Thursday, January 10, 2013

200 Post Refresh

Well we've blown past 200 comments again.   Time for a new thread.   For those tired of debating the merits of Garth, here's a new chart to ponder until the next market update.



141 comments:

Leo S said...

Here's a puzzler for you. 471 Sparton Rd. Up until 2010 it was assessed at $897,000 and they were paying $5300 in taxes. Then 2011 the land value dropped by 600,000 and taxes down to $1900. Same in 2012.
Mistake or did they find gremlins in the land?

koozdra said...

Perhaps a robo-assessment?

Happy camper said...

...and Garth was looking especially good tonight too!

Marko said...

Here's a puzzler for you. 471 Sparton Rd. Up until 2010 it was assessed at $897,000 and they were paying $5300 in taxes. Then 2011 the land value dropped by 600,000 and taxes down to $1900. Same in 2012.
Mistake or did they find gremlins in the land?


Farm status, only improvements are taxed.

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

Recently, RBC and TD both stated that the BoC will raise interest rates by 50 basis points this year.

“The Bank of Canada should be the only major central bank to actually make the move to tighten this year," says RBC. "We’re looking for 50 basis points in aggregate tightening skewed toward late this year.” Joining the Royal, by the way, are economists at TD Bank.

Those of you who know anything about the bond market and fixed-term interest rates (eg. 5-year), probably know that the bond market is currently tumbling and yields are rising. This means higher fixed-term 5-year mortgage rates.

info said...

Clearly, the massive stimulation of Canada's housing market over the past 13 years was done to stimulate Canada's weak economy.

"In the last six years alone we’ve had more pro-real estate initiatives than in the quarter-century prior to that.

We've had the zero down, forty year mortgage. The ability to raid the RRSP fund for down payments. The Home Reno Tax Credit. Emergency interest rates. First-time buyer’s closing cost credit. Regulations that permit liar loans. Regulations that permit zero-down payments with cash back from mortgage lenders. And most significantly, CMHC absorbing all lender risk."

Now that much of this stimulus has been withdrawn and bubble house prices have nowhere to go but down, Canada's true economy will be exposed.

totoro victoria said...

Appartment should be apartment on the chart - just beating introvert to it.

Dave said...

Those of you who know anything about the bond market and fixed-term interest rates (eg. 5-year), probably know that the bond market is currently tumbling and yields are rising.

They look flat to me for the past 5 months.
http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/

nan said...

Boc rates mean nothing in the bond market. Willingness to lend is what determines interest rates. Stimulus has created an expectation for inflation. Whether it happens or not,interest rates are going up as investors prepare for it.

caveat emptor said...

"Boc rates mean nothing in the bond market."

The graphs Dave linked to are NOT BoC rates they are MARKET rates.

Maybe interest rates are about to shoot up - certainly people have been predicting that for a long time.

But the movement so far is just noise.

The resolution of the fiscal cliff in the US means that their debt will be bigger (not smaller as some people seem to think) than if they had gone over the cliff. That is the probable explanation for the very modest move up in yields.

Happy camper said...

Could someone tell me the name of the 'rebate' that BC homeowners receive on their property taxes. I don't understand what this is and I'd like to learn more. What is it named? I'm interested in learning when it started. Is this one of the things that will change with the provincial election?

dasmo said...

Provincial Home Owner Grant

http://www.sbr.gov.bc.ca/documents_library/brochures/HomeOwnerGrant.pdf

I doubt they will change this...

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

Appartment should be apartment on the chart - just beating introvert to it.

Spelling is important, but spelling typos aren't my focus. Lack of comprehension (examples of which include "you're/your" and "it's/its" mistakes) is more my focus.

When people make "you're/your" and "it's/its" errors in adulthood, it's usually a problem with comprehension, not mistyping.

There's a memorable line in a blog post titled "I Won't Hire People Who Use Poor Grammar. Here's Why":

If it takes someone more than 20 years to notice how to properly use "it's," then that's not a learning curve I'm comfortable with.

Indeed.

koozdra said...

A little grammar quip to add to Interovert's.

Capitalization is important. It means the difference between "helping your uncle Jack off a horse" and "helping your uncle jack off a horse".

Happy camper said...

