Monday, October 22, 2012

Monday market update: steadily slow


This week's VREB Monday numbers thanks to Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.

October 2012 month to date (previous weeks in brackets)  
Net Unconditional Sales: 242 [166] (106)
New Listings: 714 [483] (276)
Active Listings: 4622 [4616] (4565)
Sales to new listings ratio: 34% [34%] (38%)

October 2011
Net Unconditional Sales: 483
New Listings: 1086
Active Listings: 4687
Sales to new listings ratio: 44%
Sales to active listings ratio: 10.3% or 9.7 MOI

These are challenging times to be trying to sell a house. That's all I have to say about that.

188 comments:

Leo S said...

Thanks HHV.

By the way, what's the best way to estimate sales for the month?

By days of the month, we would get 242/21 = 11.5 sales/day or 31*11.5 = 357 sales for October.

By business days we would get (242/14)*22 = 380 October sales.

But often there are closed sales on Saturday as well...

In any case, things are sluggish. At this rate we'll see another month of 12+ months of inventory.

HouseHuntVictoria said...

Leo, I hesitate to use a daily sales average as a projection for the month, but with caution it may prove "in the range."

VREB always seems to find a way to add about 30 "surprise" sales or so on the final w/e... so let's round up to 12 sales, and then round that number up again to 375, then add 30, so right around 400ish...

As you can see, I don't like being pinned down to a firm number.

DavidL said...

I don't expect much higher than 350 sales. Yes, VREB often has some "last minute" numbers to add, but the current sales rate is abysmal.

Changes in the weather often help with retail sales (prolonged good or bad weather keeps people away). I wouldn't be surprised if open houses and viewings follow a similar pattern.

ArtVandelay said...

I'll just leave this here:

Vancouver

DavidL said...

@ArtVandelay

Huh? Am I missing something...

LWilliams said...

Vancouver

- ArtVandelay

The best part is that they needed a director and producer for that masterpiece.

koozdra said...

"Nearly three-quarters of Canadian households would feel a significant strain if they were to experience a modest increase in their monthly mortgage payments, a new survey by Bank of Montreal suggests."

Lets what the bank of Canada announcement says tomorrow.

http://www.theglobeandmail.com/report-on-business/economy/housing/higher-mortgage-rates-would-hit-households-hard-bmo/article4629849/?cmpid=rss1

ArtVandelay said...

@DavidL - Just for fun. Some people see it as the best city in the world, some see it as a zero budget music video.

a simple man said...

I viewed the last house I bought during a severe rainshower on the prairies - it was biblical.

We knew that the house suited us and was almost a sure thing, but when we saw the massive storm forecasts we requested a showing in the middle of it. The house showed well and withstood a rain that has many basements in the city flooded without so much as a errant drop anywhere.

dasmo said...

I agree simple. Best time to look is winter. the Property is at it's worst and there is less competition. Less inventory, but now that doesn't seem to be an issue.

DavidL said...

Smart thinking, simple man. I know of an Edmonton home that had withstood leaks for 30 years, but then suddenly started leaking around the foundation and window well during a recent "biblical" downpour. It cost ~$15K to fix ...

DavidL said...

Canadian quality of life hammered by recession
Index shows turnaround in GDP growth no boost to quality of life

a simple man said...

Quality of life is what it is all about.

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

So, you won't buy in the Western Communities, no matter how good the prices or better the quality of the homes are, because you don't like the Colwood crawl.

Well how about living in the Saanich Peninsula?

238 homes are listed and only 25 sold in the last 30 days for 9.5 months of inventory. The sales to new listings ratio is 25/60.

Last re-sale of a property on Dean Park Road for $638,000 which is less than the previous purchase on the same home in July 2008 at $675,000 but slightly higher than when the home was bought in April 2006 at $620,000.

This and other sales seem to signal that a substantial price drop is necessary to the core districts of around 15% so that values are in balance with the Western Communities and the Saanich Peninsula.

That's about an $80,000 hair cut off today's prices for the typical home or some 21 percent off peak prices.

Introvert said...

Dead silence...

a simple man said...

must be floor hockey night in all the rental suits around town.

patriotz said...

Teranet for September:

% change y/y -2.61%
% change m/m -1.29%

This appears to be the largest m/m decline for Victoria ever reported by Teranet.

Story

a simple man said...

This news is expected - we are at the top of a steep slope for the next year or so.

Is it unrealistic to expect a 15% decline in the next year?

koozdra said...

Will a 15% drop be enough to bring back the elusive first home buyer?

The Canadian housing market cannot be sustained without tax payer under writing through CMHC. The only people that will be able to buy will be people that have saved. However saving has become a dirty word just like renting.

a simple man said...

I think once a drop starts to happen quickly buying a house will no longer seem like such a good idea and people will be hesitant to get into the market - this is why markets often overshoot were they actually should be on the way down - psychology is a powerful force.

koozdra said...

Congratulations Victoria!

"The decline was highest in Victoria, where prices fell 1.3 per cent."

Home prices 3.6% higher in September from a year ago

koozdra said...

"Now, data from the research firm J.D. Power and Associates show that 57 per cent of buyers are going with terms of six years or longer."

Saving to buy large purchases is a thing of the past. If you want something you can have... just sign the dotted line and make your monthly payments.

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/how-car-loans-help-drive-affordability-delusion/article4629902/?cmpid=rss1

Introvert said...

Good news for the housing market (if you don't want a crash, that is):

Carney on rates: no 'imminent' changes

I can't see real estate prices collapsing in Victoria when one can still get a 5-year mortgage term at 2.89%.

Mind you, our MOI is shockingly high.

Introvert said...

"The decline was highest in Victoria, where prices fell 1.3 per cent."

Down 1.3 percent? Time to light my hair on fire.

koozdra said...

"I can't see real estate prices collapsing in Victoria when one can still get a 5-year mortgage term at 2.89%."

With CMHC slowing the insurance available on mortgages, first time home buyers will have to have more substantial down payments. With these severely inflated prices this cannot happen.

The 1.3% decline is in the Teranet-National Bank National Composite House Price Index. It does not mean that prices are down 1.3%. Prices are already down way more than that.

FTA:
"This marks just the third time that house prices have fallen in September in the 13 years that this index has data for. The other two were in 2010, and prior to that in 2008 when the country was entering a recession."

Indeed those times we had the CMHC to come to the rescue and insure mortgages so people can "take advantage of the low interest rates". This time the CMHC will be hindered considerably. Without frivolous lending prices will decline. The real question is whether a 15% drop is enough.

a simple man said...

Introvert - I agree that the low interest rates, and comments that it will continue so in the near future, make it a very interesting market.

Before we light our hair on fire over drops, let's wait to see what the next few months bring and then possibly have a christmas bonfire.

Just Jack said...

What I see in the foreclosure market, is that those that bought after 2006 are not even trying to ward off repossession and are moving directly to personal bankruptcy.

It's simply too large of a debt to ever pay off in a human's life time. They feel that the bank betrayed them by lending them too much money. Money that they now realize they can't pay back without a long term mortgage.

The agents, the banks, the brokers, the contractors, and the appraisers where all making money off inflated values. And they're now left with a mountain of debt with $20,000 and more in attorney fees.

The couple I spoke with today, are packing up their belongings and moving back to Calgary and leaving close to a million dollars of debt in Victoria.

