After a near-decade of price inflation in the Victoria real estate market, you could probably forgive sellers for the hard times they must be feeling these days as the weeks go by without a sale and the days without showings outnumber the days with showings by a wider margin. Many Victoria sellers likely believe this period will pass in short order and 'the norm' will return before they start to feel the consequences of their stubborn-ness.
Those of us who have followed this market for some time know this phenomena as "catching a falling knife."
I overheard a conversation between a seller and an agent recently* that I've re-created** here for your entertainment:
Seller: It's been 45 days since we put the house up for sale and we haven't seen an offer. Why?
Agent: The market is slow all over town right now. There's lots of houses on the market and there aren't very many buyers actively looking to make a purchase. You might want to think about dropping your asking price if you want to invite an offer.
Seller: We did that 15 days ago. You told me August was slow and things would pick up in September again so we dropped our asking price by $10,000 to attract some interest. We've had two open houses and a handful of agents walk through. And yet not even a hint of an interested buyer. Our house is worth more than we're asking for it. We've invested almost $10,000 getting it ready to sell and making it the nicest house in the neighbourhood, why no buyer interest?
Agent: The market has changed. There are far more homes for sale than buyers actively looking to make offers. Believe me, I'm hearing the same thing from my other clients and I'm hearing other agents telling me their clients are all saying the same things. You have to understand, it's not just about having a nice house anymore that people can move in and enjoy right away. I know that when you bought 7 years ago, you would have faced bidding wars on houses that needed work. That's not normal. That market was too hot to be sustainable. This market is what we call balanced. Which means you have to not only have the nicest house in your area, you also have to have the best price. Right now, we're talking about you finding the best price.
Seller: So what does that mean? Are you suggesting we drop the price again? We started at $499,000 now we're at $489,000 and there are less showings than when we were at $499,000. That doesn't tell me the price is wrong.
Agent: Do you recall when we first talked about your listing price? We looked at some comparables in the neighbourhood to determine what price your house should be offered for sale at. We had a discussion then about the condition of your house in comparison to your immediate competition. We agreed the money you'd spent on getting your home ready for sale made it nicer than the rest. We agreed this was a good thing and would likely mean that you were more likely to get more for your house than Mr and Mrs Jones the next block over.
Seller: We did. We should. Our house is nicer. It's worth more.
Agent: Have any of those houses sold yet? They haven't have they? Have they dropped their prices too? They have. You see what I mean? Your house is in nicer condition and you're asking a premium price based on that when you look at the comparables.
Seller: Of course we are. It's worth more.
Agent: I think we should price it the same as the Jone's house around the corner and see if we can invite more viewings that way and maybe entice an offer.
Seller: Are you suggesting we drop our price over $40,000 from the original? That's crazy, we may as well give it away.
Agent: If we price it the same, you'll have the best house at the same price. If you were shopping around for a new car, and saw a BMW for the same price as a Toyota, would you hesitate to look at the BMW and maybe even buy it?
Seller: We can buy a BMW with that $40,000 you're suggesting we just give away.
Agent: You're moving right? You've already made that commitment. What are your options? Can you afford to buy your new house if this one hasn't sold? Can you afford to wait to move until this house sells at the price you think it should sell for? I have to tell you, I don't see prices going up anytime soon. They haven't really been going up for a couple of years now. So if your price that you think your house should be at is already too high, when do you see the market bringing you that price?
Seller: You tell me, you're supposed to be the expert.
Agent: I'm telling you now. The market doesn't agree that you have a $500,000 home. The market might bear $460,000, but we won't know until we try.
Seller: If we drop the price $40,000 in only 45 days we'll be inviting low ball offers. We don't want a low ball offer.
Agent: Right now you're not getting any offers. A low ball offer is better than no offer and gives us a chance to counter. Once a buyer has made a decision to make an offer, we'll have an opportunity to negotiate. That's a lot better position than you're in today.
Seller: So we drop our price. What happens when the Jone's drop their's too, which they did already? What then? Drop our price all over again? That would be crazy. This is Victoria, people want to live here.***
Agent: That's competition and that's the way the market works. Hopefully you'll get a buyer soon. But you'll need to be prepared to adapt to the changing conditions in the market if you really want to sell your home .
* no I didn't
** by re-created I mean made-up
*** see what I did there?
Those of us who have followed this market for some time know this phenomena as "catching a falling knife."
I overheard a conversation between a seller and an agent recently* that I've re-created** here for your entertainment:
Seller: It's been 45 days since we put the house up for sale and we haven't seen an offer. Why?
Agent: The market is slow all over town right now. There's lots of houses on the market and there aren't very many buyers actively looking to make a purchase. You might want to think about dropping your asking price if you want to invite an offer.
Seller: We did that 15 days ago. You told me August was slow and things would pick up in September again so we dropped our asking price by $10,000 to attract some interest. We've had two open houses and a handful of agents walk through. And yet not even a hint of an interested buyer. Our house is worth more than we're asking for it. We've invested almost $10,000 getting it ready to sell and making it the nicest house in the neighbourhood, why no buyer interest?
Agent: The market has changed. There are far more homes for sale than buyers actively looking to make offers. Believe me, I'm hearing the same thing from my other clients and I'm hearing other agents telling me their clients are all saying the same things. You have to understand, it's not just about having a nice house anymore that people can move in and enjoy right away. I know that when you bought 7 years ago, you would have faced bidding wars on houses that needed work. That's not normal. That market was too hot to be sustainable. This market is what we call balanced. Which means you have to not only have the nicest house in your area, you also have to have the best price. Right now, we're talking about you finding the best price.
Seller: So what does that mean? Are you suggesting we drop the price again? We started at $499,000 now we're at $489,000 and there are less showings than when we were at $499,000. That doesn't tell me the price is wrong.
Agent: Do you recall when we first talked about your listing price? We looked at some comparables in the neighbourhood to determine what price your house should be offered for sale at. We had a discussion then about the condition of your house in comparison to your immediate competition. We agreed the money you'd spent on getting your home ready for sale made it nicer than the rest. We agreed this was a good thing and would likely mean that you were more likely to get more for your house than Mr and Mrs Jones the next block over.
