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 JackMade 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?
290 comments:
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Please educate us why it's different here.
1. How many people in Canada have NINJA loans (no income, no job, and no assets)?
2. Canadian mortgages are insured by the Canadian government through CMHC.
over 400 comments in a week - blazing.
Not all Canadian mortgages are insured by CMHC.
Stats are out there that support both a bubble and no bubble - overvalued and not overvalued. Depends who you quote.
"TD Economics has gradually reduced its estimate of the overvaluation in Canada’s house prices, as the growth in people’s disposable income picks up while the market stagnates.
The quarterly economic forecast that the bank released Tuesday pegs the current overvaluation in the market at 10 per cent. It had previously estimated that prices were 15 per cent too high, and then suggested a range of 10 to 15 per cent."
Globe and Mail http://www.theglobeandmail.com/report-on-business/economy/economy-lab/house-price-overvaluation-fading-td/article4551438/
Financial Post - Market not Overvalued:
http://business.financialpost.com/2012/01/13/is-real-estate-overheated-the-bubble-debate-rages-on/
1. How many people in Canada have NINJA loans (no income, no job, and no assets)?
I've heard the term, but I've never seen any statistics to show what the percentage of loans were NINJA. How many Canadians now have negative equity with the decline that we have seen already?
2. Canadian mortgages are insured by the Canadian government through CMHC.
When Freddy and Fanny went under they were nationalized. This in effect meant that the mortgages were insured by the government during the collapse.
A nationalized CMHC is the same as a failed private mortgage insurer.
I thought you said you watched inside job kook? maybe watch it again and you will see the difference between the FM's and the CMHC.
What is the CMHC?
http://www2.macleans.ca/2011/03/23/a-mortgage-monster/
http://business.financialpost.com/2012/04/26/how-cmhc-morphed-into-a-600-billion-financing-juggernaut/
Why is it harder to get financing these days?
http://www.huffingtonpost.ca/2012/04/26/canada-mortgage-reform-cmhc-osfi_n_1455792.html
http://business.financialpost.com/2012/04/25/cmhc-set-to-be-under-osfi-supervision/
http://business.financialpost.com/2012/04/26/osfi-to-supervise-cmhc/
I've heard the term, but I've never seen any statistics to show what the percentage of loans were NINJA.
Neither have I. Why? Probably because Canada never offered NINJA loans. This is a huge difference between America's situation and ours.
How many Canadians now have negative equity with the decline that we have seen already?
Beats me. But there hasn't yet been a wave of Canadians leaving the keys in the door and abandoning their mortgages. So that's got to tell you something.
I've heard the term, but I've never seen any statistics to show what the percentage of loans were NINJA.
Neither have I. Why? Probably because Canada never offered NINJA loans. This is a huge difference between America's situation and ours.
Oops, I meant of American issued loans.
Beats me. But there hasn't yet been a wave of Canadians leaving the keys in the door and abandoning their mortgages. So that's got to tell you something.
Actually that doesn't tell us anything. Foreclosures are a lagging effect of decreasing prices. Foreclosure rates in the US before the crash were also very low.
Here is another reason you aren't seeing more foreclosures.
"CMHC said that it has been spending more money on so-called “work-outs,” in which the mortgage insurer and banks work with struggling borrowers to find a solution – such as deferred payments – to keep them in their home."
Foreclosures are being masked using your tax dollars.
http://www.theglobeandmail.com/report-on-business/economy/housing/cmhc-sees-profit-fall-in-core-mortgage-insurance-business/article4507242/?cmpid=rss1
I will tell the story again of my friend down south who was a successful builder. The bank shut him down and forced him into foreclosure. he had three houses on the go and 100k LOC. Everything was fine but the new kid on the block had a mandate to tighten up the books and pulled his line of credit. He couldn't pay his people and finish the homes. He lost everything including his personal home (that he built). So the bank ended up with four properties that they dumped on the market. His place was built with land for $750k. I think they ended up selling it for $380k.