They are now bitter soon to be ex Victoria home owners. BC to them meant "Bring Cash".

a simple man said...

Stonecrest, in the Uplands is now for sale, at $4 million. Personal home of a major developer - not built as a spec house - just too customized. Maybe they know something?

Just Jack said...

It isn't uncommon for contractors to build and live in a home for a year or two. Remember, the principle home is capital gains free. And the "actual" cost to build the home is far, far less than others could even dream to pay.

nudge, nudge, wink, wink, say no more, say no more.

hap pychucky said...

JJ

Stories like that piss me off.

People need to take personal responsibility for their actions.

a simple man said...

hap - I am with you 100%. And it starts with teaching our kids to be responsible and by leading by example. Sometimes the right decision is not the easy one.

Just Jack said...

At one time, I would have agreed with both of you. This time around, I think a lot of people were being conned into buying a home. I know, no one person held a gun to their head to make them buy. Yet the system was set up to take advantage of naive people. Yes, people are ultimately responsible for their own actions, but that doesn't mean those that facilitated those actions should not have some accountability.

Look at how long the discussion with buy versus rent was discussed on this blog. And we would be considered knowledgeable people. How can the ordinary person grasp the ultimate effect of buying a home when there is no contrary voice to be heard.

hap pychucky said...

JJ

Affording realestate is very easy.

can you afford a 20% down payment
Are all housing expenses less than 30%

are all housing and other debt servicing less than 40%

If you answer yes to all three, you can afford to buy. If not rent

Anybody who buys a house and has a no to one of the above is risking their future.




koozdra said...

Hap pychucky criteria:
"can you afford a 20% down payment
Are all housing expenses less than 30%"

Everyone else's criteria:
can you afford 5% down (if you can't get a cash back)
Are all housing expenses less than 44%.

I agree with JJ. I have a friend that was being urged to buy a condo in Winnipeg. He didn't even know that you needed 5% down to buy (which he didn't have). Most people don't know what they can afford and rely on their mortgage broker and realtor to "help" them.

If only our banks were sensible and didn't lend money to people that were buying above their affordability. Alas, the CMHC saw to it that the bank would issue money to everyone as long as you paid the insurance.

hap pychucky said...

Kooz

Do not buy that excuse. A lot of info is available on google on what is sensible with debt.

koozdra said...

Hap,

You have too much faith in the common man. Most people start with the assumption that they must buy and as soon as possible. If a way is presented to them they will take it. Economics assumes a rational and informed consumer. Such a thing does not exist.

Easy credit = Bubbles

hap pychucky said...

Easy credit = Bubbles= individuals deserve what happens to them and I hope the bank sues them for all outstanding debt.

All Canadian had a window into over extended credit in the US over the past 5 years. If they chose to ignore, they deserve what happens to them.

Ignorance and stupidity is not an excuse.

koozdra said...

Indeed they will get what's coming to them. However I have a hard time saying that they deserve it. I don't care about people that dipped into their equity to get investment properties. These people are running a business and shouldn't be surprised if their business fails (most do).

I'm talking about the ignorant common person that was buying a home. Everyone was telling them it was a good decision. From the relatives that said it was a "sure thing" to the bank that would lend them the money to drown themselves. Should they shoulder the pain that is coming, yes. But to wholly blame them leaves a sour taste in my mouth. Markets need regulations. Especially when amateurs are involved.

hap pychucky said...

Kooz

The question is. How much do you want the government to control people`s life and decisions because people cannot take the time to educate themselves and do a budget?



Leo S said...

The average person never hears anything beyond "renting is throwing money away" and "housing is always a good investment". The level of detail on this blog is overboard for anyone sane, but there is a real lack of good accessible resources for the people trying to make an informed decision.

koozdra said...

Right, it's a question of government intervention into the free market. I'm a free market guy.

A bank looking at a loan application with a 5% down should be weary. In the past you either paid a higher interest rate or were denied.

The CMHC, which is a government entity, steps in and removes the risk from the bank lending the money. It is government intervention that created this bubble. Without it, people would not have access to so much credit.

Regulation is required to control people's bad credit behaviour.

hap pychucky said...

CMHC was never created with this in mind. It was created for our soldiers coming home. This elephant needs to be further fixed.

I think creating a max of 500k and must have 10% deposit so people have skin in the game, would be my 2 fixes.

a simple man said...

hap - good suggestions. I agree that more downpayment is needed and a cap lower than $1M is warranted as well.

koozdra said...

Hap,

I completely agree.

Introvert said...

A bank looking at a loan application with a 5% down should be weary.

You mean "wary."

"Weary" means to be exhausted.

koozdra said...

You mean "wary."

oops, thanks.

Leo S said...

@hap pychucky
Ignorance and stupidity is not an excuse.

It isn't, but one might argue this is willful deception. The people that stand to benefit from house purchases have successfully billed themselves as real estate experts. Who's the first person you talk to when you want to buy a house? Well your local real estate expert, aka a realtor. And how do most people choose a realtor? Well my auntie linda said she knows a guy that was really friendly and it doesn't cost anything to work with him.

And where to go when you're looking for a loan? Well if it isn't the friendly manager at the bank, then it's a mortgage broker (another self-billed expert) and the advice is the same from both.

When the newspaper needs an expert opinion on real estate they go talk to Royal LePage or Remax or the CREA. So the message from the papers is mostly similarly biased.

Many of the online rent/buy tools out there either require a detailed understanding of all the variables, or are simple but woefully inadequate. I'm not surprised that most people don't bother going into so much detail and just go based on the majority advice from the usual suspects.

hap pychucky said...

Leo

I get it but a simple calculation of what you spend versus what you bring in is not rocket science.

a simple man said...

In the same vein:

U.S. sues Bank of America over $1B mortgage fraud.

Introvert said...

I agree that more downpayment is needed and a cap lower than $1M is warranted as well.

I agree: 5% down is irresponsible and should not be allowed, no matter what the market conditions are.

I think 10% probably is a good minimum.

Don't have 10% down? Don't buy.

Leo S said...

I get it but a simple calculation of what you spend versus what you bring in is not rocket science.

Well I don't think there is a significant number of people that aren't doing that. The mortgage broker and bank will make sure that you can actually pay the mortgage. The problem comes when people don't think about how long they are actually going to stay in a property, and what it might cost them to live there if they do sell in a few years, and what it actually costs to rent vs buy, and what the situation might look like if one person is out of a job, or on maternity leave, or what happens when the roof leaks.

I don't think any significant number of people are getting mortgages but then not being able to pay them without their income or expenses changing.

Just Jack said...

Certainly a bigger down payment is necessary. Putting a nickle down, isn't enough to discourage cash backs and other creative financing tricks.

Most people have enough of a limit on their Visa and MasterCard cards to make up the 5 percent down payment.

And mom and dad are easily convinced to take out 5 percent of their home equity for the kids. Because it's your parents equity to
give to you. You're just getting your inheritance early! And don't they owe it to you, just for leaving you in that shopping cart in front of Wallmart when you were three!

Okay, so I still have some issues to work out with my parents - but really for four hours!

Victoria said...

I guess I go against the grain here because while I am a residential real estate bear right now I don't have a problem with 5% down.

At all.

There are many people who don't have money, or family members who can kick in and help. They aren't necessarily overextended and they may just be able to eek out a rent payment every month. But that payment is faithfully made.