Seller: We did. We should. Our house is nicer. It's worth more.
Agent: Have any of those houses sold yet? They haven't have they? Have they dropped their prices too? They have. You see what I mean? Your house is in nicer condition and you're asking a premium price based on that when you look at the comparables.
Seller: Of course we are. It's worth more.
Agent: I think we should price it the same as the Jone's house around the corner and see if we can invite more viewings that way and maybe entice an offer.
Seller: Are you suggesting we drop our price over $40,000 from the original? That's crazy, we may as well give it away.
Agent: If we price it the same, you'll have the best house at the same price. If you were shopping around for a new car, and saw a BMW for the same price as a Toyota, would you hesitate to look at the BMW and maybe even buy it?
Seller: We can buy a BMW with that $40,000 you're suggesting we just give away.
Agent: You're moving right? You've already made that commitment. What are your options? Can you afford to buy your new house if this one hasn't sold? Can you afford to wait to move until this house sells at the price you think it should sell for? I have to tell you, I don't see prices going up anytime soon. They haven't really been going up for a couple of years now. So if your price that you think your house should be at is already too high, when do you see the market bringing you that price?
Seller: You tell me, you're supposed to be the expert.
Agent: I'm telling you now. The market doesn't agree that you have a $500,000 home. The market might bear $460,000, but we won't know until we try.
Seller: If we drop the price $40,000 in only 45 days we'll be inviting low ball offers. We don't want a low ball offer.
Agent: Right now you're not getting any offers. A low ball offer is better than no offer and gives us a chance to counter. Once a buyer has made a decision to make an offer, we'll have an opportunity to negotiate. That's a lot better position than you're in today.
Seller: So we drop our price. What happens when the Jone's drop their's too, which they did already? What then? Drop our price all over again? That would be crazy. This is Victoria, people want to live here.***
Agent: That's competition and that's the way the market works. Hopefully you'll get a buyer soon. But you'll need to be prepared to adapt to the changing conditions in the market if you really want to sell your home .
* no I didn't
** by re-created I mean made-up
*** see what I did there?
160 comments:
and it still amazes me that a lot of sellers may pay 6%100k+3%balance* to sell their home!
The conversation you overheard just goes to show once again, it comes down to price, not who your listing agent is (assuming the pictures and data input are half decent)!
However, if your listing agent is charging less commission you can price more aggressively in this market to make your home more desirable to buyers.
*Actual commission may be higher or lower. 6.0%100k+3.0%balance used for illustration purposes only.
A lot of home owners are in denial about what makes up the value of their home. Most believe that the value is as solid as the brick and mortar that the home is built with. Few understand that the ability to get financing constitutes the biggest portion of the home's value. And that's the fuzzy world of value. A home is worth $600,000 at 3.99 percent financing and the same home is worth $400,000 at 8 percent financing. The brick and mortar hasn't changed just the cost of money.
And it isn't just the cost of money, but how many can get financing or get mortgage insurance. Because without the ability to get financing, then it doesn't matter what the interest rate is. There is simply too much inventory and too few qualified buyers.
These things are not going to change, and most likely financing will get even more difficult to obtain for prospective purchasers in the immediate future as CMHC reaches the 600 billion dollar cap.
For home owners that are content and not wishing to sell, this has zero affect on their lives. Most will just not list their home or will cancel their listing.
But that means the inventory is more concentrated in buyers that NEED to sell. And few agents will be willing to have the expense of taking on a client that has unrealistic expectations. Especially as we head into the slower winter market with the months-of-inventory being so high.
But this is GOOD thing. Lower prices mean that those buying in the future will commit less of their gross income to a mortgage. And that leaves more money to be spent in the local economy.
A lot of agents, carpenters, plumbers, electricians and brokers will leave the industry and retrain themselves. That will leave the ones left to make an acceptable income.
I think we should price it the same as the Jone's house
It should be "Jones' house."
For Mary and Tom Jone?
I was getting excited about HHV's post until I read the footnote.
Oh well.
Don't be so sad. conversations like this are going on right now without doubt. Especially because a lot of people overprice their properties....
Esquimalt seems to be getting pounded by the change in lending regulations. Esquimalt, affectionately known as the poor man's Oak Bay, has generally been considered the ugly sister of the urban core districts. With 51 house listings and only 4 sales in the last 30 days and 4 new listings being added for each sale, it does seem to be keeping this tarnished reputation.
It's difficult to call where house prices are in this community, but a quick look at list prices suggests the prices have rolled back to late 2006 to early 2007 levels.
If you want affordable housing within biking distance to the city core, nice parks, easy access to water front and the same weather conditions as South Oak Bay, then a condo in Esquimalt might just be the answer. Come and make an offer, because with 78 condos for sale and only 5 sales in the last month, yours will likely be the ONLY offer the vendors will get. But you don't have to hurry as for every sale, there are 5 new listings.
and it still amazes me that a lot of sellers may pay 6%100k+3%balance* to sell their home!
Be glad they do. The whole premise of cash-back only works because people are agreeing to pay insane commissions.
It's a time limited opportunity. Evnetually the majority of sellers will realize they don't need to pay 6%/3% to sell their home, and there will be no more cash to give back to buyers.
There are some 47 condominiums for sale in Oak Bay.
Ranging from a low of $200,000 to a high of $4,000,000. Even for Madonna, that's quite a spread.
Of course you don't have to pay $2,700,000 for a new condo at the Oak Bay Beach Hotel. You can buy an updated 40 year old condominium of the same size and same unobstructed water view at $1,500,000. That difference should leave you more than enough to update the drapes and get a wide screen TV.
So who will play the leads in the movie version? Eric Peterson as the homeowner?
I'd be interested in hearing your thoughts on the restrictions on stratas and if these will change as the market softens? Coming from Ontario and looking to buy in the future here I am amazed at the places we cannot purchase due to age. Are there really that many 55+ year olds looking for places? Who is going to buy these places?
In a hot market everything is flying of the shelf, pet restrictions, age restrictions, rental restrictions, etc. Buyers just want into the market.
As the market softens buyers take their time and consider restrictions carefully...my impression is that restrictive strata’s proportionally suffer more in markets like this than ones with few restrictions.