When you can tell me stories like this about someone here, then I will buy into a 40% correction....
http://business.financialpost.com/2012/01/13/is-real-estate-overheated-the-bubble-debate-rages-on/
That's just another spiel from one of Vancouver's chief bubble deniers, Helmut Pastrick. Note that he doesn't even mention prices, rents, or incomes.
For all properties in Vancouver owning is massively more expensive than renting which is a bubble by definition.
Introvert: Neither have I. Why? Probably because Canada never offered NINJA loans. This is a huge difference between America's situation and ours.
koozdra: Oops, I meant of American issued loans.
Read Michael Lewis's The Big Short and watch the documentary Inside Job.
Actually that doesn't tell us anything. Foreclosures are a lagging effect of decreasing prices. Foreclosure rates in the US before the crash were also very low.
But aren't we in the midst of a so-called "crash" in Victoria and in Vancouver?
Haven't median prices dropped by 10-15% in Victoria? If so, wouldn't foreclosures in Victoria be increasing noticeably?
And what about Vancouver? How much have their medians gone down, and where are their foreclosures?
Teranet says Victoria is off 3.3% from the peak in June 2010. Now there is a built-in lag in their methodology which means that prices today are likely lower, but Victoria is not at the point where foreclosures start to become significant. There have not been big enough price drops for enough time. Kelowna certainly is.
There are also a significant number of foreclosures in Alberta where prices peaked in 2007 and are currently down 10% or more from that.
Vancouver is off 1.8% from the peak in June 2012. However condos peaked a year or so earlier.
There are also a significant number of foreclosures in Alberta where prices peaked in 2007 and are currently down 10% or more from that.
Any sources?
Monday October 1, 2012 8:20am:
September September
2012 2011
Net Unconditional Sales: 419 458
New Listings: 1,210 1,303
Active Listings: 5,025 4,940
Please Note
Left Column: stats for the entire month from this year
Right Column: stats for the entire month from last year
What would happen if the CMHC slowed down it's lending?
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/what-if-mortgages-were-more-expensive-and-less-accessible/article4573255/?cmpid=rss1
Officially 1 YEAR of inventory (11.993 months).
Sales considerably lower than last year.
The drop has begun (my opinion).
Thanks Marco. Time for a VREB "balanced market" news release.
Thanks Koozdra. Interesting analysis by Rob McLister from Canadian Mortgage Trends.
Note: one of the Google matches suggests that the site below may be compromised. I use Linux so this doesn't bother me, but you may want to be cautious.
Mortgage arrears in Canada
"Alberta's foreclosure rates are now soaring and up for the 28th month in a row. They are rapidly approaching historically high levels. The Percentage of Arrears to Total Number of Mortgages is 0.75% by December 2009."
Note also the sharp rise in BC post-2008, which is mostly Okanagan IMHO.
Introvert, I can understand your frustration at US Style RE comparisons. I think the US bubble makes an easy neighborhood comparison. But fact is that Canada just doesn't have the substandard lending practices found in the US, Spain, and outher countries where we've seen it hit the fan.
I don't think this fact percludes Canada from a RE bubble.
I think a more helpful comparison is casting out lot with the Aussies, and Chinese. I know I know, but take any Trans-Pacific ideas with a grain of salt as I always say.
A fellow by the name of GG runs a great blog that takes aim at these similarities at:
http://worldhousingbubble.blogspot.ca/
Anybody heard of this guy? Seems to be a prolific poster with a lot of data/charts.
Just doin' my bit to help us all make educated guesses :)
But we did have 0% down mortgages (until very recently - past few months you can't) and we have liar-loans where self-employed could basically tell their broker what they made with very little substantiation.
It was not the same as the US, for certain, but may be just as bad.
Anyone with the old Double Agent's chart for Sept historical sales?
Simple man, yes that's true, and $0down/cashback is terrible, from what I can tell they're fairly tame on the global scale of things.
I suppose one man's abhorant ideas are another's pedestrian business as usual.
Take the the Homebuyer Plan for instance, it's an aweful idea, most places in the world wouldn't dream of a plan so reckless, but it's pretty much standard practice for Canadians.