I enjoy seeing them get ahead. I relish the little guy who can scrap up every last dime, just enough to get into a 'real' home for him/her and their family.

They aren't going to miss a payment. They aren't going to let their dream go.

I say go for it!

Just not now. Wait 2/3 years. Then dig in.

Just Jack said...

My dream is to run a Marathon.

Houses, cars, boats are just things.

Although, if I drop another 15 lbs, I will reward myself with a cool road bike - and maybe some lululemon ript shorts.

a simple man said...

JJ - run a marathon distance on the galloping goose - a great trail and little to no concerns for traffic, etc. Some great scenery along the way, too. Only limitations are limited water and washrooms, but an awesome run, nonetheless.

Just Jack said...

I've biked the goose to Sidney and Matheson Lake and fixed two tires along the way. But, I'll try running it too. If you see a big white lump wrapped in lululemon gasping along the trail - that's me.

"When did my six-pack turn into a keg?"

a simple man said...

The part around Metchosin, past Matheson lake and up to the potholes is awesome. That last incline up the potholes is a real finisher. What a great place we live in.

dasmo said...

Wow, You want to see a real bubble, look into Spain. I did not realize the scale of what was going on there. It's a brutal example of construction purely for immediate profit for investors and not for any real demand. This has resulted in entire villages being empty, 800 new golf courses being built, Ghost airports, ghost towns like Valdeluz...

Martin Cooper said...

Wow,nice post.it will be very interesting and informative to us.good thoughts for your work.we have news about real estate investing.
property in Lucknow

not yet said...

make the lender own the loan.
no more CMHC. the lender then will determine what the correct down payment will be.
without the gov guarantee i guess that the lender will ask for more than 5 or 10%
in a falling market i'm guessing 20% +.
what would you want if you were the lender?

Chris said...

"brutal example of construction purely for immediate profit for investors and not for any real demand"

No different here. For example 58,995 condos under construction in Toronto right now. Thousands of units going up here. Prolonged low rates anywhere, always leads to overbuilding and pulled forward demand.

patriotz said...

I guess I go against the grain here because while I am a residential real estate bear right now I don't have a problem with 5% down.

The problem is the lower the down payment or longer the amortization the more expensive it makes houses. If the down payment requirement were increased to 10%, prices would go down, so you could likely buy a decent house for $300K.

That's $3K/year savings for a couple over 5 years.

dasmo said...

We are nothing like that here in Vic. I mean 800 new golf courses when less that 1% golf...There was serious corruption on a grand scale. If TO is anywhere close to that I would be surprised.

Marko said...

SFH Median has dipped to 505.5k, average at 604k. Seeing livable homes coming to market at 400k which hasn't been the case for a while.

Condos downtown at a 6 year low on average. Few rolling back to 2005 levels.

Tough market out there.

Introvert said...

"brutal example of construction purely for immediate profit for investors and not for any real demand"

No different here. For example 58,995 condos under construction in Toronto right now.


That's preposterous. Canada is different from Spain.

Chris, please show me a 30,000-person ghost-city in Canada that was caused by overbuilding.

Introvert said...

Let's call BS when we see it:

-Canada is "no different" from Spain.

-Loose comparisons to Greece.

-Canada's real estate market will mirror that of the United States, no elaboration needed.

Leo S said...

No country is exactly the same. It's all on a spectrum. Of course we dot have the extent of overbuilding here, but those places also had 80% collapses in values.

Just Jack said...

The logic is that we can't be over building if prices are increasing. The assumption is that demand for housing causes home prices to rise.

But we now know that this assumption was wrong. It was cheap and easy lending regulations that were causing prices to rise.

Sale volumes have been declining since 2007 and are now near historic lows. If it were not for the government stimulus, house prices would have fallen and construction would have come to a near stop. But, that's not what happened. Home construction kept going.

Do we have a glut of condos and houses? I think we do. A drive out to Langford and all the way to Sooke and Shawnigan Lake should convince most people. I would guess that most of these thousands of new homes are occupied by two or three people only. 15 years ago, the 20 something's would still be humping in the back seat of their cars. Today, they can get together and buy a $600,000 house, fill it with furniture from the brick and really get #$%%^$#.

But just like in Spain, the full extent of the over building will not be known until the correction is fully underway.

dasmo said...

True, I wasn't posting it to say "nothing happening here". It was more that I was shocked at the level of it there. And where else do I know a bunch of people interested in this subject...

What went on in Spain was criminal on a huge and grand scale. Here we have some speculative building and high prices. Even the speculative building is no where near as crazy as Spain. At bear mountain, people actually live there, golf there and stay there.

To use the golf course as a sign: there are roughly 2000 courses in Canada and roughly 6-million people golf (not including tourists)so

-3000 golfers per course

In Spain roughly 308-thousand play golf (not including tourists) and just in the last ten years 800 courses were built (because it increases the property value of the new development)that's

-385 golfers per course

and Spains weather allows for a much longer season...

Introvert said...

Do we have a glut of condos and houses? I think we do. A drive out to Langford and all the way to Sooke and Shawnigan Lake should convince most people.
...
But just like in Spain, the full extent of the over building will not be known until the correction is fully underway.


Can't wait to buy a second house in Sooke for a song when it becomes a ghost town.

Just Jack said...

Introvert, you will never buy that house in Sooke.

Where are you going to get the money? By using the equity in your home? By trying to convince a bank to lend you money in a market with a high vacancy rate and most of the homes for sale are under foreclosure?

Who's going to lend you money when your net worth is negative, after you've put everything into real estate?

Most of the homes will just sit empty, locked up and secured by property management companies.

Victoria has never experienced this kind of market, unlike parts of the prairies where entire subdivision had boarded up homes and unfinished concrete foundations. But we have never had this big of an explosion in new housing either.

Leo S said...

SFH Median has dipped to 505.5k

That would be quite a drop if it holds. Back to levels not seen since the drop of 2009.

Introvert said...

Introvert, you will never buy that house in Sooke.

I was being facetious.

But you are making some interesting assumptions about me, what I can afford, and what a bank might lend me.

Most of the homes will just sit empty, locked up and secured by property management companies.

You generally have quite a bleak view of where things are going (or will go) in Victoria.

Marko said...

The median could swing quite a bit. Lots of support down, but if we get two more sale above 524k it will go up to 524k.

CS said...

Hey, ten thousand square feet, anybody?

Only $1000 per square foot, and nearly new.

Victoria said...

Patriotz - you're right about the monetary difference. $3,000 seems like a small amount from this vantage point but from the broke student/single Mom/poor new immigrant view - it can be Mt. Everest.

Hard work/steely eyed determination and a can-do attitude wins the day.

Ever watch Randy Pausch's last lecture? I flipped through the PowerPoint presentation of it yesterday while readying myself for a huge challenge.

Love the brick wall analogy.

Which reminds me - Victoria has run into its own brick wall. This one made of bubbles.

Just Jack said...

Yes, my outlook is bleak on real estate because of the substantial changes that will likely be announced by CMHC at the end of this month.

koozdra said...

JJ,

Are you referring to the ending of cash back mortgages or is there something more substantial coming?

koozdra said...