The faux conversation that started off this thread seems to hit the mark in the three neighbourhoods I know well. Houses just languish with very little activity and the occasional price drop and then eventually the property disappears from the market after 90 days. I even pass two of Marko's Fernwood listings almost every day and I've never seen any activity and the house just a few feet west of Marko's Gladstone listing is begging for an offer at less than the owner's recent purchase price.
Does anyone know how to gather data for all houses in Greater Victoria that have sold more than once since 2007?
That's going to be a big psychological barrier for people to cross. The idea that after owning their house for 3-5 years and putting money into updating it is worth less than what they paid.
Leo S said...
That's going to be a big psychological barrier for people to cross. The idea that after owning their house for 3-5 years and putting money into updating it is worth less than what they paid.
These people took the plunge and bought their first house or bought up planning to move up again to their dream house because all of their friends, co-workers, family members (you name 'em) were doing it and going on and on about how much money they made on their houses and how they now live in their dream home. Now reality strikes. Well, not yet. Denial first. How can my house not be worth more after 3-5 year?!?
Part of the reason for the 'conversation' is that some people who bought recently have their house listed for not too much more then they paid. They can't (won't) afford to go lower yet. Imagine paying $524,000 for a house and then dropping the ask to $519,000 with still no takers. Reality sucks eh?
S2 (JJ's wife)
What a wonderful read. I have to say I think you captured both sides nicely. The Realtor sounds experienced, like she/he's gone through this before.
"Be glad they do. The whole premise of cash-back only works because people are agreeing to pay insane commissions.
It's a time limited opportunity. Evnetually the majority of sellers will realize they don't need to pay 6%/3% to sell their home, and there will be no more cash to give back to buyers."
The cash back isn't derived from 6%/3%, it is derived from the cooperating broker commission which may be half, such as 3%/1.5%.
While the 6%/3% may slowly adapt, in my opinion, it will be a long long time before the 3%/1.5% disappears, especially given the current market. i.e. I think there will be a shift away from the half/half split and even this will take a long time (5+ years).
Cash back probably around for at least another 10 to 15 years....but that isn't my only rabbit in the hat, stay tuned.
"Does anyone know how to gather data for all houses in Greater Victoria that have sold more than once since 2007?"
You would have to manually go through the history of each sale. If I had the time I could do it.
Houses; however, not so interesting...condos on the other hand - some huge drops. Some individual’s way overpaid in 2007/2008 during the frenzy.
Currently the perception is that you need to offer the buying realtor the full commission to bring buyers. I bet that will change with time. Good point though that with current conditions people would be reluctant to risk hurting their chances of sale by skimping on the buying commission.
You are correct. A lot of people don't realize that the gross commission can be, for example, 3.0%100k+2.5%balance with 3.0%100k+1.5%balance offered to the buyers' agents.
Difficult to get through to the general public on some of these concepts.
The cash back concept is simple so I find that is why it works well, not much to explain, "I bought a house and my realtor wrote me a cheque for $5,000."
Currently the perception is that you need to offer the buying realtor the full commission to bring buyers. I bet that will change with time. Good point though that with current conditions people would be reluctant to risk hurting their chances of sale by skimping on the buying commission.
I thought that the commission for the buying agent was negotiated between him and the listing agent out of the latter's commission, and that the seller agrees to pay a commission to the listing agent (only) as spelled out in the listing contract. In other words, the commission split is entirely outside the seller's discretion.
That's certainly the way it was the last time I sold a house. Has this changed?
Interesting roundtable discussion last night on the National - the tone has changed with a few of the commentators actually saying things like now is a good time to rent and if you are going to sell sell NOW.
Here's a link the "National housing slump?" video from last nights' The National on CBC television:
http://www.cbc.ca/player/News/TV%20Shows/The%20National/ID/2281458681/
Imagine paying $524,000 for a house and then dropping the ask to $519,000 with still no takers. Reality sucks eh?
S2,
Respectfully, lowering one's asking price by .95% isn't much of a "reality sucks" moment. (Maybe it would be if one's expectations were wildly out of whack.)
The realization that prices don't always go up isn't a pleasant one, but the truth is that, historically speaking, price declines are eventually followed by strong price gains, gains that culminate in new all-time highs.
Do I think Victorians will have to wait a long time for these gains to occur? Yes. But history strongly suggests that they will occur.
Advice to today's homeowners: don't sell unless you have to. Hunker down. Aggressively pay down that mortgage in today's low-interest environment. And, it warrants repeating, don't sell unless you have to. Need vs. want. Very important distinction.
The good times will return. One day.
"In other words, the commission split is entirely outside the seller's discretion.
That's certainly the way it was the last time I sold a house. Has this changed?"
I doubt it has ever been like this...the seller and the realtor negotiate both the gross commission and the portion of that gross commission that is offered to buyers' agents.
For example you can negotiate a 5% commission but you as the seller want 4% of it offered to buyers' agents (cooperating broker fee).
thanks for putting up the link, DavidL.
Tonight the national spends time in Vancouver talking about housing prices and apparently a interview with Garth Turner. Will be entertaining!
Was a house inspector at 2628 Eastdowne the other day - interesting to see if it goes pending. I went to the open house on Sunday - nice place, but certainly made some cheap decision based on renos. Also backing the baseball pitch may be a real pain for 3-4 months of the yr.
The panel on the National spoke of many of the things that we have discussed on this blog.
They did miss a few things that will have a big affect on our market, such as rising unemployment and more importantly skyrocketing vacancy rates.
If your renting a home outside of 10 miles of the downtown core and the tenant leaves, you may have to drop your rent or wait three months to find a tenant. Either way, that will have an immediate affect on your ability to service that debt.
What has been stabilizing this market is that home owners have been able to dip into their lines of credit to meet monthly bills and rent losses.
Most people take out a mortgage with a 3 or 5 year renewal. One has to look back at the market in 2009 and 2007 to see what the market was doing. Current home prices are essentially flat in relation to those years. Which means people renewing today have very little room to roll other debts into their mortgage.