@simple man
Google is your friend: https://www.google.ca/search?q=September+historical+sales+site%3Ahousehuntvictoria.blogspot.com+double+agent
Here's the chart you want (4th item): http://househuntvictoria.blogspot.ca/2010/09/sales-volume-falls-off-cliff-in.html
As Patriotz has pointed out, a foreclosure rate of 0.75 is an historical high. That's less than 1 out of every 100 mortgages going sideways on a lender.
In Canada, like other countries, we had no documentation and equity loans where you did not have to provide your income or even have an income to get a mortgage. Most of these mortgages would have been to self employed people and likely concentrated in those areas with a lot of new companies and lots of construction.
As we have been assured by many people, we do not have many of these types of mortgages. But how many did we have? I have never been able to find out how many were made? And neither have those that have said that there wasn't many done.
Well, how many was it?
If a serious default rate is only 0.75 Then I would suspect that we don't need many no documentation or equity loans to tip the scale.
So while we most likely (and who really knows) did not have that many Ninja loans - We still may have had enough to force us into an American style melt down.
Next time someone like Cameron Muir says we did not have that many of these types of loans, ask - how many did we have?
They don't know, and likely no one will have an indication until the foreclosures begin to happen. Then we'll know how many were stated income or equity loans.
The opening up of our Canadian banks to foreign competition (mainly the USA) morphed our banking system into an American style system. That lead to similar product lines as the USA, because Canadian lenders had to compete with foreign lenders.
totoro, you are almost like me. I had 14 years of post secondary education, four degrees from the best universities: two from a Canadian University and another two from where I grew up.
@ DavidL - thanks.
@Simon - I have to ask - which are the best Universities?
The ones I didn't go to.
Median 518.5k
Thanks Marko - appreciate your work in supplying numbers.
The myth of renovations.
Lots of people have been renovating their homes. And as any home depot sales person will expertly tell you -
"you're increasing the value of your home"
But is that completely true, or are we just needing some stranger to self validate our decision to pay $10,000 to build a 150 square foot deck? Or $30,000 for press board kitchen cabinets or $5800 to paint your window trim?
Like most things in life, there is a grain of truth in what they say.
Renovations add value to the home, when they are recent. But the contributory value of those renovations diminishes quickly with time and in about 10 years, that $100,000 renovation adds only marginal value to your property. And if the market is "soft" those renovations may only increase the saleability of your home. Which means your home may sell a couple of days sooner, than someone who just kept their home well maintained.
And that includes those big ticket items like a roof, windows and cabinets.
The best price that you are going to get for your newly renovated home is immediately before you move one piece of furniture into it.
Marko
any idea 2011 sept median? 525?
Hap - here is an image with tat datya from Leo S:
http://i.imgur.com/z2o4r.png
My pleasure - I think the median graph shows a much clearer picture. Looking forward to the update as I think the rolling average of the median will not be pulled down markedly.
@hap
Unlike daily commodity indexes, the SFH mean is very useful and determining the long term trend. As the VREB numbers show, there has been a downwards slide since 2009 ... The reduction has been modest, however the direction of the trend is clear.
The latest SFH mean value of $518.5K would indicate the the slope of the slide is increasing. Lower sales volumes, high (record?) listings and declining averages all paint a clear picture.
A simple Man
Big big moves from 2000 to 2006. but really nothing since than as a %.
"Sales are down 11.5% over August 2011" says Carol Crabb, President of the Victoria Real Estate Board. "When seasonally adjusted, there is little change from July 2012. It’s a flat market which we suspect will continue for the next few months and not trending in either direction."
http://www.vreb.org/mls_statistics/current_statistics.html
Davidl
Not sure the 518.5 includes other areas. Just want to compare apples to apples.
Simple man thanks
Reposted, they are median prices
Off of VREb
Greater Victoria SFH median for sep (does not include what vreb calls other areas)
2006 471
2007 520
2008 500
2009 550
2010 540
2011 535
2012 ???
Not alot has happened since 2006, up maybe 10% and down with inflation.
not
hap - I read it as returning towards 2007 levels. When looking at the graph, I think the market peaked around fall 2009/spring 2010 and is see-sawing its way down.
