Monday, October 1, 2012

A year of inventory in Victoria

What a beautiful September we had.  So beautiful that I'm surprised the VREB didn't use it as an excuse for the miserable sales.

We had a whole 419 sales compared to last year's 458, and 5025 active listings compared to last year's 4940.  Nothing earth shattering but just more progression in the market getting weaker and weaker every month.   Expect a drop in MOI as places drop off the market quickly in October.  The last two years have seen September mark a high point in MOI.


Some interesting points to consider:

  1. Median price is the lowest in over 3 years (July 2009).
  2. Months of inventory are the highest since February 2009.
An update to the median price chart:


179 comments:

LWilliams said...

Looks flat to me.

jesse said...

Great graphs! I would watermark them with this blog's name, because certain famous persons are known to steal graphs without proper credit.

Not saying who. I'm a greater person for not mentioning the name, and, really, only a fool would post a graph without credit.

a simple man said...

Doesn't look flat to me!

How many houses are for sale in the Uplands right now and how many are typical for an Oct?

a simple man said...

Yes Leo - absolutely fantastic graphs. Just the truth.

dasmo said...

Yep, graphs are good and much appreciated, however interpreted!

chris said...

It's interesting to see how MOI relates to price. I cannot help feel a little sympathy for anyone who got sucked in to bidding wars 2 and a half years ago. Many of them must be down close to 6 figures already.

Leo S said...

Great graphs! I would watermark them with this blog's name, because certain famous persons are known to steal graphs without proper credit.

That's ok. Happy to contribute some actual data to that site ;)

JustWatching said...

LWilliams said "Looks flat to me."

Really! Can you not see the drop from the peak in May 2010 to now?

The prices are back to the same level as June 2008 but tell that to the owners that bought 2 years ago.

JustWatching said...

Just re-read the VREB press release and can't believe that the president made these comments...

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."

And this person gives people advice on the biggest purchase of their life?

As a society are we so focused on the monthly payment that purchase price and the total debt owing have no relevance anymore?

Marko said...

How many houses are for sale in the Uplands right now and how many are typical for an Oct?

24 & probably less than 24 :)

3335 Midland Rd looks to be a solid buy for 3.6 million.

Marko said...

Really! Can you not see the drop from the peak in May 2010 to now?

The prices are back to the same level as June 2008 but tell that to the owners that bought 2 years ago.


Was this blog launched in May 2010 or June 2008?

koozdra said...

@JustWatching

The amount of debt you owe no longer matters because you are sure to make a profit when you sell.

Leo S said...

1780 Angola Pl sold today for $540,000. We were interested in this place and made some offers but couldn't settle on the price.

In 2008 it sold for $550,000. Let's take a look at the cost of ownership for 4 years.

20% down, $440,000 @ 5% in 2008 costs $83,000 in interest.
New roof, new floors, new doors, kitchen, shower, paint, etc. Let's say $30,000 at least.
Realtor fees $21,000.

So we're already scraping $2800/month to own the place and we haven't even considered property taxes, cost to break a mortgage, opportunity cost from the down payment, etc etc etc.

So yes LWilliams, the market was flat for this property. But a flat market requires long time frames, and most people just don't stay in their places that long. I think the average is something like 5-7 years.

Marko said...

1780 Angola Pl sold today for $540,000.

Basically shows a flat market. Regarding your calculations...might as well rent forever if your comparable is to sell every 4 years.

Simon said...

Anyone please tell me the sale price of #58-3987 Gorden Head Rd?
Thanks in advance.

Leo S said...

Regarding your calculations...might as well rent forever if your comparable is to sell every 4 years.

About 20% of owners do exactly that. It's not my comparable, but people forget how much money goes down the drain at these valuations even in an approximately flat market.

patriotz said...

But a flat market requires long time frames

It requires more than just that, it requires that buying not be more expensive than renting with all costs included.

This is the sort of example that shows that flat prices at an inflated level are not sustainable. As time goes on more people will get the message and decide not to buy, and landlords will sell as they see no prospect of coming out ahead.

Introvert said...

I cannot help feel a little sympathy for anyone who got sucked in to bidding wars 2 and a half years ago. Many of them must be down close to 6 figures already.

These people don't lose any actual money unless they sell their home right now.

totoro victoria said...

"Landlord's will sell because they see no prospect of coming out ahead?"

I'm sure many landlords would be surprised to hear this is what they will do.

Real estate moves in cycles. Why would an investor choose to sell at a loss when they could obtain rental income to cover costs and wait for the cycle to rise again?

Marko said...

I am starting to lose a decent junk of listings to the rental market. Still relatively easy to rent out and money is cheap for Landlords on the other end.

Leo S said...

Still relatively easy to rent out and money is cheap for Landlords on the other end.

Not cheap enough. Your Howroyd place is advertised for rent at $1800. For a buyer today even with 20% down that place is significantly cash flow negative. Only works out if they bought it a long time ago.

Marko said...

1600 Howroyd was bought for $236,000 in 2002 - obviously he has done fine with this invesmtnet property.

I am sure if the owner could cash out at 450k and place it into something earning 8% he would do it; however, no such thing exists.

reasonfirst said...

Intovert: "These people don't lose any actual money unless they sell their home right now."

2 people of equal income and net worth. One buys 2.5 years ago and is now down close to 6 figures. The other one waits and buys today. Who is better off assuming rent/buy comparisons are relatively similar?

JustWatching said...

Carla's latest...

Greater Victoria home sales slide below $200 million

Any seller reading this knows that prices and sales have dropped.

Carol Crabb was spared the embarrassment of having her economic expertise revealed. (People shouldn't wait for prices to drop, because we never know when interest rates will be increased to stimulate the economy)

chris said...

These people don't lose any actual money unless they sell their home right now.

Furthermore to reasonfirst explanation, they are also losing ~$1500 per month over what they would have been paying, renting the same place. It’s easy to figure out using the Howroyd example above at $1800 rent, which they would have paid close to $600,000 at the peak 2.5 years ago.
Multiplying the $1500/mth by 2.5 years, they are already down $45,000 + $100,000 and counting. The $100,000 will be crystallized when they have to sell; ie. lose a job….or a long list of other circumstances that will easily push someone whose monthly is that high.

JustWatching said...

totoro victoria said:

Why would an investor choose to sell at a loss when they could obtain rental income to cover costs and wait for the cycle to rise again?

Having read your posts I know that your properties are cash flow positive and you are in it for the long term.

But your zeal for rental properties seems to overlook the fact that many investors bought properties that are cash flow negative. These guys were hoping for a quick capital gain (condos for example) in rising market or couldn't sell at yesterday's prices and are renting while they wait for a comeback (next spring?). If prices keep the downward trend some will throw in the towel and sell for what they can get.

Marko said...

2 people of equal income and net worth. One buys 2.5 years ago and is now down close to 6 figures. The other one waits and buys today. Who is better off assuming rent/buy comparisons are relatively similar?

What about those who bought 6,7,8,9, and 10 years ago?

Marko said...

, It’s easy to figure out using the Howroyd example above at $1800 rent, which they would have paid close to $600,000 at the peak 2.5 years ago

This property was never ever close to $600,000.

dasmo said...