Of course that means, those families have to start making cuts to their budgets like eliminating frivolous expenses such as too many telephone lines, cable vision, gardener, dog walker, etc.. And that means rising unemployment, moving to a different city for a job, people doubling up on housing and the kids coming back home to mom and dad. And that means even more empty suites.
What percent of homeowners bought between 2007 and 2009?
Where are the stats indicating skyrocketing vacancies?
Where are the figures indicating rising unemployment?
What percent of Victoria homeowners have dipped into lines of credit?
My gut says a lot. It's hard to resist when your credit card is 7.5% and your LOC is 3%.
Would you consider almost doubling the unemployment rate in Victoria from 2008 as rising?
Or the vacancy rate quadrupling since 2006 as skyrocketing?
As for the percentages of home owners that bought in 2007 and 2009. 100 percent of those that had 5 and 3 year renewals respectively will be renewing this year.
Oh, I thought you were talking about current trends. unemployment in BC has reduced has it not? Vacancy rate is also trending down now isn't it?
No need to guess. According to CAAMP, 34% of households with a mortage have a HELOC, with an average balance of $59,000.
No, unemployment in Victoria has increased and so have vacancy rates.
I thought I had read somewhere that the trend was slowing but I find nothing. I guess we will have to wait for the post spring reports to come in.
Ok I concede that our unemployment rate increased by .1% in the spring ;-)
CMHC will be coming out with the vacancy rate for Victoria about the middle of October.
It will be interesting to see what happens to the rate.
My money is on the rate going higher. I say that, because as I bike around town, I see for rent signs on apartment buildings that for years have never had a vacancy sign outside of them.
There are some really cool Art Deco apartments, I'd like to rent around Beacon Hill Park.
I found these interesting tidbits regarding HELOCs and equity:
* Households with both mortgages and HELOCs: 2 million (Average HELOC size: $58,600)
* Households with a HELOC but no mortgage: 625,000 (Average HELOC size: $70,700)
* Average equity for homeowners with mortgages but no HELOC: 49%
* Average equity for homeowners with both mortgages and a HELOC: 41%
* Average equity for homeowners with a HELOC but no mortgage: 82%
Some people keep HELOCs as a backup, and rarely use them.)
http://www.centum.ca/AboveAll/Blog/CAAMP_s_Spring_Mortgage_Report_2012
Canada's Housing Crash Begins according to Canadian Business Magazine.
It is only a matter of time before the average price more accurately reflects the price reductions and general weakness of the Victoria housing market over the past number of months. This is what is happening in Vancouver, and it is happening fast.
It was not that long ago that most Canadians would state that Canada was different and that our housing market would not correct or crash. Well, most Canadians were wrong.
Deep price cuts are necessary to sell a house in Vancouver these days. Houses can be had for 15% to 20% below peak in Victoria right now, but the decline has only really started. If you are a potential buyer in Victoria right now, hold off and wait for prices to come down more. It will be well worth it.
It's hard to believe that the volume of sales can get significantly lower that they are today. Especially in areas like Oak Bay.
I mean are they not dying faster than the agents can sell homes in Croak Bay these days. There have been 10 sales in the last month, surely there must have been at least that many burials.
It seems the only land that is appreciating in Oak Bay these days measures 6 feet deep.
As for Fernwood, good luck trying to sell a home in that hood that doesn't have a suite.
That could be the reason why only two of the 22 homes listed in that hood have sold in the last month. And both had suites.
google this for a fun look at some listings in Vancouver:
Vancouver Price Drop Desperation Meter
"Even for Madonna, that's quite a spread."
Bahaha, that's a pretty funny saying!
OMG you are all very funny. But no one really answered my question from yesterday. I haven't slept since! Marko did comment on the softening market for stratas with restrictions (thank you for sharing that perspective Marko). But I am interested in perspectives on whether a strata would be motivated to change its restrictions if places don't sell? Has this happened in other weak markets times in Victoria? I know it has happened in the U.S. Or, can a strata make an accommodation during downcycles in the market and let us undesirables in?
I've never heard of the age restricted (55+ buildings) stratas changing that rule no matter what the market does. Anybody else?
I know of some property managers that have brought up the point about changing the strata corporation bylaws to remove the age restrictions and they have not been successful. There are just too many myths about real estate that these old timers believe to be true. And that there building will be over run by children and their property value will drop, is one of them.
Far better to lobby the city, to make a bylaw that restricts ownership based on age unenforceable. That would go a long way in making affordable housing available to young families without a cost to the taxpayer or the city.
Besides, it just isn't right to discriminate against children.
Imagine, a couple hours of work for the city council to pass a motion and hundreds of affordable units are made available to young families.
Ahhh, its too simple.
Just Jack - is it a provincial law or a city bylaw? I thought this was something special in the province. It did strike me as very discriminatory. In Ontario I don't even thing pets can be discriminated against but here no one likes my kids (other than me!). I find this quite fascinating because there are townhouses that seem to be very suitable for families but people need to be 55 to live in them. I don't want a SFH because of the work involved but I also don't want an condo/apartment.
I honestly believe that it is illegal to discriminate against children in housing situations. I think that if someone spent the time and money to challenge that in court, it would fail. Charter of Rights and all that.
Today's RE News...
Globe & Mail - Housing market will crash: research firm
Get ready for a Canadian housing crash.
That’s the forecast from the folks at research firm Capital Economics, who say the collapse in house prices will feed into economic weakness and cause the Bank of Canada to back track on its insistence that the next move in domestic interest rates will be up.
“Home sales have slumped in recent months, not just in response to the tightening of mortgage lending standards. We fear this adjustment is only just starting and anticipate that the resulting excess supply of homes for sale will eventually drive home prices down by as much as 25 per cent,” the firm says in a note to clients.
That's a conflict between the Rental Act and the Condominium Act.
You can't discriminate in renting a suite to someone who has children. But you can if they want to buy the suite. The person buying into the complex must be approved by the Strata members. Think of the strata as a private club.
White balls elect
Black balls reject
As for the Globe and Mail article
"Then the home owner arose, and tattooed his arm, and shaved his head, and fell down upon the small lot subdivision, and worshiped the granite counter tops,
And said, renter came I out of my mother's home, and renter shall I return thither: the government gave me high house prices, and the government hath taken away; blessed be the name of Flaherty."