DavidL - that is the statement from last month - the spin-gine at vreb must be working hard as they have not released their statement yet.
@Leo S - is it true? Are you in the process?
"Buy the best house on the worst street". ???
@ simple man
... that is the statement from last month
You are correct! Apparently I can crunch numbers cannot tell the date! Thanks for letting me know ...
VREB numbers are now up ... still waiting for the press release.
"We are at a bit of a standoff in the Greater Victoria real estate market," says Carol Crabb, President of the Victoria Real Estate Board. "Buyers are waiting for prices to go down, but there are no economic indicators to show that will happen. Sellers are pricing their properties reasonably for the current market, which is reflected by the fact that single family homes are selling for an average 96% of list price and the average days on market remains 64.
"The median price of a single family home is only 1.5% lower than last year and that number has held steady for the last five months," Crabb says. "Interest rates are also holding, but should they increase by as little as 1%, that would negate a 10% drop in purchase price. People shouldn't wait for prices to drop, because we never know when interest rates will be increased to stimulate the economy."
http://www.vreb.org/mls_statistics/current_statistics.html
As far as renovations go, In ten years I do expect that the value that is added by building a suite to a good standard will still be there. Some renovations add more value than others.
High quality laminate flooring wears better than carpet and lots of folks don't like carpet any more. We just put laminate in that came with a 30-year warranty and it sure looks nice: http://www.goldenselect.ca/en/laminate/autumn-oak/ It is replacing cheap laminate that looks bad after ten years of renters.
A new roof will pay off still in ten years and sometimes you just have to do this as maintenance - not discretionary renovations. Asphalt roofs last at least 20 years.
Double-pane windows last 16-18 years or so and save quite a bit on energy costs while you have them - I replaced old aluminum frame windows and we could feel the difference immediately. Not sure this pays back in energy savings but it did affect marketability for me.
As far as kitchen cabinets and appliances go, there might be a ten year window before they become a bit dated. I don't want to pay for granite countertops because I don't really care about this feature or want to maintain them or worry about chips.
I am; however, willing to pay more for older nice basic wood cabinets that can be updated with new knobs as opposed to more modern pressboard ones. I am also willing to pay more for 200 amp service - and that keeps going.
There are some things that I am not willing to pay more for and view as liabilities even if new:
- jetted bathtubs - more to go wrong and they don't seem easy to clean
- hottubs - ditto plus maintenance
- vinyl siding
- pressboard anything (ie. bathroom cabinets)
What is true is that people can charge loads of money for things like painting and debris removal. Even I can do these things and I'm a non-handy sort.
"because we never know when interest rates will be increased to stimulate the economy"
Interest rates are low to stimulate the economy.
Is that 96% of the original asking price or 96% of the last reduced price?
Off of VREb
Greater Victoria SFH median for sep (does not include what vreb calls other areas)
2006 471
2007 520
2008 500
2009 550
2010 540
2011 535
2012 518.5
We are back to 2007 median. But alot of nothing over the last 5 years.
I don't know if buyers are waiting for prices to go down or that buyers can't afford the old prices, due to the changes in high ratio mortgage insurance.
The change from 30 to 25 year amortizations did change how affordable homes are.
All us buyers got together at the national real estate buyers convention and decided en masse to wait till prices drop.
96% of the last reduced price - I really think that stat is one of the most misleading stats there is.
We should write vreb a letter telling them so. maybe they read this.
Hey, vreb, be honest and ditch that stat or, better yet, calculate it correctly by using the initial offer price - I'll bet it is closer to 90%. People appreciate it when you are not spinning the numbers and then they will trust you.
Also, what is the "should they increase by as little as 1%, that would negate a 10% drop in purchase price" - we need to corroborate this. This statement drips of desperation.
they also fail to say that if interest rates went up 1% that housing prices would likely plummet even faster and further.
@hap
We are back to 2007 median. But alot of nothing over the last 5 years.