I agree that a lot of people have cash flow negative properties. the logic for them is thus:
"It's only costing me 400/month." there is some sense to this if you are going long. Let's assume the market only doubles in 25 years and interest stays the same etc for simplicity. If you keep the place for and pay off the mortgage (and your taxes/insurance)(ignoring the odd hit for a new roof etc) for $400/month you will have your 1,2 million dollar house to sell for retirement. Even with the mythical 10% compound interest (we all know how that went) the same monthly investment will only get you 640k. (Also note that the market has more than quadrupled every 25 years for the last 100 of them)

This is the reasoning, I don't promote it personally, nor do I practice it, just relaying the logic of those that I know that do.

The risk with this strategy is that property is also a liability. So new roofs do happen, so do plumbing redo's, bug infestations, interest rate spikes and on it goes.

reasonfirst said...

"What about those who bought 6,7,8,9, and 10 years ago?"

That is beside the point of the discussion. My point is that an "unrealized loss" is still a loss when that comparison is made.

patriotz said...

What about those who bought 6,7,8,9, and 10 years ago?

They see their equity dropping every month. Or those who have their eyes open anyway.

I'm not saying that all investors are going to get out. What I'm saying is there will be net shift of investors away from the buy to the sell side. And that's all it takes.

dasmo said...

if they are investors they should be used to seeing their equity dropping. Happens all the time. If they are in it for the short game they have screwed themselves yes, if they are in it long, they are fine. Lucky they can't look at a stock ticker on the value of their house. That takes the pressure off.

Introvert said...

My point is that an "unrealized loss" is still a loss when that comparison is made.

By definition, an unrealized loss is not a loss until it is realized.

chris said...

This property was never ever close to $600,000.

There were lots of houses like Howroyd that sold for close to 600 at the peak. Peaks are always full of irrational behaviour. As I recall, you have first-hand experience at how difficult it is to resist buying into a peak.
Besides, my argument was sympathising with the FTBs who got sucked into losing close to 6 figures over the last 2.5 years. Even if Howroyd would have only fetched 580 then, I doubt it will get the 490, or whatever it's listed for today.

koozdra said...

Anybody that has bought into real estate in the past five years has become an investor in over priced market.

hap pychucky said...

I could be wrong but people today spend way to much time trying to figure our where the market is going and what the value of there house is.

Never heard my parents discuss this.

I am also guilty of this. Weird thing is nothing changes in my life if the price goes up or down 100 or 200k.

Leo S said...

which they would have paid close to $600,000 at the peak 2.5 years ago.

You are going beyond cherry picking here. You can't just take the absolute peak of one month and compare to the absolute depth of the current month. Nevermind that even that extreme difference is only about 70,000.
In reality, that place lost maybe $20-$40k in value in that time period and will be highly variable on who's buying when. There is no way they are down anywhere close to 6 figures from peak.

hap pychucky said...

Vancouver sales plunge, listings up. Prices did not move in Sept.



The residential real estate market in Metro Vancouver continues to plunge, with home and apartment sales in September down 32 per cent from the same month last year, according to the Real Estate Board of Greater Vancouver.

The REBGV is also reporting an eight per cent decline from August. Eugen Klein, REBGV president, blames the drop on new government mortgage regulations.

“There’s been a clear reduction in buyer demand in the three months since the federal government eliminated the availability of a 30-year amortization on government-insured mortgages,” Klein said in a release. “This makes homes less affordable for the people of the region.”

Klein said the total number of properties listed on MLS increased 14 per cent from this month last year, and increased 4.5 per cent from August.

“Today, our sales-to-active-listings ratio sits at eight per cent, which puts us in a buyer’s market. This ratio has been declining in our market since March when it was 19 per cent,” Klein said.

Prices of homes, however, have seen little decline. The benchmark price of a detached property decreased 0.5 per cent from last year to $935,600. Apartment prices fell 0.7 per cent to a benchmark of $368,600, and attached units fell 2.7 per cent to $458,600


Read more: http://bc.ctvnews.ca/vancouver-housing-market-plunges-further-1.980542#ixzz28AtH3PIk

chris said...

btw, I noticed there was some confusion on Carol Crabb saying
People shouldn't wait for prices to drop, because we never know when interest rates will be increased to stimulate the economy.

Believe it or not, she is correct on the last part. If interest rates rose it would stimulate 'much' of the economy. Real estate would still remain morose ,however at this stage, real estate and interest rates are more positively correlated than negatively. Especially real estate here. Although I think shes OTL insinuating interest rates may be about to go up....if that's what she really meant. Then there's always the chance they could go up for the bad reasons that she wasn't referring to. If that happened, real estate would quickly go back to its negative correlation.
Maybe Carol is a bond broker on the side and knows something we don't.
And yes, I do know several who are down at least 100k from when they bought early 2010. But I'll give you this much ,they sure don't know it.

koozdra said...

"If interest rates rose it would stimulate 'much' of the economy"

Decreasing interest rates stimulates the economy by letting people borrow and spend more money. Increasing interest rates will mean more income will have to be dedicated to servicing that debt thereby removing that spending from the economy. If interest rates rise in the near term, it will put some serious fear into first time home buyers. You think people are waiting now?

reasonfirst said...

"By definition, an unrealized loss is not a loss until it is realized."

How about answering my question as to who is better off.

reasonfirst said...

"By definition, an unrealized loss is not a loss until it is realized."

And then check investopedia.

a simple man said...

More reasons why housing will take a hit in the near future:

Reason #24:

Ferry prices due to increase 4% each of the next three years. People have already given up on the ferry (as I return on it right now while a young man with an overly pierced face snores beside me).

Read all about it - especially the comments

Victoria said...

Many people can afford to buy and hold, even in a declining market. What sets the trajectory on its downward spiral are those who cannot hold. It doesn't take much. A price drop on one street begets a drop on another as both non-holders now, by necessity, compete with each other for the infrequent buyer. THAT is what we see in the early stages now.
Much like a stop sell order, it I were still holding, and I'm not, I would be cutting any losses now.

dasmo said...

Real estate is a long play with a long a tried pattern of increasing in value over the long haul. Unlike equities it won't devalue into nothing and disappear. When investing in equities you learn that that is a reality. Why do you think RIM is so low right now? There is good reason to take a small loss and redirect your money elsewhere. In real estate, you also have the option to rent the property and wait it out. You just can't compare it to equity investing, it's a different animal.

Introvert said...

Looking at Investopedia, I half expected to find an article on how to shelter one's money in the Cayman Islands.

----------

I found a document that's quite interesting.

Some highlights:

[From 1999 to 2005,] [t]he median net worth of homeowners rose 27.4% after inflation, in sharp contrast to the 5.1% drop experienced by the median renter.

As a result, a typical homeowner went from being 18 times wealthier than a typical renter household in 1999 to 24 times wealthier in 2005.

The gap between the wealth of owners and renters has been widening for at least two decades.


Renting is awesome, isn't it?!

hap pychucky said...

Introvert

OMG you have opened a can of worms.