Just Jack - if the strata has no restrictions is it still necessary to be approved by the 'club'? What would they be approving that would be within their rights to do so?
Thanks.
"if the strata has no restrictions is it still necessary to be approved by the 'club'?"
No.
When buying into a strata, you should read the last two years of the strata council meetings and the bylaws.
Issues about deferred maintenance or upcoming special assessments should be investigated as to the costs involved.
The complex should have a building depreciation analysis done. The recommendations made by the person making the study may lead to a significant bump in the monthly strata fees.
http://www.cbc.ca/player/News/TV%20Shows/The%20National/ID/2282034757/
Interesting on the National last night (as linked by Marko above), the discussion about a drop in prices has gone from a "if there is a drop" to a "when" and "how big".
The masses are now starting to hear. This will impact psychology.
I didn't expect to get a 'bug in my craw' by just looking to purchase a home for my family in B.C. but I have to admit it has happened. I can't be the only person to find it wrong that age is permissable discrimination? What if the strata rules defined a restriction such as race? So, for the first time I actually looked up the charter of rights and freedoms. Up to this point I've just lived with the privilege and benefits of it.
http://www.efc.ca/pages/law/charter/charter.text.html
EQUALITY BEFORE AND UNDER LAW AND EQUAL PROTECTION AND BENEFIT OF LAW / Affirmative action programs.
15. (1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.
(2) Subsection (1) does not preclude any law, program or activity that has as its object the amelioration of conditions of disadvantaged individuals or groups including those that are disadvantaged because of race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.
Do I want to live somewhere where we are not welcomed - no of course not. But I never realized that my family wasn't welcomed in so many places before. A very good lesson for me because others in Canada have experienced this on a more systemic basis. Someone must have challenged this before? Does anyone know of anything along this line?
What is also interesting, is that the news can now find Economists to talk on camera. Where were these same economists a couple years ago?
If you have to in-debt yourself to spending half your working life and a big chunk of your disposable income to the purchase of one asset - no rational person would do it. But put the specter of easy money to be made, then it becomes the Yukon Gold rush all over again. And in the end, you will find that most people made and then lost the money in real estate. The true winners were the ones that sold the picks and shovels.
- and a couple of saloon gals too.
New CBC article out
How Canada resembles a slow-motion replay of the American crash
"If you have to in-debt yourself to spending half your working life and a big chunk of your disposable income to the purchase of one asset - no rational person would do it."
The above comment is a description of most wealthy older immigrants that I know in Victoria - irrational people? Came to Canada, a lot of them worked labour intensive jobs, for more than half their working life and most invested it primarily into real estate.
Straw man argument there Marko. This is 2012 not 1955.
One, if not the only argument that I hear from informed sources why our banking system is different from the USA, is that Canada did not have the excessive below prime lending as the Americans.
We did have sub prime lending, just not as much as the Americans.
But how much is too much? Maybe we have just enough. The extent of the American sub prime market wasn't known, until that market corrected. The same could be true in Canada.
"Do I want to live somewhere where we are not welcomed - no of course not. But I never realized that my family wasn't welcomed in so many places before. A very good lesson for me because others in Canada have experienced this on a more systemic basis. Someone must have challenged this before? Does anyone know of anything along this line?"
It has been challenged before, i.e. a woman got pregnant in a 19+ only building, etc., won the case and was allowed to stay.
However, it hasn't been widely challenged. Even though I am in my late 20s I understand why a 65 year old would not want to live next to a young family of 4 or a bunch of partying teenagers.
A lot of the new buildings downtown have unrestricted rentals, not pet restrictions, no age restrictions.
Typically half the building is rented, some of which are drug dealers, you have a lot of university kids either renting or parents bought the units, or a lot of first time buyers also buy a first time pet, typically dog, for their 450 sq.ft. unit. Then you have those pet owners throwing their dog crap into garbage bin next to the mail boxes so you can smell it every time you go get your mail :)
Personally, I would never buy into a building with any restrictions; however, they do have their place.
A drug dealer isn't going to set up shop in a 55+ building with no rentals allowed.
And the whole issue of the gov't's $111 BILLION bailout of our banks after 2008 seems to have disappeared off the radar of news agencies?
Are we really that much better than the states?
"Straw man argument there Marko. This is 2012 not 1955."
Same concept thought.
They should let the market take care of the restrictions. Put in shag carpet, wood paneling on all the walls, host weekly square dance jamborees and only allow advertisers for dentures and incontinence products in the elevators. No one under 55 will want to move in and you don't get sued under the human rights act
How do women only gyms work under the human rights act?
Man, does our society stereotype people.
I suppose we could add that renters love their children less than home owners.
Do not these strata's have regulations on noise? Do not we have laws against drug dealers?
Who is to say that the day you turn 19, you become accountable or responsible for your actions. In Victoria we have 30 year olds that still haven't matured and are riding around on long boards and breaking into cars.
Accountability and responsibility are taught to you by your parents, not by a Strata Council or by buying a condo.
Or as the young man send to his Psychiatrist.
"I'm a loser because my father is an alcoholic."
And the doctor replied.
"No, your father's an alcoholic because your a loser."
From this morning's Times Colonist:
$30-million boost for Camosun
I would never buy in a rental restricted condo; however, you would be very naive to think there is no difference between a building where half the units are rented and where it is 100% owner occupiers.
Under the Rental Act you can not discriminate based on age.
Under the Condominium Act you can have a bylaw that sets an age restriction.
Your buying into a collective and agree to follow their bylaws. Much like a woman's gym can restrict their membership for privacy reasons.
Unlike say the Union Club, which can not restrict its membership to just men, because their is no legitimate reason to do so. I mean try to use the same argument that woman are noisy and disruptive to not allow them membership.
So, as long as society believes that all young people are irresponsible then we can have age restrictions in condo complexes.
But there are a lot of illogical age restrictions. You can train an 18 year old to blow the head off someone in Afghanistan from a mile away. He just can't go to the bar and have a drink. Because that would be wrong.