Thanks Dasmo for the Prov Home Owner Grant piece. I realize politics makes it necessary to let the home owner think the provincial gov't is giving them money. But in reality wouldn't it have been much less expensive (i.e. no need for audits, etc) to have the province transfer money to the municipalities for reality taxes and the municipalities to reduce their millrate by that amount. The homeowner still gets the lower taxes. It gives more to those who own multiple homes but it's a bit of a 'who cares' in the scheme of things. Just thinking useless stuff outloud. It's always political in the end. (note my correct use of the apostrophe)

Happy camper said...

National Post has a piece on a couple in BC who own rental properties: http://business.financialpost.com/2013/01/11/bad-real-estate-investments-leave-couple-with-1-5-million-in-debt/

caveat emptor said...

@ CS "Profits per share for the S & P 500 rose 135% from 1990 to 2012, so the S & P was probably less overvalued last year than Victoria RE."

In the same period the SP500 went up by 4.4x thus the earnings multiple approximately doubled over that time period. Unless you think the PE ratio is going to double again then stocks no longer have that tailwind of increasing valuation.

backinVictoria said...

Does anyone know the story with 959 Maddison (MLS 318032)? I seem to remember seeing it listed fairly recently. Thanks.

patriotz said...

the S & P was probably less overvalued last year than Victoria RE.

Just compare earnings yields today. S&P earnings yield right now is 6.45%. I would think average earnings yield on Victoria RE (remember that's net of taxes, etc) would not be much more than half that.

totoro victoria said...

Comparison is way too simplistic. You can't live in a stock, nor would you pay to rent one.

koozdra said...

An article on the topic of the previous thread.

"Indeed, more Canadians than ever are relying on appreciation in the value of their homes to pay the bills in their golden years. It’s a trend that worries advisors, especially as savings rates decline and more people say they are comfortable carrying debt into retirement.

As the U.S. housing crash so painfully demonstrated, property values can move in both directions – and quickly."


Someone should let the folks at the financial post know that seniors down sizing is only a theory.

Canadians pin retirement dreams on not-so-safe houses

Introvert said...

You can't live in a stock, nor would you pay to rent one.

I'm pretty sure patriotz lives in a stock.

dasmo said...

From the article
"After crunching numbers for annual returns of the Toronto Stock Exchange and the Canadian housing market over the last few housing cycles, Andrew said the two are in many cases a wash.

From 1981 to 2012, the TSX posted an annual return of 5.45%, excluding dividends. The appreciation in Canadian home prices represents a 5.6% annual return. Booming cities fared not much better, with a 6.17% annual return in Toronto housing and a 6.43% annual return in Vancouver.

“You may think prices have gone nuts,” especially if a real estate investor is just looking at the booming market from 1997 to 2012, said Andrew. But when a longer cycle is considered, the difference is almost nil, he said."

Also interesting to note that it isn't 8%...

info said...

Canada's housing market has started a multi-year correction. No doubt about that.

Interest rates are already at emergency levels in Canada. Rates cannot be lowered from 5-6% to 2-3% overnight as they were during the US crash. Even with that instant, powerful stimulus, the US housing market continued to crash for another 2-3 years. Basically we can forget about any effective housing market stimulus coming from any lowering of rates, from current emergency levels, during this correction. Besides, rates are set to rise, not fall.

My predictions for December 2013 do not rely on rising rates. I assume they will be flat (which will not be the case).

Speaking of my predictions, all bets are off if enough intervention is initiated between now and December 2013. I doubt we will see any.

Dave said...

Over the long-term, stocks vastly outperform real estate. As Shiller, Amsterdam, et al show real estate merely tracks inflation (ie. no real increase). Stocks, on the other hand, beat inflation by a great deal over the long run.

dasmo said...

in 2009 BOC dropped it's overnight rate to .25%. Right now it's at 1%. So, yes, rates can be lowered...

a simple man said...

On a flight to Regina yesterday for a work engagement. Ten carpenters joined me into the blizzard welcoming us in Regina. I asked one why there were coming to Regina from the Comox Valley in January. No work in Comox and lots in Regina, he said.

DavidL said...

I see that 2878 Glenwood Ave (MLS 308825) just sold for $575K. This is $120K less than the original asking price of $695K and almost $150K less than the assessed value of $727K. Granted, the property needs a lot of work (~$50K) in repairs and another $100K to make it really nice - but the 17% drop between original asking and selling prices is surprising.

patriotz said...