They will come on here and say that is about to reverse and we are going back to 2003 prices.

patriotz said...

[From 1999 to 2005,] [t]he median net worth of homeowners rose 27.4% after inflation

And if they'd sold in 2005 they'd be laughing all that way to the bank today.

But what actually happened? A lot of them borrowed against that net worth, and then when prices collapsed, the average homeowner ended up with a smaller net worth in real terms than in 1999.

a simple man said...

Good thing I owned during those years! Ride the wave up but remember to jump off before it crashes.

reasonfirst said...

Boy that's some really interesting hindsight.

Introvert said...

Good thing I owned during those years! Ride the wave up but remember to jump off before it crashes.

Good for you. But I don't know how you and others do it. I mean, the inconvenience of moving is enormous; I can't imagine buying and selling three, four, five times over my lifetime. If I wanted to ride waves, I would do it with stocks, not houses. Moving is stressful (and expensive)!

Plus, the more I tailor my house to suit my tastes, fix up little things, landscape the yard, plant a beautiful garden, etc., the more I can't fathom selling, only to have to re-do all those same things at my next house.

I guess everyone is different. Thank goodness--otherwise this blog would suck.

Introvert said...

Boy that's some really interesting hindsight.

Worse than interesting hindsight is interesting hypothetical hindsight:

"2 people of equal income and net worth. One buys 2.5 years ago...blah, blah, blah"

chris said...

koozdra
I was referring to the five asset classes and where money would flow as interest rates went up, ie. Debt instruments come down. Likely it would flow into equities. One can debate whether that would help the economy or not, but most would argue it would.

patriotz said...

It's not hypothetical, since people were buying 2.5 years ago, and people are buying comparable (and sometimes the same) properties today.

Introvert said...

Has anyone ever checked out the Site Meter for this blog? (It's on the main page, near the bottom.) I only discovered it today.

It sure seems like this blog is alive and popular (588 avg. page views per day)! Five years old and still going strong.

Cheers to HHV--that wacky guy who checked himself into the witness protection program when he left Victoria for brighter prospects--for creating the blog and for allowing it to continue.

Digging through the Site Meter stats one learns some interesting things:

-We have a reader (contributor, perhaps?) from Poughkeepsie, New York, as well as one from Canberra, Australia; Bradenton, Florida; Delray Beach, Florida; and Cancun, Mexico. Who knew?

-People are logging in from many places including UVic, the BC government, the federal government, VIHA, and IBM.com (go Tectoria!).

-At least one person recently used Bing to find this blog.

Leo S said...

Wouldn't be surprised if this was at or very near the top blog for Victoria...

I could be wrong but people today spend way to much time trying to figure our where the market is going and what the value of there house is.

Never heard my parents discuss this.


It is surprising. Especially the long term owners here. I suspect that when we buy I will probably think about these things much less, but we've had owners on here for years and years. Curious as to what the motivation is, especially for those who have no intention of selling regardless of possible drops.

Simon said...

No doubt the price is dropping and will drop further. The question is how low will it goes and how long will it takes. Considering the large amount of paper bills printed in USA, and China, the inflation will here to stay and the money will go down to the water. In another 15 yeras, the price will go very high again.

dasmo said...

I found this blog when I was looking to buy again. then I just got sucked into the debate being a halibut and all...I also continue to find it interesting and humorous and full of drama.

dasmo said...

I found this blog when I was looking to buy again. then I just got sucked into the debate being a halibut and all...I also continue to find it interesting and humorous and full of drama.

Introvert said...

Correction: avg. of 588 page visits per day.

mrmike said...

I was talking with this guy today who was talking to Carol, and he says we need to run to the hills because we're all doomed!
;)

a simple man said...

Let's cut Carol some slack - I am sure she is under huge pressure and she's just crabby about the stats.

koozdra said...

"MUST BE SOLD!WILL LOOK AT ALL OFFERS!"

Seems like they aren't getting any offers at all.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12276552&PidKey=739050069

a simple man said...

Of course they will look at all offers - otherwise how would you know the offer was. Statements like that are meaningless.

mrmike said...

^ruff getting offers when it's not done. Guessing the builder ran out of money...I'm sure there are liens to satisfy as well expired permits and let's not forget HST!
Similar one in the Highlands been sitting for ever.

LeoM said...

Koozdra - That link explains why they will look at any offer; that's one ugly house!!! It looks like owner designed and built without any professional help; or perhaps they had a house designer make the plans from their napkin sketches. Anyway, thanks for the laugh.

HouseHuntVictoria said...

@ Introvert - that might be the nicest thing you've ever written to/about me, cheers!

@ Jesse - slow clap

@ LeoS - I think it's safe to say that HHV is likely the top real estate blog in Victoria, but I'm willing to bet there are more than a handful of higher traffic Victoria based blogs out there. Although I'm particularly proud of all you folks who come back day in day out for stimulating conversation... you've driven total page views over a million this year!

koozdra said...

It's not different in Vancouver, or anywhere in Canada for that matter.

Hurry! There are still people in your neighbourhood who haven't figured out the correction is here. Don't worry about the 'how' or the 'why', sell now. Sell before your neighbour undercuts your price and you MAY be able to keep most of your tax-free gains before they evaporate. Easy come, easy go.

Sell now or be priced in forever.

http://sitelife.theglobeandmail.com/ver1.0/gocomm?ck=CommentKey%3a250a7d28-50d2-41b5-a6ad-6805df5c1460

koozdra said...

#6

Back on the West Coast, aspiring renters in Victoria needed to pay $1,046 for a two-bedroom place this spring, up $22 from a year earlier. The vacancy rate jumped to 3.5 per cent from 2.7 per cent.
(Martin De Valk/The Globe and Mail)

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/in-pictures-apartment-rental-rates-across-canada/article4580893/?from=4580877

Leo S said...

@HHV Well you're the 4th result on google for "victoria bc blog" :) Alright if not the most traffic I think the most comments.

dasmo said...

So sell for a 50k loss and spend another 20k on rent while you hope for a housing crash so you can buy back in at a lower price? Now that's a fools game...

Douggie said...

I'm sure in 10 years we'll all look back on this blog with fond memories of a time before we lived in mansions we 3d printed ourselves/bought on comfree.

http://www.youtube.com/watch?v=JdbJP8Gxqog

nehvabby said...

Congratulations! That is a good news how I wish that we can have also a good news for our houses for sale but as of now I don't have any idea about it. Thanks for sharing this information to us and I am very amazed on it.

sofia marielle said...

Thanks for all your hard work on this site, I really enjoy reading it.

Sofia of house for sale philippines

dasmo said...

oh oh, with success comes the smell of spam...

Marko said...

video on CMHC ->

http://www.youtube.com/watch?v=3NNLMCOgnmE&feature=plcp

koozdra said...

Don't talk about the decline, it's going to be very inconvenient for our economy. A market crash will affect everyone and is unavoidable.

Perhaps some people can comment whether it was a good idea to raise the CMHC lending limit from 300 to 600 billion to prop up our housing market in 2008. Does anyone think they will raise it 12 billion this time? Don't forget the CMHC was created after the second world war. Since when it was create to 2008 it went from 0 to 300 billion. From 2008 to 2012 it went from 300 billion to 576 billion. The CMHC is the driving force for this bubble.