Jack, I agree - we do stereotype way too much against young people, just like on this blog; whenever, a younger buyer is mentioned in conversation it is always followed by, "bank of mommy and daddy." Is it too hard to believe that young individuals can work hard to achieve real estate goals :)
Anway, now that I've waste 30 minutes of my morning on this blog back to work.
There are apartment buildings just for renters. I actually have lived in some at times. I never found them to be excessively noisy or unruly, there were no weekly ambulances or police raids.
I suppose the thought is that home ownership teaches responsibility and accountability. I always thought it was a paper route or taking care of a dog.
So by extension are those people that live in expensive homes more lawful and respective than those that live in less costly condominiums?
But Marko, will you still say the same thing when you are an old person.
I think it is in our human nature, to exclude others to make ourselves feel more important. And that's what the age restriction really is.
Do you really think your grand parents hated you as a child. No, they didn't hate you.
- they just hated the other neighbors' kids.
The rights guaranteed under the Charter are limited by s.1 to "only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society."
British Columbia provides a blanket statutory exemption for seniors-only housing. They differ in terms of the types of housing to which each applies, and also in terms of flexibility regarding the number of residents who may be below the age limit.
British Columbia’s Human Rights Code provides that the Act’s protection against age-related discrimination in rental tenancy does not apply:
"if the space is a rental unit in residential premises in which every rental unit is reserved
for rental to a person who has reached 55 years of age or to 2 or more persons, at least
one of whom has reached 55 years of age".
Want to try and interpret that.
If declining house prices are now thought inevitable, the concept of "affordability" will have to change to take into account the equity you need to survive the fall in capital value.
It is legally okay to have 55 plus restricted buildings in BC. it is in law and an exemption from the BC Human Rights Code which is based on the Charter which has section 1 allowing discriminatory laws which are deemed a reasonable limit on the right.
Better?
If you are in a strata having an age restriction that is not a 55+ bldg, such as 19, 40 etc. and you allow rentals in that bldg., then, you cannot discriminate against age in the rental unit. i.e. the rental units in the building can have children, but the owner occupier units cannot. This is not the case in the 55+ bldg.
If you are in a strata having an age restriction that is not a 55+ bldg, such as 19, 40 etc. and you allow rentals in that bldg., then, you cannot discriminate against age in the rental unit. i.e. the rental units in the building can have children, but the owner occupier units cannot. This is not the case in the 55+ bldg.
That means the Legion can build social housing for its members that are 55 and over.
Well I guess that's kinda still on the topic.
But can a private individual who owns an apartment block refuse tenancy based on age?
Clearer
sorry, don't know how that happened.
But the owner of the condominium that has rented the suite in contradiction to the bylaws, can be fined by the strata corporation.
The owner of the condominium can not legally evict the tenant, but the owner can be fined as long as that tenancy continues.
Yes, "if the space is a rental unit in residential premises in which every rental unit is reserved
for rental to a person who has reached 55 years of age or to 2 or more persons, at least
one of whom has reached 55 years of age".
From that CBC The National video:
On why Vancouver is expensive and there's "no more land": "We are in a mini Manhattan here."
Yeah, right.
There are no violation of human rights going on here. There is no hardship being caused by this at all... Law is also about intent, not just technical wording. I don't get being so upset by this?
There is a violation of the Charter: discrimination based on age.
The violation is; however, held to be reasonable and permitted by the law and the exception forms part of the BC Human Rights Code.
Is this reasonable? That is left to the "reasonable person" ie. the courts and legislators to determine.
I think the result of such a case would be a very irritated judge...
I understand now, I just didn't make the flip to seniors housing.
It makes sense when your building or managing seniors housing. But "old folk's" homes are a different business than renting residential apartment buildings.
"Provisions of the Human Rights Code
The Human Rights Code contains provisions prohibiting discrimination on certain
grounds in relation to both the purchase and the rental of a property.
The discriminatory grounds that are prohibited in relation to the purchase of a property
include factors such as race, colour, ancestry, religion etc., but do not include age or
family status.
Only the provisions of the Human Rights Code that relate to tenancy prevent
discrimination on the basis of age or family status (with one exception noted below).
The Human Rights Code therefore only applies to prevent discrimination based on age
or family status in relation to tenancies.
3. 55+ Exception
The provisions of the Human Rights Code respecting discrimination based on age and
family status do not apply to rental premises if the age restriction is set at persons 55
years of age or older.
4. Application of the Human Rights Code
Bylaws that restrict occupancy based on age or family status are unenforceable against
tenants (renters) unless the entire development is limited to persons 55 years and older
(or a couple, one of whom is at least 55).
Unless the building is restricted to age 55 and older, it is not possible for a strata
development to prevent strata lots from being occupied by children in rental suites.
However, age and family status restriction bylaws can apply to owners. Thus, a bylaw
that prevents children can apply to owners who occupy a strata lot. "
Want to see if Vancouver is running out of land. Just Google Earth Vancouver.
There is lots of land - its just under utilized.
But that's not the reason why prices are expensive in Vancouver.
The more you build, the more you stimulate the economy. Then have interest rates so low, that those building the concrete towers can buy the very ones that they built.
You can create your own demand! And as long as you keep building, you keep creating demand. And as long as you have demand, you keep building.
Just don't stop building!
And as long as you keep building, you keep creating demand.
No.
And as long as you have demand, you keep building.
Yes.
According to Robert Shiller, "Canadians... are in some ways more vulnerable than Americans" (when it comes to a housing market correction/crash).
Mark Carney recently stated that the Canadian real estate market is overvalued by 37% (we all remember that). According to the metric he used, house price to income ratio, Vancouver and Victoria are by far the most overvalued markets in Canada. It is logical to conclude that (on average) the most overvalued markets will correct/crash the most while the least overvalued markets will correct the least.
Thanks for the insights. Dasmo - the townhouses that are affordable in the area near my (quiet, lovely, never jump around, won't be annoying teenagers - ha ha) children are age restricted. Are they more affordable because the age restriction kept their prices lower? I've bought several places but I've never had to work around age before. It's almost enough to drive me to buy a SFH. The townhouses seem to be less old in comparison to the SFH which is one of their attractions. However, I'm just acquiring knowledge at this time and enjoying renting. I didn't realize how the rules (or application of condo rules) were so different than my prior experience. Also, Victoria has the best selection of rentals that I've ever experienced. And we are in an 'all renters' building and contrary to some comments above I seem to have thoughtful neighbours of all ages, clean building, caring property manager.