"How did that happen? Governments, Liberal and Conservative, were blind to the First Law of political intervention in housing markets: Anything you do to help homebuyers will eventually go too far–and merely help home sellers win the lottery."
...
"But who gains? Not the first-time homebuyer, who merely faces more competition for a house. The real estate market is even more susceptible than the stock market to being flooded with marginal buyers who shouldn’t be there. Owning your own place has an undeniable psychological appeal, even when the numbers don’t add up. Most people don’t need more encouragement from their politicians."


http://www.theglobeandmail.com/report-on-business/rob-magazine/cmhc-outlived-its-mandate-now-its-just-meddling/article4634264/

Just Jack said...

CMHC has reached its cap, and has to have that cap increased or seriously retire the amount of insured mortgages along with the exposure to the Canadian tax payer. Doing nothing is not an option, as CMHC would just freeze up and could not generate new revenue for itself. And as Flaherty has said, he wants the government out of the mortgage underwriting business.

I'm suspecting that there are several other high ratio lenders that will be more than happy to renew past CMHC's high ratio mortgages - for a fee.

Just Jack said...

And how about those homes in Sooke that CMHC has taken back and are selling under a conduct of sale.

A house on Grant road, that was bought in August 2006 for $270,000 and then renovated, now sells for $227,000. After close to 330 days at a starting price of $349,000.

Yet if your living in an upper income neighborhood things still look rosy with renovated 1950's homes getting close to $900,000.

The people in steerage are drowning while those in first class are sipping champagne.

patriotz said...

while those in first class are sipping champagne.

Rather, those leaving first class. Those getting in are drinking kool-aid.

StalJ said...

Re: the bottom finding post.
A rich old fella let me in on when our prices will bottom. He didn't say how much, but he was very clear on when. He told me largely to do with world currency market, president elections, .. He said reserve currency US$ follows a 16 year cycle and used Vancouver proices saying we are here# at late '96 or late '80. Clinton held in '96 and can't remeber said '80? It doesn't matter who wins, either way US$ strengthens which is opposite of what everyuone thinks. Any way long story short, it made a lot of sense when he exlained it. What he was clear on was our market would bottom first part of '17 after the next election. He said last two times that he bought a lot of proeprty was '85 and '01 in Vancouver but I know he has owned all over.

Leo S said...

@Marko The median could swing quite a bit. Lots of support down, but if we get two more sale above 524k it will go up to 524k.

For sure. When median varies by up to $40,000 from month to month you can imagine how volatile it is on even smaller periods.

@JustJack CMHC has reached its cap, and has to have that cap increased or seriously retire the amount of insured mortgages along with the exposure to the Canadian tax payer.

How do you figure that this will come to a head this month? My impression is that CMHC has been rationing their insurance to stay beneath their cap for quite a while (ending bulk insurance programs for low-ratio loans having the biggest impact).

koozdra said...

Wow, someone hasn't gotten the memo.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12324344&PidKey=-1560597822

dasmo said...

no kidding sheesh...

dasmo said...

the zoning is a plus but the lot isn't big enough for anything but a duplex. They are way off. 580 tops because the medium zoning is in place and the house is a simple demo. if this sells to Abstract then the whining that there are tight margins out there will be officially rendered BS!

koozdra said...

found on VREAA:

http://fullcomment.nationalpost.com/2012/10/24/kelly-mcparland-hard-pressed-homeowners-just-close-their-eyes-and-borrow-some-more/

koozdra said...

oh boy...

http://www.realtor.ca/propertyDetails.aspx?propertyId=12535030&PidKey=878052068

http://www.realtor.ca/propertyDetails.aspx?propertyId=12535029&PidKey=917177954

http://www.realtor.ca/propertyDetails.aspx?propertyId=12535028&PidKey=-1455687043

http://www.realtor.ca/propertyDetails.aspx?propertyId=12535027&PidKey=1720389864

yogurt said...

^ I think I'm missing what you want us to see with those links, koozdra. Expensive? Cheap? I'm not sure how to value East Sooke real estate anymore -- we moved away about six years ago.

(I'd love to live on Beecher Bay Road if I didn't have a kid to get to school.)

koozdra said...

I don't think these houses are saleable anywhere near this price. I've been watching houses in East Sooke for a while and nothing is moving. The market there is about as exciting as the market in Sooke. These developers are rushing to market to catch some lingering top end buyers that think they are going to get a great deal.

yogurt said...

Thanks koozdra! We lucked out with our East Sooke home -- first house purchase, right at the start of the bubble.

Our second house in Sooke's Sunriver neighbourhood was a different story. We sold in 2011 for a tiny bit more than our purchase price, meaning an overall loss after fees and the new fence we built.

But perhaps we were lucky in a different way, because the house sold before we'd even finished taking photos or put up a sign. Not the usual selling story in Sooke these days.

I still watch my PCS for the old neighbourhood out of curiosity/schadenfreude. It's dead slow, but homeowners are sticking to their prices.

DavidL said...

@koozdra
re: the four links to unfinished homes in Sooke

Yikes! Only one of those home has been finished on the exterior, and only the lower floor is insulated, dry walled and (apparently?) roughed in for electrical and plumbing. I would think that these homes are $100K to $150 away from completion - so the final price is more like $700K to $850K.

DavidL said...

@koozdra
Quoting from the National Post article that you linked to:
Hard-pressed homeowners just close their eyes and borrow some more

The Bank of Montreal report that came out Monday and noted that almost three-quarters of homeowners would feel a significant squeeze from even a small rise in interest rates shows just how close Canadians are to falling over the edge of their finances. What it means, in essence, is that 73% of the people surveyed can’t afford their own homes. And a lot of them are already feeling the pinch.

A third have cut back on other spending so they can make the mortgage payment. One in six has been forced to raid their savings to pay current costs. This is at a time when interest rates are at historic lows, which means they can only go up from here. That they will rise, eventually, is inevitable. Yet 16% of the people in the survey said they might not be able to make their payments if rates rose by even a tenth.

...

As the housing market cools and home prices slip, a lot of people could find themselves making monthly payments they can barely cover for a house that isn’t worth what they thought it was. If you can’t cover the mortgage, you just have to pray the roof doesn’t start leaking or the furnace fail.

And borrowers won’t really have anyone to blame but themselves. The warnings are out there. The examples are rife: all anyone has to do is examine the experience of U.S. homeowners over the past few years. The dangers aren’t a secret, they’re just being ignored.

a simple man said...

that is some powerful editorial.

Alexandrahere said...

Maybe a relatively good deal: 1431 Myrtle sold for $389K while being assessed at $512K. It's a late 60's home on a nice street and in a convenient location.....close to Hillside Mall etc. No pics of the interior and the house is tenanted. Two (smallish) bedrooms on the main with a separate dining room. Downstairs has a bathroom and likely could be suited.

info said...

Moody's places 6 Canadian banks on review for downgrade.

It's all starting to unravel. Our media and government have worked so hard to convince Canadians and the rest of the world that our banks are conservative. Not so much. The only reason our banks have not had to deal with very much difficulty yet is because CMHC was used to re-inflate the housing market in 09 when it was clearly tanking. This temporarily avoided many problems for the economy and the banks.

CS said...

@ Koozdra

"But who gains?"

The Government. They got the majority they wanted, and they achieved it by juicing the economy with a property boom.

The downside is the collapse of the bubble -- if there is a collapse.