The government is tired of all the personal and mortgage debt. If our economy is to recover, interest rates would rise. For that not to be a devastating effect we must go through a process of debt-deleverage. The debt must be paid off to recover. And the biggest debt causing driver in our society is the housing market.

hap pychucky said...

From our friends in Toronto.

No crash there yet

Housing prices in Toronto increased more than 8.5 per cent compared to last year, according to a report by Greater Toronto Area realtors. Of the 5,879 homes sold by the firm in September, the average selling price was $503,662.

The report also shows the total number of transactions fell by 21 per cent compared to September 2011 when prices were lower. However, September 2012 had fewer working days than years previous, bringing the per working day comparison to a decrease of 12.5 per cent.

"While sales have been lower due to stricter mortgage lending guidelines, we continue to see substantial competition between buyers. The months of inventory trend remains low from a historic perspective, which explains the strong price increases we are experiencing,” said Toronto Real Estate Board President Ann Hannah.

September average selling prices were up compared to last year for all major home types. Price growth was strongest in the City of Toronto, including condominium apartments with eight per cent year-over-year growth.

“Barring a major change to the consensus economic outlook, home price growth is expected to continue through 2013. Based on inventory levels, price growth will be strongest for low-rise home types, including single-detached and semi-detached houses and town homes,” said TREB’s Senior Manager of Market Analysis, Jason Mercer.

A report released Tuesday showed a different trend in Vancouver's housing market where both home prices and sales declined by 0.8 and 32.5 per cent respectively.

a simple man said...

Toronto has followed a later pattern than Victoria and Vancouver, but the same pattern. They will follow us down.

hap pychucky said...

http://www.vreb.org/pdf/historical_statistics/YE782011.pdf

Only one large decrease in Victoria in the early the 80`s (interest rates went to 20%). Even during other economic downturns victoria realestate was stable. So all you doomsayers history is not on your side.

History also show that Victoria does not always follow Vancouver and Toronto in both ups and downs. Victoria stays stable than goes up for 5 or 6 yeats than stays stable.

Again numbers do not lie. We have been in a stable market for 5 years (plus or minus 5%).

a simple man said...

When have we ever had conditions in the market like we do now? the past will have no bearing in this instance - it is a brave new world.

reasonfirst said...

"2 people of equal income and net worth. One buys 2.5 years ago...blah, blah, blah"

First - good comeback "blah, blah, blah'

Second - not hypothetical. My brother bought some gulf island property at the peak (after I told him to wait). If he waited, he could have high 5 figures more in his bank account. Reality

koozdra said...

"(Unprecedented NEW PRICE, $100,000 lower for a Limited Time Opportunity)"

Perhaps the "urgency to buy" selling tactic will work.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12468151&PidKey=-1614920425

hap pychucky said...

A simple man

Really... your brave new world still has not happened here. These are only your speculations.



hap pychucky said...

Kooz

Still seems expensive for Sooke!

dasmo said...

Who is better off? the person who walks down the street and doesn't fall and break their leg OR the person who walks down the street and breaks their leg?

koozdra said...

Thoughts?

http://www.buyerprotectionplan.ca/broker/mark-fidgett

hap pychucky said...

I as a seller would not agree to that and how do u determine what your house in your neighbourhood is worth in a year.

SJ said...

Noticed three properties with large price reductions came up on my PCS.

5248 Parker Avenue in Cordova Bay. Down from $895,000to $699,000. Unfortunately, not a lot of curb appeal on this property.

2786 Sea View Road on Ten Mile Point. Down from $989,000 to $895,000.

939 Carolwood in Broadmead. Down from $735,000 to $647,000.

Reminds me of the larger price drops seen during late 2008 and beginning of 2009.

SJ said...

Noticed three properties with large price reductions came up on my PCS.

5248 Parker Avenue in Cordova Bay. Down from $895,000to $699,000. Unfortunately, not a lot of curb appeal on this property.

2786 Sea View Road on Ten Mile Point. Down from $989,000 to $895,000.

939 Carolwood in Broadmead. Down from $735,000 to $647,000.

Reminds me of the larger price drops seen during late 2008 and beginning of 2009.

a simple man said...

My brave new world is our new world - when have the economic forces been like today?

SJ said...

Noticed three properties with large price reductions came up on my PCS.

5248 Parker Avenue in Cordova Bay. Down from $895,000 to $699,000. Quite the drop.

2786 Sea View Road on Ten Mile Point. Down from $989,000 to $895,000.

939 Carolwood in Broadmead. Down from $735,000 to $647,000.

Reminds me of the larger price drops seen during late 2008 and beginning of 2009.

dasmo said...

Sounds fishy. You are better off to negotiate 5% off and only buy what you can afford if interest rates are at 4.5%. Keep it simple.

hap pychucky said...

A simple Man

Have not seen a big change. People still have jobs. Still go out for dinner, still pay for their kids sports. Still shop at cosco.

EagerBuyer(Not) said...

hap pychucky said:

Really... your brave new world still has not happened here. These are only your speculations.

It's time to help you wake up and smell the coffee.

Royal Lepage Housing Report (pdf)

When a pumper firm like LePage tells you tthat prices for a Victoria SFH rancher are down by 6.3% from last year and also down in the last quarter you know prices are falling. You will also see that we are leading the pack.

How much longer will you keep denying the obvious?

a simple man said...

Hap - are you serious - start at 2008 and move forward - the economic world is a different place.

Simon said...

$100,000 reduction is a joke. No one would look at this, I am sure. In order to enduce a real interst from potential buyers, I would say, there should be another $350K reduction, making it $450K reduction in total with a listing price of $849K. Of course, the property can probably sell at low $800s if marketed aggresively:
http://www.realtor.ca/propertyDetails.aspx?propertyId=12468151&PidKey=-1614920425

EagerBuyer(Not) said...

hap pychucky said:

Have not seen a big change. People still have jobs. Still go out for dinner, still pay for their kids sports. Still shop at cosco.

LMAO Perhaps this will help you figure out what is going on.

Save a lot of money spending money we don't got

reasonfirst said...

dasmo said...
Who is better off? the person who walks down the street and doesn't fall and break their leg OR the person who walks down the street and breaks their leg?

Dasmo - I expected more from you than that weak analogy...

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

That was my point ;-)
It's pointless to ask who is better off, someone who bought for more or less. That's the nature of the beast and can happen at anytime in the market. I believe it's called being a Monday morning quarterback. If he bought and can't take the possibility he bought for more than he COULD have bought today, then he is a fool. If he bought and could care less what the market is doing, he is not.

reasonfirst said...

Personally, I would call BS on anybody that says that they don't care that the value of their property went down significantly.
They feel it but they won't admit it.

dasmo said...

Life is full of opportunities and missed opportunities. You work with the cards you are dealt. If you are always looking over your shoulder or at what other have or what you could have had or done, then you are a fool.

a simple man said...

good halibut-ism, dasmo,.

hap pychucky said...