The age restriction is most likely why it's a lower price. As JJ pointed out the same happens with co-ops. But with those you also might get indiscriminately discriminated against ;-). If you are buying, a townhouse isn't necessarily less work, you just have to pay for someone to do maintenance (if it's a strata). If it's detached, you can chose to let your lawn go, unless you live in Oak Bay....
Same concept thought.
"Buy low" is not the same concept as "buy high".
In New York co-op's they don't have to be indiscriminate to discriminate.
Richard Nixon was rejected when he tried to buy a co-op in New York after he got the boot as the leader of the free world. The former president of United States was well not up to standards.
You're right Introvert, at a certain point building no longer creates additional employment. And with this glut of housing, unemployment and vacancy rates rise, along with the months-of-inventory.
I wouldn't have wanted Richard Nixon as a neighbour! The police presence alone would be annoying and drag down values. Reputational risk to the coop would be enormous and who knows what would be recorded in the elevators!
I don't see a glut of housing in Vic. Wouldn't that entail a lot of vacant properties?
@dasmo. Have a look at this article.
Oddly enough, vacancy rates seem to not increase until after price declines, rather than before as one might expect. I can't say I fully understand why but it seems that price declines may force some household consolidation (families moving back in together, more roommates or more people forced to rent out space in their homes)
2091 carrick looks like it has a very good price for size and location. Have not been to see it but for a folks willing to DIY this could be a good deal.
Love the blog, don't post often.
2628 Eastdowne Rd in Oak Bay, looks to be an example of why you would want a 'realtor'
For sale by owner at $700K no bites, Realtor started out at $720K. Looks to be sold at $712K.
As a few posters mentioned what they thought this listings was worth, it was interesting to watch.
Marketing does help.
I suppose it depends on what you consider to be a lot of vacant condos or homes. Say there were 815 condos for sale in Victoria and 226 were available to be occupied immediately or vacant would that be a lot?
In contrast if there were 840 homes for sale and only 104 were vacant would that be a lot?
So, I don't know if the home being empty means that there is a glut.
But, If there are 627 houses for sale in the Western Communities and only 55 sold in the last month. I'd be calling that a glut.
I call one out of seven vacant homes (Las Vegas Valley 2011) a glut.
I'm now convinced that I will never ever ever (think Taylor Swift when reading this) purchase a strata with restrictions. However, I'm still grappling with the differences in B.C. in comparison to that other province other there. When I look at a strata that is two houses stuck together I would have thought it was a semi detached house and a freehold. In that other province the house (Half) was fully owned, no strata. For example, if you needed to replace your roof you would do it independently of your attached neighbour (looks odd but if your neighbour isn't interested they don't need to put out the money). Here the strata (double hosue) looks like a semi but there is a reason for a strata agreement that I can't figure out. An example would be a semi on Richmond above Richardson that I pass every day. Can someone explain the rules on this type of house? Maybe I will never ever ever .... it too? It lets me get into a nice neighbourhood for a reasonable price.
yes - the Eastdowne house sale was fast and the realtor seems to have helped.
Carrick's problem is that it is on an alley shared with an apartment building.
With the strata duplex, you would share the home insurance.
Otherwise go ahead and paint your side purple and put an orange roof on your side. I'm just kidding, then you would look like the town homes and condos along Tyee Road.
Walk around town, the vacancy rate is really high.
For sale by owner at $700K no bites, Realtor started out at $720K. Looks to be sold at $712K.
Of course, minus 6%/3% commission only leaves $684,000
Isn't 6 and 3 $687,640 on 712k? I think they did ok considering they started at 700k. That's not even 2% less than what they wanted in the first place. Oh well, if no one is willing to negotiate, prices won't come down...
Isn't 6 and 3 $687,640 on 712k?
Plus HST if I'm not mistaken.
oh that...the phase out is another thing affecting sales too I'm sure.
Did PST not apply to real estate commissions?
I don't think so. Too late to look it up but I'm in the service biz and never charged PST and I assume paying an agent would fall under the same tax domain.
HST is applicable to real estate commissions.
So yes, that $24,000 commission on a $700,000 home is really closer to $27,000 when you add HST.
"Did PST not apply to real estate commissions?"
No, it was just GST.
"2628 Eastdowne Rd in Oak Bay, looks to be an example of why you would want a 'realtor'
For sale by owner at $700K no bites, Realtor started out at $720K. Looks to be sold at $712K."
As another poster mentioned the owner walked away with a lot less than 700k. They would probably have been better off selling privately for $690k.
This is a smart home owner; the problem with most who try to sell privately is they start out overpriced (they don't want to pay any commission and want to get top dollar for their home). For example, they will go 750k privately and then they will engage a realtor at 720k - doesn't make sense.
The important thing is not so much the listing realtor in this day and age as much as the MLS exposure (assuming pictures and description are okay).
Last 10 sales in Okay Bay, 1 double-end which is about right. 90%+ of the time the buyer sees the property in the PCS account, calls their buyer's agent, views the home, makes an offer. Where is the listing agent in all of this in terms of generating an offer? Listing agent; however, can help with negotiations, paperwork, etc.
We've been abusing listing realtors to do all the showings. Why? Because cash-back realtors have a max number of showings you can do and still get the max amount back. So we get the listing realtor to do the legwork, then when we're really serious just get the cash-back guy to write up the offers.
"We've been abusing listing realtors to do all the showings. Why? Because cash-back realtors have a max number of showings you can do and still get the max amount back. So we get the listing realtor to do the legwork, then when we're really serious just get the cash-back guy to write up the offers."
To be honest, a bad idea. Looks smart on paper, doesn't work so well in real life.
For anyone still hoping for inflation to save them. The masses couldn't have been more wrong over the last few years.