The tightening in credit is coming just as the US begins to recover. If the $US strengthens, which against the Renmimbi or the Euro seems far from unlikely, the C$ can sink enough to keep our commodity exports flowing. In which case, maybe there is no collapse here, or only in Vancouver and possibly Victoria, and who in Ottawa cares about that?

In particular, housing demand may stay strong if a falling C$ is accompanied by inflation that keeps real interest rates below zero.

info said...

Loosening of credit was the reason prices in Victoria doubled over the past decade. No question.

We are now entering a prolonged period where the name of the game will be tightening of credit.

Renters and savers will enjoy this. Those who bought near the peak will learn to loathe it (if they bother to pay attention).

koozdra said...

@CS

"In particular, housing demand may stay strong if a falling C$ is accompanied by inflation that keeps real interest rates below zero. "

If inflation picks up, won't the BOC increase interest rates to combat it? I think the fear of raising rates right now is a rising Canadian dollar. If the dollar sinks then we can start ratcheting up the rate slowly (A modest withdrawl of economic stimulus, as Carney would say). This would have a deleterious effect on housing prices.

Sure the demand will always be there but who will be able to get financing is the bigger question. As the CMHC starts to slow, will the banks make foolish loans without tax payer underwriting?

I just don't see anything that can rescue this bubble.

koozdra said...

@Info, great article

Quoting from the Whisper from the edge article:

Consider how we got here:

Prior to 1999 you needed 10% for a mortgage and that mortgage had a maximum amortization of 25 years. CMHC also had limits on how much you could buy with their insurance.
CMHC then lowered the down payment to 5% down with price limits depending on the area.

Amortizations were 25 years. There would be no price limit on what they would insure if 10% or more was put down.

By Sept. 2003 CMHC allowed 5% down on 25 yr amortizations but they removed all price ceiling limitations. Now any mortgage would be insured regardless of the value of home purchased.

March 2004 CMHC began allowing Flex-Down products which permitted the 5% down to be borrowed and 1.5% closing costs to be borrowed (essentially zero down, but 95% insured.

March 2006 you had 0% down, 30 yr amortizations. This became 0% down, 35 yr amortizations later in the year. Interest only payments were allowed for 10 years.
November 2006 CMHC began allowing 0% down, 40 yr amortizations along with interest only payments for 10 years.

Canadian banks ramped this up by allowing up to 7% cash back offers is you would take on a mortgage with them. You could basically get paid if you bought a house.

Just Jack said...

So much for conservative lending practices in Canada.

DavidL said...

@CS
In particular, housing demand may stay strong if a falling C$ is accompanied by inflation that keeps real interest rates below zero.

I don't understand your conclusion ... how does the export market ("falling C$ is accompanied by inflation") maintain a strong demand for housing when - quite simply, there is an oversupply of real estate? What about the boomers who are just beginning to downsize?

CS said...

@Koozdra
"If inflation picks up, won't the BOC increase interest rates to combat it?"

It depends on the reasons. If the $US strengthens while interest rates in Canada stay low, the C$ will fall giving rise to imported price inflation, which will tend to encourage property investment -- or at least stem a collapse in the market.

Dave said...

“the C$ will fall giving rise to imported price inflation, which will tend to encourage property investment -- or at least stem a collapse in the market.”

I’m not sure anyone should be encouraged to buy property that’s denominated in a falling currency. Especially since the last two times our currency fell hard in the early 80s and the 90s, so did property prices. Those were painful double whammies for novice investors.
The time to invest is when both currency & property are doubling upward together, like the past decade (if I remember, the C$ was 60 cents in 01). Then it’s the good kind of double whammy.

CS said...

@Dave
"The time to invest is when both currency & property are doubling upward together"

You might be waiting a century or two!

From 1950 to 75 the C$ deviated by an average of no more than 5 cents from the US$. During the next 25 years it slid to 60 cents and since 2002 had regained parity. So maybe in the next 25 to 50 years you'll see the C$ back at 60 cents. But then again you may not.

CS said...

Dollar history

Dave said...

“You might be waiting a century or two!”

Or maybe only a year or two. Maybe we’re back at 60 cents & oil at $30 again soon, with what’s happening in China & US. Many research firms are claiming US will soon be energy independent. Then there are finance professors at Peking University’s Guanghua School of Management, specializing in Chinese financial markets saying commodities are about to collapse.
http://www.mpettis.com/2012/09/16/by-2015-hard-commodity-prices-will-have-collapsed/

Or...like you say, it could be the year 2212 before we see 60 cents again...

CS said...

"Maybe we’re back at 60 cents & oil at $30 again soon"

"Many research firms are claiming US will soon be energy independent. "

$30 dollar oil would end any hope of American energy independence. Fracked oil costs about as much as tar sands oil, around $80.

Why should the C$ fall to 60 cents when we are approaching a balanced Federal budget? The 60 cent excursion was in the aftermath of massive and long sustained Trudeau - Mulroney budget deficits.

Introvert said...

Then there are finance professors at Peking University’s Guanghua School of Management, specializing in Chinese financial markets saying commodities are about to collapse.

And then there's the former chief economist at CIBC World Markets, Jeff Rubin, who argues that oil will never be cheap again, resulting in the end of growth.

No matter the conclusion, one can find an "expert" who supports it.

CS said...

I think Michael Pettis' prediction referred to "hard" commodities, which would exclude oil and gas.

And if China succeeds in rebalancing its economy, i.e., by increasing consumption as a percent of GDP, we can expect continued rapid growth in the number of Chinese driving an automobile, which would mean that the rapid growth in China's oil consumption will continue. Then there's the growing number of Indians driving a Tata Nano!

Here are historic data on the Canadian Federal deficit.

Dave said...

“$30 dollar oil would end any hope of American energy independence. Fracked oil costs about as much as tar sands oil, around $80.”

They used to think fracked natural gas could never fall below $10 again too. There’s lots of tight oil already being produced for under $40. You just have to keep up with the times. Progress and technology have this way of advancing. Strange how those engineers keep thinking stuff up.

CS said...

"They used to think fracked natural gas could never fall below $10 again too. "

Whoever "they" may be, they were correct if they thought two-dollar gas was uneconomic, which is why the number of US rigs drilling for shale gas in the US is down by more than half in the last year.

It is also why there is massive investment in gas liquefaction and export facilities, which will alow producers to take advantage of high prices in Asia (about $15.00).

But anyway, no one said oil prices would not fall to $30. What I said was that if they did, you could forget about US energy independence.

CS said...

@Intro.

"
No matter the conclusion, one can find an "expert" who supports it."

Yes, predictions are difficult, especially about the future.

Oil prices are strongly influenced by events in the ME. The US is heavily involved in the ME, having spent $trillions in the last decade to assert hegemony over the region.

US objectives in the ME are (a) to control a major energy choke point, (b) keep oil prices high, which hurt Asian competitors who are large energy importers, while hastening US energy independence, and (c) direct oil revenue through the hands of regional allies, Saudi, Iraq and now Libya, who can be trusted to invest surpluses in the US and purchase arms and infrastructure from Western, not Chinese or Russian suppliers.

dasmo said...

This is all feeling a little like last call at the bar where they sell you a few pints and then moments later kick you out...

Dave said...

I couldn’t resist commenting on Jeff Rubin. He predicted in April 2008 that oil would be $225 in 2012. Whoops, I think it’s $80 or so. Just another credentialed doomsayer who overlooks human innovation, among other things. The funniest part is how many Canadians wasted money on his best-selling books.