Recall that inflation has been 9% over the past 5 years, so that median of $520K in 2007 should be $567K in 2012. As the median is now $518.5K - that equates to a $48.5K drop, or > 9% drop.
A new roof will pay off initially, but after 10 years a roof is a roof is a roof. Unless, you have a special gift where you can tell a 10 year old roof from a 20 year old roof.
Yes, most people will get a 20 year guarantee on the roof, or as long as the roofing company is in business. Hopefully that is transferable to the new owners.
A basement suite will add value to the home over a home with a fully finished basement at roughly the cost of installing kitchen cabinets and plumbing fixtures in what was once the basement family room. Of course after 10 years with a basement renter, the home owner will have to remodel because of increased wear and tear of having a suite rather than a family room.
New appliances are only as good as their warranty. 3 years.
"A basement suite will add value to the home over a home with a fully finished basement at roughly the cost of installing kitchen cabinets and plumbing fixtures in what was once the basement family room. Of course after 10 years with a basement renter, the home owner will have to remodel because of increased wear and tear of having a suite rather than a family room."
Really? How much are you estimating for cabinets and fixtures?
A roof is not a roof. A roof that needs replacing detracts from sale value. Brand new adds. Mid-level keeps things stable. Plus you have to do this.
"Interest rates are also holding, but should they increase by as little as 1%, that would negate a 10% drop in purchase price. People shouldn't wait for prices to drop, because we never know when interest rates will be increased to stimulate the economy."
This is just embarrassing. It demonstrates absolutely no knowledge of why interest rates at historic lows. An interest rate rise of one percent would be HORRIBLE.
http://www.canadianbusiness.com/article/77314--bmo-survey-suggests-interest-rate-hike-worries-4-in-10-homeowners
This person is the president of the Victoria Real Estate Board. Completely ridiculous.
Davidl
Than we are back to 2006 median.
How much do you want to pay for cabinets for a suite?
They can be done for as little as the cost of updating the main floor cabinets and putting the old ones in the basement for the tenants.
Can we at least agree on that a roof is a roof.
Average detached house in the 416 area code is 746k. Victoria is losing ground.
For me a suite detracts from price as I have to pay for it and then pay to have it torn out (although I am a lot like Totoro in that I will get my hands dirty for these sorts of jobs).
"Interest rates are also holding, but should they increase by as little as 1%, that would negate a 10% drop in purchase price."
But the people who buy today will get tomorrow's rates at today's price.
@ a simple man
Good point regarding removing those pesky suites. Might be something for the buyer to negotiate in the next few years. If prices adjust so that many of us no longer require a third income, how many would continue to rent out part of the house?
I always thought the old axiom was 'buy the worse house on the best street', echoing the location, location, location mantra.
This has proven to be accurate in my case. I always buy according to location. My preference is Inner Harbour or upscale acreage areas. My next purchase for personal use - after the correction is WELL in hand - will be one of those areas.
If I were buying for investment purposes and wanted to rent the units out I would go Oak or James Bay. Both areas are full of old folks who are reliable tenants. They pay their rent, they don't damage the premises and they tend to stay put. Hard to find more ideal tenants and they tend to be lovely to deal with as well.
http://www.realtor.ca/propertyDetails.aspx?propertyId=12409109&PidKey=704642113
"Trades, Hobbies, Craftsperson?"
What kind of tradesperson/hobbiest/craftsperson would be able to afford 1.325 million?
If you build it they will buy.
^ love it. But not at that price.
Is the assessment just for the land?
assessed: 4,408,000
asking: 18,000,000
http://www.realtor.ca/propertyDetails.aspx?propertyId=12415728&PidKey=-498200299
^ might be a bit tight with < 12,000 sq.ft.
Yeah, it's different here....
What colour is your parachute(s)!?!?
@Leo S - is it true? Are you in the process?
Still thinking. With needing to move it's a tough decision.
This is about Vancouver but I think the same principle applies here.