Inflation cools to 2-year low
BC latest y-o-y inflation rate, a whopping 1.0%. I heard someone mention oil dropped ten bucks this week, so you can bet Sept will be lower, yet again.
To be honest, a bad idea. Looks smart on paper, doesn't work so well in real life.
Yeah we're missing out on the oh so valuable insights from the buying realtor. The motivation of both is the same: make the sale as quickly as possible.
Much more valuable to bring an independent expert along I a viewing.
"Yeah we're missing out on the oh so valuable insights from the buying realtor."
Nothing to do with that.
Does anyone think inflation will save them? Getting paid more in nominal dollars is what will save you. Work hard, be usefull, ask for a raise. It works.
Nothing to do with that.
You're a real treasure trove of information today.
Likely because he is at his open house off Fort St - I almost stopped in to say hello, but had to get home to feed the kids.
If you ask the listing agent to show the property first and then you engage the services of another agent to represent you as a buyer's agent you'll really piss off 9 out of 10 listings agents. You have the legal right to seek your own representation (i.e. buyer's agent); however, it won't help in putting the deal together if the listing agent is not happy with both you and your representation.
it won't help in putting the deal together if the listing agent is not happy with both you and your representation.
You mean the listing agent will put his own ego ahead of the interests of the seller?
You mean the listing agent will put his own ego ahead of the interests of the seller?
My thoughts exactly.
I doubt it's true though. So far the listing agents we've spoken to have been very open to either us putting in offers on our own, or engaging a realtor to put in an offer.
And Marko, you were just saying that you think it's ridiculous how much listing realtors are paid. So excuse me if I don't feel bad about the listing realtor having to spend an hour showing their property to a potential buyer.
"I doubt it's true though. So far the listing agents we've spoken to have been very open to either us putting in offers on our own, or engaging a realtor to put in an offer."
Have you specifically noted cash back realtor :)
Have you specifically noted cash back realtor :)
Nope.
Honestly though, it never occurred to me that a realtor would seriously get mad about spending an extra hour to do the occasional showing, let alone consider compromising their professional ethics over it.
Anyway, for the most part we take advantage of open houses (hi today at Howroyd). Duly noted, I'll get our realtor to show us if any of your listings come up :)
There is an unwritten rule that the buyers' agent always has to show the property. I once had clients that called the listing agents despite me having several conversations with them about not doing it and it caused me a lot of problems with other agents. My clients had the rationale that they would gather more information from the listing agent regarding the home. While true, just not how things work.
I don't really care if people call me to view and then use their own agent as my listing contracts have a double-end discount clause so really the seller loses out more than I do. A lot of the times it is easier they have their own realtor anyway.
PS. 15 groups came by Howroyd, I ran out of feature sheets, only printed 12. No bites yet. I have another 10 days and then it is back in the rental pool. I think a lot of people are going to give up come October/November.
I have a question.
What do you think about realtors asking people who attend an open house to write down their names on a piece of paper at the front door of an open house?
I'd never come across this before but have recently and was just wondering what the general feel is out there about this practice.
Thanks
S2 (JJ's wife)
Gotcha. Will keep this in mind.
That neighborhood has a few listings at $499k at the moment which is better value than I've seen there for a while. Convenient neighborhood and they won't have any trouble renting the place.
I know of a situation where there was a sign-in sheet at an open house for a waterfront property. The person I know signed it and walked though the house. Six months later the same property was for sale by owner at a reduced price. She bought the house from the owner without a Realtor. The previous listing Realtor matched her with a name on the sign-in sheet and sued the seller. I don't know what the outcome was but it is food for thought.
I have no idea why realtors have people sign in other than maybe what Anton just mentioned.
Noticing some larger price reductions.
This one just reduced $300,000 or 25%.
Maybe the evening news predictions of 40% drops are jolting some sellers back to reality.
There is an unwritten rule that the buyers' agent always has to show the property.
Well it obviously does not apply to open houses.
No does not apply to open houses.
I guess they're hoping for a bidding war. Wonder how big the market is for somewhat outdated tudor mini-mansions?
There is an accepted offer on it.
and what was that offer?
The agent at the open didn't seem very confident in the conditional offer on that tudor. I realize it's her best interest to get backup offers but a couple things she said believed it would fall through…in case any one wants to buy a rockland mansion for under a mill :)
I thing there is no doubt that the deal will go through because of the low asking price. Bidding war?Any one interested in buying it for higher than asking price for that house？
Devil's advocate says they only dropped it to make the sale/ask look better.
What do you mean, Leo, by saying making it look better? I have been in the house and there is a lot of improvemnt to be done including windows, kitchen and bathroom. The craw space is not paved. Will there be buyers jumping into the deal for a bidding war in the extreme situation because so many potnetial buys went inside the house in the last two days of open house.
Just saying when it sells for something close to the current asking price, it will look good as far as stats for the realtor (Sold for 99% of ask!).
Selling for 75% of ask doesn't look so good.
I don't really believe that's the reason, but the theory has been floated before.
Leo, likely it is not what you think because there is a lot of improvement to do and they struck a deal before the open house.
I like your idea of sold for 99% of asking to make the stats look good.
I still don't understand why people make offers without financing in place. Are people just assuming that the bank will lend them whatever they ask for?
I've made offers without financing in place. There are a few reasons for this:
1. pre-approval only lasts for a certain amount of time and I tend to look for a long time to try to find the right property
2. approval turnaround time is quick and I don't want to engage in the process unless I am sure that my conditional offer has been accepted
3. when you have an accepted conditional offer you may have better response from competing mortgage brokers re. rates
Also, I think asking prices are now dropping slightly in Oak Bay on some properties. Loads of listings have not dropped, but these places are staying on the market longer.
Monday, September 24, 2012 8:00am
MTD September
2012 2011
Net Unconditional Sales: 321 458
New Listings: 939 1,303
Active Listings: 4,768 4,940
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
SFH MTD Average = 618k
SFH MTD Median = 531k
Condo MTD Average = 331
The SFH MTD Median is subject to quite a bit of variability right now, it could easily swing to 520k with two sales under 515k or up to 538k with two sales above 550k.
That median is really sticking tough. At these low volumes in this market (very large spread) the average becomes somewhat meaningless.
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