Dave said...

Oops, part of my comment vanished. Anyhow, sadly I actually know people who probably paid more for homes in core locations over last five years based on Rubin's books.

girlseekshouse said...

What's with all the sales lately on PCS? I have 5 condo sales listed for today alone.

CS said...

@ Dave

"There’s lots of tight oil already being produced for under $40. You just have to keep up with the times."

In May Reuters reported the breakeven cost was $68, which means that is some producers were at $40 others must have been at $80 plus. So if price falls much below $80.00 you can expect marginal producers to quit investing.

I have some experience of technological innovation and have now doubt it will continue in the energy industry as elsewhere, but you've gotta keep to the facts if you want to know what's going on, and politics will plays an important role in the determination of the price of oil, as of houses.

DavidL said...

Is that crickets I hear? I guess everyone must be busy with things more important than real estate predictions... ;-)

a simple man said...

I have been travelling a lot for work, so have been largely silent.

Looking forward to today's numbers.

Marko said...

Monday, October 29, 2012 8:00am

MTD October
2012 2011
Net Unconditional Sales: 329 483
New Listings: 932 1,086
Active Listings: 4,640 4,687

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

Marko said...

SFH Average MTD = 598k
SFH Median MTD = 520.25k

Condo Average MTD = 292k

Marko said...

On pace for less than 6,000 sales for the year for the first time since 2000.

a simple man said...

Thanks for the stats, Marko. Looks like the MOI may be climbing.

Just Jack said...

We are likely around 7 months of inventory for houses in the core districts and a sales to new listings ratio around 120/280. Days on market are around 52 and the Sales to Assessment ratio at 100 percent.

Condos in the core districts have about 11.5 months of inventory and a sales/new listings ratio of around 70/220.

And that's the end of the good news.

The Western Communities have around 18.5 months of inventory for houses. Sales/new listings at 35/145. With an average 74 DOM.

Houses in the Saanich Peninsula have about 13 MOI and a S/NL ratio of 18/55 along with an average 70 DOM.

With this low, low sale volumes the use of averages is almost meaningless. When there are only 120 house sales in the core and prices range from $300,000 to $3,000,000 even median prices are questionable.

That only leaves re-sales of the same home and they are few. Especially when you weed out the ones that have just been renovated.

We are in a very shallow market with the strongest demand in the core. You can still drop your home price by a minor $10,000 or $20,000 and get some activity in Victoria city or Oak Bay. In places like Sooke, that will not guarantee any more showings than when the property was at the previous price.

DavidL said...

Thanks for all the numbers and data, Marco and Jack.

Just Jack said...

This is just a casual observation on my part, mostly because of the very few re-sales of houses that had been previously purchased in the last decade.

It does seem that they're selling almost at twice the original purchase price, even though the house may have been bought in the years from 1996 to 2003. There are exceptions, but I'm wondering if some of the agents have come to pricing their listings using this as a rule of thumb?

Just Jack said...

So, how bad do you really want a home?

Would you be willing to pay between $1,500 to $2,000 a month, to live along a very busy street in a two-bedroom home that has not seen any updating in 50 years? With some big ticket items like a roof and furnace coming your way in say the next five years? And no way to finance those items, because you are strapped for cash.

And hypothetically speaking. What happens in three or five years when it comes time to re-finance that CMHC high ratio mortgage and you have to pay an additional fee to switch from CMHC to say Genworth? Because CMHC is no longer renewing mortgages. And what if you can't qualify with Genworth?

This is just fear mongering on my part. It's ludicrous to suggest that CMHC would ever stop renewing their mortgages. That would just be a royal screw over by the government.

Alexandrahere said...

Hello all....here are my stats for 22-28 Oct:

SFH in Vic,OB,ESQ,SE&SW with min 2 beds & 2 baths priced between $375K & $775K.

Sold: 15
Avg price: $572K
Med Price: $542K

compared to....

25-31 Oct 2010, Sold: 22 Avg $584K
24-30 Oct 2011, Sold: 12 Avg $517K
Med: $485K

Out of the 15 sales last week, 11 sold for less than BC Assessment and 7reported having secondary suites.

Within the same criteria,in the areas of Gordon Head, Lambrick Park and Mount Doug there were 3 sales with an available inventory of approx. 51 homes. The avg price of the 3 was $631K. In the past four weeks in these areas there were 5 sales with an avg sale price of $645K.


For condos and townhomes last week, pretty much in the same areas with a min of 2 beds & 2 baths, priced between $248K & $550K there were a total of 6 sales. The avg condo sale was $281K and the med. was $270K. Only one townhouse sold and it went for $317K. Four of the six went for below BC Assessment.

a simple man said...

1649 Elgin Rd just sold:

Original ask: $685K
Sold: $550K

backinVictoria said...

re:1649 Elgin Rd

What got my attention was the assessed price of $671,000. What's up with that?

Just Jack said...

Previous sale before some of the renovations for the home on Elgin was in 1996 at $258,000. Now 16 years later it has only slightly more than doubled?

What happened to all the near tripling in prices?

Marko said...

$258,000 in 1996 was a lot of money. My folks bought a home in Fernwood with a decent rentable suite around that time for $180k on a 5,500 sq.ft. lot backing onto a park.

You could pick up a 2 bed, 1 bath home on 5,500 sq.ft. in Fernwood in the 130k to 140k range back then. Those now go for about 350k-400k.

dasmo said...

671K seems a tad high. Not the nicest street nor the nicest spot on the street. Is $550 a good deal? I don't know, it's an expensive demo, and a risk if you can't get it rezoned for a duplex or small apt.

DavidL said...

@Marko
My folks bought a home in Fernwood with a decent rentable suite around that time for $180k on a 5,500 sq.ft. lot backing onto a park.

Just curious ... what would you expect the resale price of that same house to be now (without substantial improvements)?

patriotz said...

$258,000 in 1996 was a lot of money.

It's also a lot of money today - over 3 times the median household income in Victoria.

Which is the point really.

Just Jack said...

Just out of curiosity, is backing onto a park a good thing or a bad thing?

Or how about houses on corner lots? Would you pay more or less for a home on a corner lot.

Or a house that backs or sides along a school yard?

For me, they would be deal breakers. But I'm assuming that there would be less privacy and parking issues.

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

@Just Jack
Just out of curiosity, is backing onto a park a good thing or a bad thing?

I live in a corner lot at the end of a cul-de-sac that borders on a park. When looking off my back deck, or out of the kitchen and dining room windows, I mainly see just trees - no neighbours peering in (or vice versa)! There are access pathways along the edge of the property - which means a bit less private, but overall - it is a huge "plus". BC Assessment values do not include consider such "benefits"

Marko said...

Just curious ... what would you expect the resale price of that same house to be now (without substantial improvements)?

Without improvements probably around 499k?

My parents added another suite soon after they bought it. For about 15 years they rented a 2 bedroom basement suite for $950 to $1,000 and a cottage suite for $580 to $650. Now they just rent the 2 bed basement suite.

Amazingly enough never once had any issues with tenants. My mom works at uvic so she has always been able to advertise and find solid students up there.

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

Say, a typical lot that did not back onto a park was worth $500,000.

How much more would you pay for a lot backing onto the park then?

$25,000
$50,000
$100,000
more?