"Life is full of opportunities and missed opportunities. You work with the cards you are dealt. If you are always looking over your shoulder or at what other have or what you could have had or done, then you are a fool"

yep well said!!!

reasonfirst said...

VREB Press release updated - they removed 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."

reasonfirst said...

I agree Dasmo - most people are fools :-)

reasonfirst said...

And the housing "wealth effect" would not exist if people didn't pay attention to the value of their homes.

CS said...

Good to know that VREB not only knows when they are talking rubbish, but knows that we know they're talking rubbish.

a simple man said...

@reasonfirst - I think they were starting to get some national exposure on that comment and quickly thought twice.

That statement was desperate.

koozdra said...

Looks like Ben took notice of the VREB release also.

http://theeconomicanalyst.com/content/more-signs-market-weakness-vancouver-toronto-spin-machine-goes-overdrive

patriotz said...

From our friends in Toronto. No crash there yet

You do understand that's bad news for the BC RE market? Because the mortgage rules were tightened up to get the Toronto market under control, and they are going to stay that way until it cools off.

It's pointless to ask who is better off, someone who bought for more or less.

Yes it's pointless to ask, because the answer is so obvious - the one who bought for less.

dasmo said...

ummm yes....

a simple man said...

Finally, vreb is being called out for the over-the-top spinning they do.

dasmo said...

They are extremely irritating aren't they? The market could be down by 40% and there would still be positive side...

EagerBuyer(Not) said...

Yep - Carol Crabb is being called a fool on other blogs and is still being quoted on many local real estate agents websites. VREB must be really embarrassed if they decided to change their press release.

It's the Internet - The Crabb economic analysis can't be withdrawn - click here

"It is better to remain silent at the risk of being thought a fool, than to talk and remove all doubt of it." - Maurice Switzer 1906

EagerBuyer(Not) said...

VREB has already selected next year's President and a month ago she spoke with Carla at the TC.

Sept. 5, 2012 - Average and median prices, number of transactions down from 2011

Greater Victoria's real estate market cooled in August as the total number of sales slid month-overmonth for single-family homes, condos and townhouses.

Although some price increases were seen from the previous month, the average and median (midway) prices for homes dropped from August of last year, the Victoria Real Estate Board's monthly sales report said Tuesday.

The market is not falling, said Shelley Mann, president-elect of the Victoria Board. But she added: "We are definitely in a flat market. There's no question."

Mann predicts that the number of sales will rise in September and October - typical for those months after summer - and that prices will be steady.


Yea sales always go up in the fall! Looks like we will have more of the same next year with the new President

DavidL said...

"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."

Although Carol Crabb has now redacted her comment, let's look at how much a 1% increase in interest rates might cost ... Taking a typical $530,000 SFH with a $53,000 (10%) downpayment, after closing costs of $12,315 - the mortgage amount would be $489,315.

4% interest
At a fixed rate of 4% interest rate and a 25-year amortization, monthly payments would be $2573.90. As of early October 2037, you will have paid a total of $771,214 of which $282,853 is accrued interest.

5% interest
At a fixed rate of 5% interest rate and a 25-year amortization, monthly payments would be $2845.88. As of early October 2037, you will have paid a total of $852,936 of which $364,449 is accrued interest.

The difference of the 1% interest rate increases the monthly payment by $271.98, totals $81,722 of additional interest paid - which works out to 15.42% of the original purchase price.

My thanks to a friend whose spreadsheet gave me these quick answers ...

JustWatching said...

Today's RE news

G&M - Tighter mortgage rules start to take toll on high-end homes

The federal government eliminated the approval of 30-year amortization periods on government-backed mortgages in June – and the decision’s impact can now be seen most vividly in the cooling off of Greater Vancouver’s market, with sales falling for everything from entry-level homes to luxury houses, Bank of Montreal senior economist Sal Guatieri said Tuesday.

Real estate sales across Greater Vancouver are sinking. There were 1,516 residential properties that changed hands in September in the region, down nearly 33 per cent from the same month last year.

“The gap has widened between what buyers are willing to buy at and what sellers would like to sell at, so the transactions are slowing because of that,” said Patricia Mohr, the Toronto-based vice-president of economics at Bank of Nova Scotia.


Of course the BCREA had the usual response.

Cameron Muir, chief economist at the B.C. Real Estate Association, said the Vancouver-area housing market remains healthy, and he doesn’t see any major economic shocks on the horizon.

“It’s a short-term lull in the market,” Mr. Muir said

SilverSurfer said...

"Cameron Muir, chief economist at the B.C. Real Estate Association, said the Vancouver-area housing market remains healthy, and he doesn’t see any major economic shocks on the horizon."

You know, the irony of all this spin and *caugh* deception is that the longer they pretend everything is hunky dory the deeper into declines we get and the less chance they have to blame government as a (feeble?) attempt to roll back some of the changes.

So please keep on telling us everything is sunshine and lolipops, I for one have been waiting long enough for this house of proverbial cards to fall apart.

Roger said...

DavidL,

Unfortunately, your quick calculations yield an incorrect answer. Unlike the US we don't have 25 year term mortgages. The longest term available is 10 years although most people elect to take 5 years.

So if you bought today and financed at 4% for a ten year term you would still be in the same position as someone who buys next year. You would be renewing in 2022 and they would be renewing in 2023 if you both took 10 year terms. For the remaining 15 years the interest rate would be quite close.

The free wait vs. buy spreadsheet that I submitted to this blog takes all of this (and many other factors) into account. You can download a copy from one of the links in the Resource section of this blog (upper right)

DavidL said...

@Roger
Unfortunately, your quick calculations yield an incorrect answer. Unlike the US we don't have 25 year term mortgages.

As someone who has had a mortgage for the past 10 years, I'm well aware of this. Projecting future interest rates 5, 10 or more years hence is a guessing game - thus, I used a five-year fixed rate mortgage that renews 5 times over the 25-year amortization.


The free wait vs. buy spreadsheet that I submitted to this blog takes all of this (and many other factors) into account.


Your spreadsheet is excellent, and although it includes some of the closing costs - it doesn't include the final CHMC fees and premiums, survey certificate(s), building inspection(s), municipal tax adjustment, and house insurance (required to satisfy mortgage).

Roger said...

DavidL said "it doesn't include the final CHMC fees and premiums, survey certificate(s), building inspection(s), municipal tax adjustment, and house insurance (required to satisfy mortgage).

Thanks for the compliment. If you take another look at the output click here you will see it has provisions for all these factors:

CMHC fees
legal costs
house insurance

Survey certificate, municipal tax adjustment and inspection costs can be added to legal cost input, if desired. These costs are so small relative to the purchase price I didn't bother to add them as separate line items.

David L said: Projecting future interest rates 5, 10 or more years hence is a guessing game - thus, I used a five-year fixed rate mortgage that renews 5 times over the 25-year amortization.

I agree with you that it is impossible to predict rates that far in the future. Any output from making guesses like this is not valid, in my opinion. That is why I don't do it in my analysis. I stop at the end of the mortgage term and determine who has the lowest outstanding balance. This puts both options on equal footing going forward.

koozdra said...