"Reductions of 66-75 percent would take us back around 10 years, or a little more. Particularly if you’re 35 or over — i.e. you’ve been an adult for that decade — think about exactly how much has, and hasn’t, changed about Vancouver, Canada, the industrialized world in that decade. Is it impossible to imagine real estate costing about what it did at the beginning of that decade, adjusted for inflation? (Which has been fairly low in many other areas of the economy — if you still have utility bills from 10-12 years ago, compare them with what you pay today. My monthly gas bills peaked in 2001-02.) And keep in mind, that by historical and national norms, Vancouver real estate was expensive then, on the verge of insupportably expensive. If 2001 prices seem impossibly low (and affordable) by reference to your salary, consider whether your salary has gone up due to inflation or because you’ve advanced in your career. It’s not surprising that a given price for a house or condo should seem cheaper to a 45-year-old than to a 35-year-old; the 45-year-old usually earns more, controlling for factors such as location and occupation. The bubble mentality and behavior have been so intense that they’ve affected the judgments even of many who consider themselves bears. Just because the bubble has lasted an unusually long time doesn’t mean the rules of the world have changed. Reversion to historical norms is actually, well, normal."
http://vreaa.wordpress.com/2012/10/01/i-visited-a-few-open-houses-today-at-every-one-i-was-the-only-visitor-and-the-sales-pitch-was-the-same-buy-now-do-a-few-quick-fixes-and-sell-higher-nobody-assumed-that-i-may-actually/#comment-49016
For anyone who read the release today. It has been changed.
All the arrows are pointing down now. Where as some arrows were pointing up and green this morning. I really like the new green check marks for 0%.
If anybody has a cached version save it for fun.
Okay - a roof is a roof. And suites aren't for everyone.
All the arrows are pointing down now. Where as some arrows were pointing up and green this morning.
I don't think this is intentional. The caching on their site is a bit off and often shows the previous month's table instead of the current one even when the text is update. You have to force a refresh to get the new images.
@LeoS
Ah, thanks.
People shouldn't wait for prices to drop, because we never know when interest rates will be increased to stimulate the economy."
I just read this again and my head exploded. Interest rates increase to stimulate the economy???
I thought I would turn over a new leaf and show that I can be positive on real estate too.
Here is my list of what I consider to have been the best sales for September
193 Obed at $325,000
3341 Cedar Hill Road at $400,000
1068 Bank Street At $418,000
These 3 are what I consider lot value, but also livable homes. With some of Totoro's sweat equity, one could have an acceptable place.
741 Greenlea Drive at $425,000
700 Miller Avenue at $484,000
2091 Carrick Street at $530,000
Ranch style homes in good neighborhoods. And because suite's are the rage right now, these one storey homes are going for very nice prices.
1526 San Juan Ave at $531,000
1550 Earle Place at $536,000
3228 Carman Street at $572,000
1325 Topaz Ave at $572,500
Yes even some of the basement homes with suites or family stackers can be nice too.
93 Linden at $727,000
4480 Shore Way at $750,000
3314 Woodburn Ave at $777,000
Character homes and some good locations with views.
See, I can play nice too.
"NOW IS THE TIME TO TAKE ADVANTAGE OF THE 1ST HOMEBUYERS TAX CREDIT!! DON'T THROW FREE MONEY AWAY!!!"
http://www.realtor.ca/propertyDetails.aspx?propertyId=12404708&PidKey=-1691560685
overpriced....
How about a look at the "Outer Limits" of our marketplace.
The Gulf Islands and more specifically Salt Spring.
This week a water view home on Maxine sold for almost exactly twice the price that it was bought for 16 years ago in December 1996.
Could that happen here in Victoria? Salt Spring island is not Mars, the island is in Victoria's back yard. People commute from Salt Spring to Victoria and to Vancouver. It's a pretty island, friendly people and the weather is as good as any place in Victoria or Oak Bay.
Well back in December 1996, the median price for a home, like a Gordon Head box, in the Victoria core was $223,000.
Could a Gordon Head box again be twice the 1996 price or $446,000? That's a 22 percent drop from today's house median for the core districts?
Most likely - not. Since we are just at the beginning of a correction, a 22 percent decline would be the minimum drop.
Do, do, do, do, do, do, do, do ...
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