DavidL said...

It depends on the park: a skateboard park = -$30K, a wilderness park = +30K. ;-)

Alexandrahere said...

Some homes that sold in that area back in 93/94:

2021 Byron Asking $259K, sold for $251K, 4 beds 2 baths, built 1950.
Sold in Oct '93

1557 Wilmot, Asking $330K, sold for $322K, 3 beds, 3 baths, built in 1913. Sold Jan '94.

2018 Meadow, Adking $260K, sold for $252K. 2bes and 2 baths built in 1913 and sold in Nov '93.

1608 Hampshire, Asking $385K and sold for $385K. 3 beds, 3 baths built in 1913. Sold Sept 93.

966 Hampshire Asking $290K sold $280K. 4 beds, 2 baths, built in 1923, sold in Jan '94.

1746 Armstrong, one bed and one bath built in 1930, sold in Dec '93 for asking price of $195K.

Marko said...

How much more would you pay for a lot backing onto the park then?

I don't think buyers pay a whole lot more, makes it more attractive thought. Definitely not anywhere close to $25,000....

nan said...

"$258,000 in 1996 was a lot of money.

It's also a lot of money today - over 3 times the median household income in Victoria.

Which is the point really."

Exactly - I have a challenge for everyone here: how long would it take each of you to save that kind of dough at your current wage?

The low average wage and high average house price in Victoria have two very real (but in the future) consequences: sacrificing childrens education and retirement.

I did the math for one of my staff the other day about how much you need to earn in Victoria to afford an average house with a family. @ 100k/ year, after taxes, car costs, food, and kid stuff, you could afford the house, but not kids education or retirement.

Go to calgary and double the wage and half the house cost and you can have it all.

Basically, the average (and even well to do) Victorian families are sacrificing their retirement and possibly their ability to educate their kids for nice weather.

For the wealthy, no prob but I feel sorry for thos who think "everything will just work out" because it won't.

Leo S said...

@nan. And 100k is already well over the average household income in Victoria.

The stats show us that your scenario is correct. Most people have very little saved for retirement, just their house.

On another topic, when does the VREB release their annual survey of buyers that includes average down payments, reasons for buying, etc?

a simple man said...

As I have often said, many of the non-mansion folk in Oak Bay are living hand to mouth and on house-secured LOCs. It is not as it appears and when it tips, it will tip hard.

Introvert said...

Go to calgary and double the wage and half the house cost and you can have it all.

Except that you live in a hell-hole. So it's not "having it all."

(Cue the Calgary-is-beautiful-and-amazing retorts...)

Was listening to talk radio the other day and a fellow from Fort Mac phones up and talks about how they have trouble attracting and keeping workers who earn 100 grand or more.

Why? Simply put, Fort McMurray is a desolate hell-hole.

"Having it all" is living in a place like Victoria while earning a high wage.

I realize that this is unfortunately not possible for most people.

Introvert said...

As I have often said, many of the non-mansion folk in Oak Bay are living hand to mouth and on house-secured LOCs.

Let's not kid ourselves: many are also living hand-to-mouth renting houses that will still not likely be affordable even after the "price crash" that has yet to materialize.

These people certainly don't have a down payment saved up. And many of them carry balances on their credit card(s).

How will these renters pay for their kids' university tuition? How will they be able to retire?

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

Where do I derive my albeit unscientific views on the predicaments of renters?

From the renters I've rented to.

backinVictoria said...

lol @ describing Calgary as a hell hole.

Obvious troll is obvious.

backinVictoria said...

news flash Intro...

The people renting your crappy basement suite aren't the same people discussing real estate here.

Introvert said...

The people renting your crappy basement suite aren't the same people discussing real estate here.

backinVictoria, if you've followed this blog for any length of time you would note that I often qualify my generalizations regarding renters by saying that I believe most renters on this blog are in a vastly superior financial situation compared with the general renting populace.

backinVictoria, where would this blog be without your invaluable "troll patrol"? Keep up the good work.

Introvert said...

Canada Housing Market Crash Won't Be Like U.S., CIBC Economist Says

backinVictoria said...

@ Intro,

Why are you so angry?

I come to this site to learn more about real estate and I enjoy hearing from both sides of the rent vs buy argument.

People like Totoro, Dasmo etc regularly contribute useful content for the bulls side. You on the other hand contribute nothing but nonsense and troll posters like Just Jack and Simple Man over silly things grammar.

You make the conversation here dumber...keep up the good work.

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

^ my post above should say bull/halibut side. Sorry about that Dasmo :)

dasmo said...

Hey, I'm a Halibut not a Bull!

koozdra said...

http://www.cbc.ca/news/business/story/2012/10/30/cibc-housing-tal.html?cmp=rss

CBC commenters seem to disagree with Tal.

totoro victoria said...

Well, moving is... challeging. I'm surrounded by unpacked boxes with a trail to the kitchen and bedrooms. I can't find my printer cord

That said, buying has been good for us. We feel great in our new location which is walking distance to all schools and shopping. The new flooring is beautiful - the Terasen gas guy thought it was real hardwood.

I'm bringing out the bike and retiring the car except for business/vacation trips. That should save us quite a bit of money.

Our new tenants have moved in, they seemed much more organized than us :)

And the money side is good. Our housing costs will be at about $300a month once we finish the last renos and rent another unit.

For us, it was the right decision to buy. There have been challenges, but a positive attitude goes a long way. Looking at the short-term disruption and managing tenants vs. the ability to retire if need be was no contest for us.




nan said...

@ introvert:

Yes, maybe Calgary isn't as nice as Victoria, but think about what you are giving up.

If you live and work in Victoria, you work a full time job, maybe have kids, and other responsibilities. How much time do you really get to "enjoy" the beauty? one day per week? I would suspect that most of the time you experience a very similar life to those that live in Calgary.

If you live in calgary, you can make a pile of dough and you get to retire. At which point you can move to Victoria. And spend every day for 40 years enjoying the city.

I cant leave because of family obligations, but trust me if I was unattached, I would be out of here in 2 seconds (to go to calgary or silicon valley or toronto or boston or anywhere really)

I have a buddy building roads in the oil patch making $200k/ year.

Superficial things seem to command a high price these days. I wonder if there is anything to a "flight to quality" in cities when times get tight? Maybe we will be able to correlate Apple's decline with Victoria's real estate.

Both are all about bragging about flashy features, neither are sold based on intrinsic value or yield. hmmm.....

Marko said...

http://www.npr.org/2012/10/30/163942956/home-prices-up-latest-sign-of-housing-recovery

Just Jack said...

With so many of us biking on this blog we should have shirts made up.

Actually, I am now looking for a better bike.

I need more speed.

But trying to find the right bike seems just as difficult as finding the right house.

Lots of baffling sales people pushing the product they have on the floor.

Leo S said...

Except that you live in a hell-hole. So it's not "having it all."

(Cue the Calgary-is-beautiful-and-amazing retorts...)


I've never heard anyone here say Calgary is amazing, but I have heard you say that other places are "hell holes" or that Victoria is the best place in Canada.

You're making objective statements on a subjective, personal topic. Calgary might be a hell hole to you, but many people love it there. I prefer Victoria, but I realize that there are lots of places that are just as nice for different reasons. Not a fan of the prairies, but the Okanagan, Kootenays, Rockies, East coast, all amazingly beautiful and on-par with Victoria in my opinion.