"BETTER THAN NEW! Over $125,000 spent in complete makeover in this outstanding rancher."

Ouch.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12376972&PidKey=-989874816

Leo S said...

@roger I noticed that even if the purchase price of the house is over $450,000, the first time buyer checkmark still changes the numbers. Why?

Marko said...

http://www.vreb.org/pdf/historical_statistics/YE782011.pdf

Hmmmm, so even with 20% interest, 1981 was the only year where those who bought got hit hard, and that is after almost doubling from 1979.

DavidL said...

@Marco
1981 was the only year where those who bought got hit hard

It's a bit more complicated than that ... Anyone having to renew their mortgage during the four year period from 1979 through 1982 was "hit hard". For example, the bank rate in January 1977 was 8.5%, while five years later in January 1982 the rate was 14.7%. The monthly payments on a $60K mortgage (25 year amortization) jumped from $477/month in 1977 to $702/month in 1982 - a 47% increase! Of course, if you had to renew in August 1981 when interest rates were ~21%, many just had to walk away from their mortgage.

Check out the BOC historical rates at: http://www.bankofcanada.ca/wp-content/uploads/2010/09/selected_historical_page1_2_3.pdf

House prices started plunging in 1981 and didn't recover until the late 1980's. The nominal value stopped dropping in 1985 while the real value continued to drop as the inflation rate was so high at that time.

My folks tried selling their house in 1981. After many price reductions and a a year on the market, they took it off the market. Their "saving grace" was that in 1968 they got a fixed rate 25-year mortgage at 8.5%. It worked out well for them ...

From my perspective, I remember that in 1986 as the best year to buy (purchase price combined with the financing costs) and that a modest SFH could be bought for $80K. Alas, I was only earning $5.85/hour - not exactly mortgage worthy!

DavidL said...

@Marco

Ever visit the tony neighbourhood of "Wedgewood Point" (squeezed onto Ten Mile Point onto what was previously known as Minnie Mountain)? Development started there in about 1976, with the first houses completed in 1978. I recall quite a few of the "original" speculators and owners having to walk away from their mortgages post 1981. Some of the houses remained vacant for many years ...

LeoM said...

The past five years has seen relatively stable prices for SFH in Greater Victoria.

The next five years might be chaos due to mortgage renewals with rising interest rates and declining house values.

My point is simply that the past five years have been relatively calm with lots of sales and those new owners from the past several years will need to renew their mortgages, starting now and continuing for the next five years.

Five year mortgages...
Five years at a plateau in prices...

During the past ten years anyone who renewed their mortgage did so as house prices were rising and interest rates were falling.

Now we begin a new five year cycle where those 3-year and 5-year and 7-year mortgage holders will be re-negotiating with their banks for another mortgage term based on higher interest rates and lower SFH values.

The first wave of these mortgage renewals is just beginning with people who bought in mid-2005 with 7-year mortgages, and those who bought in mid-2007 with 5-year mortgages and those who bought mid-2009 with 3-year mortgages.

Commodity price bubbles and stock market bubbles can crash overnight because investors can sell anytime; but a real estate bubble tends to be tied to mortgage renewals which have multi-year commitments. Real estate bubbles in Canada tend to happen in slow motion, over a five year time period.

The next five years from mid-2012 to mid-2017 will probably be the real-estate crash that people will talk about for the next 30 years.

dasmo said...

Why, what's going to happen when they renew? Rates are lower than were then and values have remained flat. If anything the experience of down south will make them think twice about forcing a foreclosure wave...

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

"The next five years from mid-2012 to mid-2017 will probably be the real-estate crash that people will talk about for the next 30 years."

I can't see anyone having to refinance at higher rates for a while, that will probably come up when the 5 year 2.99% mortgages start coming up.

koozdra said...

"four hundred and fifty thousand dollar fixer upper" used to be an oxymoron, now its a "good deal".

The market can't stay afloat without first time home buyers and first time home buyers are evaporating.

a simple man said...

I can't see anyone having to refinance at higher rates for a while, that will probably come up when the 5 year 2.99% mortgages start coming up.

True, but they will have to refinance, usually on 5 yr terms. They will be doing so in a different environment than they were. The house may be worth less, the LOC may be a larger proportion of their net worth, and their income qualifications may have changed due to tighter regulations from OFSI. The banks may offer 2.99% to fresh clients with sparkling credit, but for high risk people who owe more on their homes and other debts than the home is worth, they may get the posted 5.5%.

This is a different time and while Carney may not raise the Bank of Canada rate any time soon (I think), the banks will make sure they remain profitable and will balance their risk by squeezing those at the highest risk to them.

Roger said...

LeoS said "I noticed that even if the purchase price of the house is over $450,000, the first time buyer checkmark still changes the numbers. Why?"

I didn't include range checking on the first time buyer checkmark. I assumed users would know that 450K was the cap on the property tax exemption for FTB's.

dasmo said...

It's not profitable for the bank to foreclose on properties they prefer the much easier route of just getting a regular paycheque...

From the 30's to the 50's rates were this low. We might even enter a new era of even lower rates for a similar stretch. It is a brave new world after all.

The posted rates right now are pretty low

dasmo said...

This also keeps our rates low ...
Man, you can probably actually make money with real estate down south right now....

Phil said...

The 1980’s are not a bad comparison

+ If memory serves, interest rates fell in half along with house prices
+ Natural resources almost fell in half, with China sputtering and USA becoming independent this could happen again
+ Possibly most important buyers and renters fell off sharply (Boomers) now the same thing is happening with generation Y (Boomer children) as they have already formed their households

JustWatching said...

Today's RE news...

TC - Victoria house price slides ahead of national average

Greater Victoria's residential real estate prices are falling, according to a Royal LePage survey on Wenesday.

All housing types saw decreases in the region, with detached bungalows falling the most by an average of 6.3 per cent to $450,000 compared to the same time last year. Standard two-storey homes dropped in price by 2.2 per cent to $455,000, while standard condominiums dipped by just 0.7 per cent year-over-year to $275,000.


David Madani of Capital Economics has predicted house prices will decline by 25 per cent over the next year or two as the housing bubble in Canada bursts.

Leo S said...

@dasmo. I agree. Low rates are here for a long time...

patriotz said...

It's not profitable for the bank to foreclose on properties they prefer the much easier route of just getting a regular paycheque...

True, and if the mortgage is insured they're not going to care whether the equity is < 5% or underwater.

However, if that's the case the borrower will not be able to move the mortgage to another lender, so the lender will have him by the b**ls at renewal time. No discount from the posted rate.

SilverSurfer said...

This morning's Financial Post headline: As housing market slows, industry scrambles to paint positive picture.

I must admit, I wasn't expecting to see such a headline so soon. Nice to see them calling them out.

JustWatching said...

Want to buy or sell in Sooke? Check it out with Tim Ayres latest Sooke housing report...

Sooke Real Estate Statistics – September 2012

Readers will have to calculate the months-of-inventory (MOI) since Tim didn't provide this stat.

a simple man said...

