man said...

LWilliams - can you give us your opinion of how this market will stay afloat at these levels?

a simple man said...

Marko - living in a condo with your girlfriend, both being yuppies, is a lot different than raising children there.

a simple man said...

Totoro - I agree - grew up with nothing, many years of working and putting myself through a similar number of years of post-secondary was essential for my luck.

Introvert said...

And because the U.S. housing market collapsed does not mean that Canada's necessarily will. It just doesn't.

It's a convenient comparison, but one that ignores all details and nuance.

Think, people!

koozdra said...

Introvert

Please educate us why it's different here.

Alexandrahere said...

For sure, right now is not the time to buy real estate in Victoria. But many times in the past this was the mantra of the crow and a few "lucky" ones didn't listen and just got on with business.

Life should not be wasted by sitting on the fence in its entirety.

Risks have to be taken at every stage in life including that first step....some at nine months, (usually the girls)and some at 14 months. You do your calculations and you wait for the right opportunity to take the step.

He who hesitate is lost and blah, blah, blah.

Accolades to any single parent or persons of any age willing to work hard and to work smart in order to get themselves out of a lifestyle that condems them to eek out their entire lifetime in relative poverty.

Call me, Cindy, Totoro and others opportunists.....call us what you may.....we are tough cookies and we will not crumble....

koozdra said...

Canada's housing crash begins

Just Jack said...

So hows the condo market doing?

There are about 1,100 condos for sale in the greater Victoria area. But let's just concentrate on the Victoria core which has 805 current listings with about a hundred sales in September or 8 months of inventory. On average it took 69 days to sell a condo that sold at 83% of the assessed value.

The lowest price was for a 554 square foot suite at $152,000. But no children under 18 allowed.

The most expensive condo sold for $1,080,000 which is $57,000 less than when it was bought in January 2006. But no age restrictions here so bring the rug rats along.

The median price was $275,500 or 6.5 times the average salary of a single government worker. That got you 975 square feet and two bedrooms in a 20 to 25 year old building that will likely need structural upgrades and repairs in the next few years. Something that every single parent would look forward too. But that's their fault, if they spent more time at work and less time with their children, then they could have bought a home - bunch of lazy bastards.

Marko said...

"Marko - living in a condo with your girlfriend, both being yuppies, is a lot different than raising children there."

Yea but we live in 530 sq.ft., a single parent in 900 sq.ft. to 1,000 sq.ft. is quite the size upgrade.

dasmo said...

"Please educate us why it's different here"
watch this link.

DavidL said...

@JustJack

LOL. I appreciate the Money Python reference....

@Marco

Get yourself two kids, aged 5 and 7 (like I do) - then see how much space you need to be "comfortable".

dasmo said...

I think one can adapt and get used to what they have. 1000 sq feet isn't bad. I am glad I have the ability to live in more space though and I only have one kid! That said, a condo isn't a bad option for a young family IMO. My son doesn't like to sit around the house anyway so we are always going out. He would also rather go the park than hang out in our yard. Our main level is about 1000 sq and besides laundry and storage ( of a lot of stuff we could probably be rid of) we mainly only live on that level. So long story short I don't think a 1000 sq feet is too bad.

a simple man said...

@dasmo - but you do have a yard, and are not sharing walls. You don't have to go to the storage locker to get a bike. They may not seem like big deals but they are.

Our new neighbours lived in Vancouver for a 8 years and had a couple of boys there and they lived in a huge condo (1500 sq ft if I remember). They hated it. Their boys could not ride bikes yet (both in primary school) because there was nowhere easy to ride, etc, ect.

Go throw or kick a ball around for 15 minutes while dinner cooks - easy in a house, harder or impossible in a condo.

It is possible to raise a kid in a condo, but much harder and likely not as much fun.

Leo S said...

1762 Howroyd.

Estate sale, listed 499,000. Assessed at $614,000.

Good shape upstairs, has a small suite. Giant lot. Needs a new roof.

Thoughts anyone?

patriotz said...

Maybe it's time to use words like "maybe" and "perhaps", and remove words like "unquestionably" and "guaranteed".

When did I use those words you put in quotes?

koozdra said...

I've seen "Inside job", it's really good.

The actors might be different but idea is the same. A debt fuelled housing boom that is soon to collapse.

Leo S said...

More like "have not collapsed yet". Which ones were you thinking of?

I believe the scandinavian countries amongst others, but I can't find the article I'm looking for at the moment. It's not to say consumer debt isn't a big factor, but I don't think we can point to specific level that is "too much".

totoro victoria said...

I don't know about more time at work. That has always seemed counterproductive to me when you have kids.

There are other options for singles and couples with kids just starting out:

1. boarders/homestay students
2. smaller homes
3. calculating the true cost of working f-t and going p-t instead plus doing 1 and/or 2 and not having childcare costs and maybe even providing evening/overnight childcare for someone like a nurse on nightshift
4. teaming up with another friend or single parent to buy or rent together and sharing childcare
5. cutting your costs on non-essentials
6. buying a home with a suite

If you need and want private space and you don't have the money and want to save a down-payment then there is also the option of trading work for accomodation or a discount on accommodation ie. yardwork, senior care, or childcare. An ad online can open many options.

I was in school and had kids and a lower family income than the average government worker when I bought my first place and I did a number of these things. It worked well and life does get easier if you keep at it.

I still only purchase homes that can accommodate a sound-proofed suite because it provides a buffer.

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