Leo S said...

I wonder if the recovering US market will have any effect on the situation in Canada. They are recovering at almost exactly half the average house price in Canada.

dasmo said...

The Rockies are beautiful, so is snow when it first falls. I just don't want to live in the snow. When it turns to slush mud and ice it loses it's beauty pretty fast. I've done my time in Alberta and Ottawa... Anyway, I can visit the snow anytime I want!
To me it's not so much about the "beauty" it's about the ease of living here and the daily benefit of it's environment. For instance, Driving in the winter sucks and is dangerous. Here, if it snows, everything shuts down so you don't even have to drive. Not an option when you go east. Just walking, driving, and existing in this place does a lot for ones health and well being. Life is just easier here. And hey, the rent is isn't too bad here, so you don't HAVE to spend a lot on housing...

reasonfirst said...

"Let's not kid ourselves: many are also living hand-to-mouth renting houses that will still not likely be affordable even after the "price crash" that has yet to materialize.
These people certainly don't have a down payment saved up. And many of them carry balances on their credit card(s).

How will these renters pay for their kids' university tuition? How will they be able to retire?


I'm assuming you realize that those statements just reinforce the bear position that there is a very shallow pool of buyers out there (at least the ones currently living in Victoria).

I don't think us rich :-) renter/blog followers are enough to keep to market up.

Chris said...

US prices (released today) are following the same pattern as last 4 years. Call it the slope of hope if you want, but prices will now fall through winter. You won’t know it for a few months because of the lag in data.
Their price-to-rent ratio, along with prices, will carve out a bowl shape over the next few years like it did in the 90’s.

How will their eventual bottoming affect us? Retirees who would have bought a piece of our cold wet island, will instead keep buying the sunbelt for a fraction the price. Cheaper food, booze, gas, golf, taxes to boot.

DavidL said...

@nan
Basically, the average (and even well to do) Victorian families are sacrificing their retirement and possibly their ability to educate their kids for nice weather.

Interesting point ... so what are Victoria-born people like myself supposed to do? Move away? How about my wife whose father and grandmother were born in Victoria? It may make financial sense to move away, and although "The Island" is stunning - what really keeps me here is the family connections.

hap pychucky said...

Calgary salaries are higher Victoria is in the top 10




The top 10 Canadian cities for family income:



Statistics Canada released data Wednesday on median total family pre-tax annual income for major metropolitan centres in 2010:
1. Ottawa-Gatineau: $90,790
2. Calgary: $89,490
3. Edmonton: $87,930
4. Regina: $84,890
5. Guelph, Ont.: $82,560
6. Oshawa, Ont.: $82,270
7. Saskatoon: $80,570
8. St. John’s: $78,210
9. Victoria: $77,820
10. Kingston, Ont.: $77,140





hap pychucky said...

Interesting about that list. Vancouver and Toronto with the 2 highest markets for SFH is not in the list of top 10 median income.

hap pychucky said...

http://www.costofliving.welcomebc.ca/

cool website

need to make alot of money to live in BC

a simple man said...

I will eat the $12K salary difference to live here instead of Calgary.

koozdra said...

Most of my Canadian experience has been spent in Winnipeg. I would rather remain a renter for the rest of my life in Victoria than a home owner in the praries. 12 month motorcycle riding season. I love this place.

Just Jack said...

You don't have to move to Calgary. Just to Langford or Brentwood or Sidney.

Same weather, same pay, lower house prices.

I have never found a real estate text book that cites the weather as an economic fundamental.

In relation, to other Canadian cities, our weather has not changed in hundreds of years. And we still are only the 15th most populous city in Canada.

Sure, I like calling my relatives back in Toronto at Christmas and tell them I just finished cutting the lawn. I'm lying of course, the wheels on the lawnmower are rusted tight from all the rain.

DavidL said...

@hap

Very interesting ... according to the site you linked to, renting a 2500 sq. ft. house costs $8500 less per year than owning - in "after-tax" dollars.

DavidL said...

@Just Jack
... Just to Langford or Brentwood or Sidney. Same weather, same pay, lower house prices.

It might be more like Sooke, Shawnigan Lake or Cobble Hill to be comparable to Calgary prices - but your point is well taken.

nan said...

"I will eat the $12K salary difference to live here instead of Calgary."

A yes - the power of compound interest...

Like I said - this is your entire retirement. The future value of the 12k/ year invested at 7% returns (the average real return over every 30 year period over the last 100 years)is $1.2MM. This is worth $68k/ year paid out annually for 30 years assuming the balance gets 4%/year (your risk tolerance usually decreases in retirement)

Do you want to retire or not? If you live in Victoria and buy a house and earn an average income, you won't be able to afford to because that house will eat up 110%of the 72k/ year salary and then some.

If you make an average income in Victoria, that 12k you will happily "eat" virtually guarantees that you will work until you die.

dasmo said...

Weather is an economic fundamental. Cheaper to heat and maintain a house, Not as harsh on vehicles, cheaper wardrobe, less spent on travel etc.

Just Jack said...

Cheaper wardrobe!! You don't want to know how much I spend on speedo banana hammocks and lululemon.

There is no direct or indirect relationship of weather to prices. Is Vancouver's weather that much better or worse than ours? Does Sidney have less rain than us? Do the flowers in Oak Bay smell sweeter than in Fernwood?

a simple man said...

nan - point well taken.

But, I was miserable when I lived on the prairies and now earn about 30% more because I am happy and more productive. But then I am unique in that my work pile is practically limitless and my pay is great, and independent of Victoria.

My cost for vehicles is a quarter of what it was, food is about the same, utilities far less and clothing less. My rental is comparable to what I would pay in the frozen tundra of my last city.

Jonas Smith said...
This comment has been removed by the author.
Justin Sara said...

This post is probably where I got the most useful information for my research. Thanks for posting, maybe we can see more on this. Are you aware of any other websites on this subject…
Condos Singapore

turesta, said...

The size of an istanbul real estate apartment or house can be described in square feet
or meters.istanbul real estate In the
istanbul real estate United States, this includes the area of "living space",
The istanbul real estate "square meters"
figure of a house in Europe may report the total area of the walls enclosing the home, thus including any attached garage and non-living spaces, which
istanbul real estate makes it important to inquire istanbul real estate
what kind of surface definition istanbul real estate has been used.

It can be istanbul real estate described more roughly
by the number of rooms istanbul real estate. A studio
apartment has a single bedroom with no living room (possibly a separate kitchen). A one-bedroom apartment has a living
istanbul real estate or dining
room istanbul real estate separate from the bedroom. Two bedroom, three bedroom,
and a istanbul real estate closet for clothes
storage.istanbul real estate)

In most istanbul real estate advanced economies,
istanbul real estate the main source of capital used by
individuals and small companies to purchase and improve land and buildings is mortgage loans
(istanbul real estate or other
instruments istanbul real estate). These are loans for which the real
loans at istanbul real estate favorable rates in large part because, if the borrower
does not make payments, the lender can foreclose by filing a court action which allows them to take back the property and sell it
istanbul real estate to get their money
back istanbul real estate. For investors, profitability can
be istanbul real estate enhanced by using an
off istanbul property plan or pre-construction strategy to purchase at a lower price which is often the
case in the pre-construction phase of istanbul property development.