However, if that's the case the borrower will not be able to move the mortgage to another lender, so the lender will have him by the b**ls at renewal time. No discount from the posted rate.

Exactly my point - so their real rate might rise 2% and they have little to no control.

Alexandrahere said...

Contrary to all the buzz, so far this week within my criteria of SFH in Vic, OB, ESQ, SE & SW, with a min of 2 beds and 2 baths priced between $375K and $775K, I have 13 sales (last week had 13 sales in the entire week), only 5 out of the 13 went for below BC Assessment, (in the past year it has usually run at over 50%-70% of sales). Four of the 13 have secondary suites (usually this figures is also over 50%) and lastly the average price so far this week is at $622K. If sales stay this way until the end of the week, then the week will come in as the highest avg sale price within my criteria since mid July 2010. Weird. The med sale price so far this week is $582.

a simple man said...

Sooke = 19.45 Months of inventory.

LeoM said...

Marko and Dasmo -- Like I said in my post; 'This is just the beginning' ... "Starting now..."

As of 'now' being October 2012, we see only minor things like property prices falling only about 3%, but that slide will continue, and as more sellers jump in during the spring of 2013, the decline will accelerate and be undeniable by July 2013.

Mortgages have changed too, but again, this is just the beginning. When people go to renew their mortgages they will be faced with two problems; 1. interest rates will have increased, and 2. Most of the people applying to renew their mortgage will have lost considerable equity so consequently they will not be eligible for the bank's 'preferred rate' especially if they ever missed a single payment.

Times are changing, but again, this is just the beginning of the next phase where property prices are declining and interest rates are increasing.

Watch for a rapid increase in rental vacancy rates too as home owners try to rent their properties rather than sell; if history is a teacher, this will happen just prior to a rapid decline in house prices. The decline will occur when these new landlords realise they can’t rent their properties at all, or if they can rent them the rent will be mush less than expected.

By the way; the difference between the preferred rate that the best customers get when they have equity and the posted rate is about 2.25% or a monthly increase of $616 on a $500k mortgage; or $7400 per year in after tax dollars ($10,000 in earnings). That $616 zaps the food budget for many families on a tight budget.

hap pychucky said...

Alexandrahere

In the future please refrain from posting positive info. That just
infuriates the housing bashers on here.

EagerBuyer(Not) said...

hap pychucky,

LMAO. You consider stats on 13 sales in selected areas to be "positive info".

I guess I didn't make the coffee strong enough for you yesterday. Tomorrow I will make expresso.

hap pychucky said...

Eagerbuyer

Bla bla blab bla

You guys all post the same crap.

Facts are in Victoria we are in a nowwhere market since 2007. The predictions of a market crash are based on zero facts and wishful thinking at this time. Same thing has been posted every year on this blog. Guess what the crash has not materialized.

hap pychucky said...

Todays latest is mortgage renewal will crash the market.

Most people renewing in the next year will probably get a lower rate.

43% of canadian are mortgage free
37% of BC residents with mortgages have less than 10 years to pay off.

Just do not see renewals crashing the market. Just more baseless speculation.

a simple man said...

It all adds up, Hap.

You don't seem that Happy.

koozdra said...

Happy chucky is decline denier.

hap pychucky said...

Kooz

Not at all. Just need to see it in real numbers instead of speculation.

JustWatching said...

hap pychucky,

You seem to be the only one talking about a "crashing market". The bearish posters on this blog seem to be talking about a slowly deflating market.

Look at LeoS's graph and you will see a drop of 10% a year starting in June 2008. The only thing that stopped the fall was the "Great Recession" in the US that resulted in historically low interest rates in Canada. The feds goosed the market and prices rose to a peak in the spring of 2010. Since then the mortgage restrictions have started to take hold and prices are falling. We are now back to 2008 levels and many economists and even the RE associations are talking about further corrections.

Buyers and sellers in the real estate market have a strong emotional component associated with their purchase/sale. When the MSM is publishing articles on a daily basis talking about lower sales and falling prices in Victoria this will have an impact on the RE market. It is only reasonable to assume that this will result in a continuation of the decline.

Is there any of the above you disagree with?

hap pychucky said...

http://www.vreb.org/pdf/historical_statistics/YE782011.pdf

This table seems to show sales activity and prices are not correlated in Victoria. How is it
we have far less sales activity with more residents than the 80`s and early 90`s? That just does not add up.

hap pychucky said...

JustWatching

Median prices show a stable market since 2007. Up and down 5 or so %.

Also there has been numerous posts here calling for a 30 to 40% corection.

Victoria has not seen the Vancouver and Toronto rises since 2008. My view after looking at historcal numbers. Victoria does not act the same with ups and downs that those 2 markets do. Victoria is more of a stable market for years than up for 4 or 5than the cycle repeats it self.

I would not want to own housing in Vancouver or Toronto but in my view Victoria will only see more of the same stable market with the possibility that the median price may fall to 500k from its 520 level.

backinVictoria said...

hap pychucky,

Why are you here exactly?

If everything here is rubbish and you know better...why waste your(and our) time?

koozdra said...

I think many living on the island share Happy Chucky's view point.

"real estate never declines here", "it's a sure thing, take a look at the historical data".

So what did everybody do? They bought up all the stock of houses as holding properties and flips. Take a look on MLS at how many vacant properties are on the market right now.

Then the builders stepped in with new developments and golf communities. If you drive around the island as much as I do you will see rampant over building and half finished developments. Visit Nanoose bay, Cobble hill and even Nanaimo. Do you think Victoria won't be dragged down by defaults up there?

This situation has never happened before. It is the perfect storm of insane levels of consumer debt and housing prices.

DavidL said...

Recall that between June 2006 and June 2008, it was possible to get a zero-down mortgage with a 40-year amortization. At that time, the discount 5-year fixed rate varied between 5% and 6%.

So let's say that in October 2007, a modest $450K house was purchased with $0 down and a 5-year fixed rate mortgage at 5%. With closing costs of $10,715 the total mortgage is for $460,715 with a monthly payment of $2205.92 for a 40-year amortization. Five years later, the owner is now looking to renew.

As of October 2012, there is still $439,934 owing on the mortgage. What happens if between a market correction and depreciation, that the property can now be sold for 10% less ($405K)? There is now a difference of $35K between the outstanding mortgage amount and the gross resale value. (After fees and realtor commissions, the difference is likely $60K.) A few considerations:

* The owner cannot transfer their mortgage to a different lender.
* The mortgage holder could demand the difference between the resale value and the outstanding mortgage amount. This likely would not happen though, as it may very well "force" a sale.
* The new mortgage term would likely be reduced from the 35 remaining years to 25 years. At 5% interest, the monthly payment would increase by $352.76 (16%) to $2558.68/month.

However, the lender has no obligation to offer the standard posted rate of 5%. In fact, due to the high risk associated with the mortgage, they may demand a fixed "open" rate - which currently ranges from 6.3% to 6.7%. At 6.5% interest, the monthly payment would increase by $740.86 (33.6%) to $2946.78/month.

If they cannot afford the increase, the owner (or lender) might just add the home to the existing bloated inventory of listings, having to slash the price to make a sale.

DavidL said...

According to CAAMP, 25% of mortgages have a amortization of more than 25 years. In particular, 3% of existing mortgages are for 36-40 years while 7% of homes bought in 2011/12 were for a 31-35 year amortization.

http://www.caamp.org/meloncms/media/Spring%20Report%202012_ENG.pdf

hap pychucky said...

BackinVictoria

Enjoying the banter. A few have to support the other side.

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

Also According to CAAMP:
"Looking further, for borrowers who have recently renewed a mortgage, the average
interest rate is now lower (by 0.56 percentage point) than the rates prior to renewal.
Among borrowers who renewed, 74% (about 800,000) saw their interest rate fall,
27% (200,000) saw increases, and 8% (75,000) had no change. For borrowers who
saw their interest rates increase at renewal, the increases were minor for most. It is
estimated that about 75,000 of these borrowers had their rates increase by more
than 1 percentage point. This amounts to less than 2%"

"Among homeowners who have mortgages (but not HELOCs), on average their home
equity represents 49% of the value of their homes.
For owners with both mortgages and HELOCs, the equity ratio is 41%.
For owners without mortgages but with HELOCs, the equity share is 82%"

a simple man said...

@Hap - glad to have you around.

SilverSurfer said...

"Guess what the crash has not materialized."

1. Try adjusting the average person's 95% leveraged investment for inflation.
2. Add in loss of revenue in missed investment opportunities.
3. Consider that governments strongly influence the outcome of national economies and that they are anti-real estate for the past couple of years.
4. Consider the state of our largest trading partner.
5. Consider peak consumer debt has been reached and that mortgages are the biggest portion of such debts.
6. Consider the state of the global economy which has deteriorated month after month since 2008 (back then it was sector specific, in 2012, entire countries are going bankrupt, and soon entire continents).
7. Consider globalization and that economic "decoupling" is a proven false theory of wishful political leaders.
8. Consider that at no point in the history of man-kind have extremely low interest rates been in existance for more than a few short years.
9. Amid a sea of opposing evidence, contemplate the possibility you might soon be a victim of confirmation bias.

hap pychucky said...

Kooz

My 2 homes, one here and one on the lake I enjoy owning. I think in 10 to 12 years they will be worth 50% more (a guess). How we get to 50% more I do not care. I pay 50% less in property taxes for more of a house than I did in Toronto. The house I have would cost double or triple in Toronto. Victoria is soo much better a place to live.
My cottage takes 1 hour to get to versus a nitemare in Toronto. So ya I think Victoria is different and better.
I also think this gem called Victoria will continued to attrached people which will keep prices stable.

hap pychucky said...

Silversurfer

A house is not a commodity. It is shelter to enjoy and raise a family. Unfortunately some especially over the past 10 years treated it as an investent. A house historically has been a bad investment once you include taxes, maintannce and so on.

Better to invest in stocks if you want to treat your home as an investment. Own a home because you enjoy your shelter.

hap pychucky said...

Interesting read on Mortgages.

http://newsroom.bmo.com/press-releases/bmo-study-canadians-on-track-to-be-mortgage-free--tsx-bmo-201207040803133001

koozdra said...

"According to BMO Economics, new mortgage rules should help create soft landing for Canada's housing market"

We'll have the first one history.

SilverSurfer said...

hap, a house is not a commodity to some, but it has been to many. But one's mental and emotional perspective of whether house is an investment or not is irrelevant to the fact that this is where 70% of the Canadian population has plunked down the vast majority of their life savings...many with huge levarage.

No need to own a home to enjoy shelter. I quite enjoy my rented shelter, even more so when I consider how much money I've saved by not owning. One day, when the real estate market returns to sensible valuations, I will seriously consider owning a shelter. Until then, I'm buying popcorn and getting ready to watch the calamity of greater fools that is just beginning to unfold.

SilverSurfer said...

hap, from your link " One in five [Canadians] have five years or less remaining on their mortgages; only 12 per cent have more than 25 years to go"

You need to understand that each year only aprox 5% of all houses are bought and sold in Victoria. That means that a mere 5% of the population determines the real estate netoworth of 100% of owners... including those that are mortgage free.

Further, no real estate market ever reaches 100% mortgage free status. Thus the projected illusion that somehow only X% of the market has a mortgage is a somewhat useless statistic to be touting as positive news.

koozdra said...

"Priced aggressively $106,000 below assessed value."

$100,000 dollar drop in asking price is all the rage these days.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12409100&PidKey=-440354940

koozdra said...

"6 MONTHS PRE-PAID STRATA FEES"

Worst incentive ever.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12366166&PidKey=-531006930

Dave said...

* The new mortgage term would likely be reduced from the 35 remaining years to 25 years.

I didn't think borrowers were forced to qualify under the tighter regulations.

Does anyone have an idea of how likely banks are to tighten the amortization without the consent of the borrower? Can they even do that?

I don't think that scenario would play out. A friend of mine was relieved to know he didn't have to qualify at a 25yr amort. when he renewed last month (at a lower interest rate). Also, ING gave him a better rate than his old lender. Of course he -could- have qualified at 25yrs which probably had something to do with him being able to switch -and- get a better rate.

Dave3

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j said...

Right now over 1M is largely dead in Victoria. Lost of action in the 500-900 range but that is slowing.

We are very much at the beginning of the slide. And there is no knowing how large the slide will be: 15% is not a big deal; 30% is.

The Uplands is a funny market segment. At the moment there is lots for sale. A few houses have sold. Not at asking but sold. More have been taken off the market.

The issue is, as always, the vendors' idea or what a real price should be. If they want to move their houses they need to forget 2010 and price aggressively. That will not happen in the Uplands for a while because the people who live there have the money to sit on the sidelines for a bit.

But, if and when, the panic sets in watch out. Smart money is heading for the exits.

koozdra said...

"VIREB past-president Jim Stewart doesn't like the term buyer's market, but said "we're in a market where you can negotiate a really good deal."

http://www.canada.com/City+real+estate+numbers+better+than+others/7350718/story.html

koozdra said...

How did we get here:
Bank: I'm sorry Mr. Smith we just feel that it's too risky to lend you such a large amount of money with only 5% down.
CMHC: Hey Bank, don't worry. If this guy can't pay you back just sell the house for whatever you can get and we'll make up the difference. Mr. Smith we'll just need a couple of thousand dollars for insurance.
Bank: Actually... you know what Mr. Smith if the CMHC is vouching for you, we'll lend you the money you need to pay for that insurance.
Mr Smith: I will take as much money as you can give me and I'm going to buy the most expensive house I can get.


Daily CMHC rant:
This graph shows how the CMHC's debt climbed over the years. You can see that from 2003 to 2011 it climbed from mid 200 billion to mid 500 billion. Without raising the debt limit of 600 billion the CMHC will slow insuring mortgages and the bubble bursts. To add to the chocking off of the CMHC, it has been placed under OSFI. OSFI is a financial regulator which will require stricter rules on the mortgages insured by the CMHC.

http://www.theeconomicanalyst.com/sites/default/files/u3/cmhc_total_insurance_in_force.jpg