I'm pretty sure patriotz lives in a stock.

I live on stocks.

And totoro, people pay to "rent stocks" all the time. Stocks are ownership in businesses, and the customers of the businesses pay for the yield on the capital. Just like your renters pay you for the use of your property.

totoro victoria said...

Over the long term I do not believe stocks vastly outpace a primary residence. Not even close.

In order to calculate this you need to consider:

1. Gains on leveraged dollars
2. Tax exemption for primary residence
3. What you would have spent on rent
4. Rental income if you have any
5. Less costs of ownership

If you are buying stocks on margin mayb you can compare the power of leverage - I don't and never would. Too risky.

If from 1981 to 2012, the TSX posted an annual return of 5.45%, excluding dividends. The appreciation in Canadian home prices represents a 5.6% annual return I don't see how a primary residence was not a MUCH better investment. Sure was for me.

totoro victoria said...

Oh good grief - what kind of analogy is that - "people pay to rent stocks all the time". What exactly are you comparing to what. Where are your numbers?

patriotz said...

If from 1981 to 2012, the TSX posted an annual return of 5.45%, excluding dividends. The appreciation in Canadian home prices represents a 5.6% annual return

You're picking the top of the biggest housing bubble in Canadian history for your end point. Stocks looked pretty good from 1981 to 2000.

Dave is absolutely right - stocks have vastly outperformed RE over the long term.

Leverage is a bogus criterion because both stocks and RE can be leveraged. Just look at total return: net yield + capital gain. You can assume RE gains are tax free if you want. It still comes out way behind.

DavidL said...

@happy camper
I realize politics makes it necessary to let the home owner think the provincial gov't is giving them money. ... It gives more to those who own multiple homes but it's a bit of a 'who cares' in the scheme of things

You can only get the homeowner grant if the dwelling is your principal residence: "Ownership of a home does not automatically qualify you for a grant, even if it is the only real property you own. You must occupy the home as your principal residence to be entitled to the grant."

Thus, rental properties and those only occasionally inhabited (such as a vacation property) are not eligible for the grant.

patriotz said...

Oh good grief - what kind of analogy is that - "people pay to rent stocks all the time".

A correct one. Capital yields income to its owner. That's what rent is.

Since you're not the least bit interested in basic principles of economics or finance, I'll turn over the discussion to someone with more patience.

Introvert said...

Since you're not the least bit interested in basic principles of economics or finance, I'll turn over the discussion to someone with more patience.

Snarky!

dasmo said...

Roughly the average dividend yield is 2,5% rental yield is 4%?. Anyone have any actual numbers on this? I am curious. None of my shares yield that much in dividends, that's for sure. Then again, my stocks have greatly out performed real estate from an appreciation perspective...

caveat emptor said...

Stocks vs primary residence is a poor comparison. A more appropriate comparison is total return from stocks (dividends plus capital gains) vs total return from real estate investments (net rental income plus capital gains)

My point about stocks was that if you buy when valuations are high (1999-2000, 2007-2008, and arguably now) it's harder to make good long term returns.

That is the EXACT argument that people on here make about buying real estate when valuations are high. Future returns depend on when you buy!

About said...

@ Simpleman

"On a flight to Regina yesterday for a work engagement. Ten carpenters joined me into the blizzard welcoming us in Regina. I asked one why there were coming to Regina from the Comox Valley in January. No work in Comox and lots in Regina, he said."

Yet, they all live in Comox still and so do you (on the Island)...

:)

DavidL said...

Bonds and stocks can be bought and sold with relative ease - allowing an investor to re-balance these investments based on the whims of the market. Real estate is completely different as substantial costs are involved with selling, and only when a suitable buyer can be found.

Comparing long terms averages of stocks versus real estate is not much use in my mind, as successful investors do not hold onto their stock for 5 or 10 years the way they might with real estate.

I re-balance my investments and equities quarterly, so that I can maximize growth.

totoro victoria said...

Stocks and bonds are much more liquid. I agree.

Primarly residence is a different investment because you have to live somewhere. It is like taking a job where you get free food but not counting what you would have spent on food as an economic benefit.

totoro victoria said...

"A more appropriate comparison is total return from stocks (dividends plus capital gains) vs total return from real estate investments (net rental income plus capital gains)"

net rental income plus capital gains plus equity paydown plus any positive or negative difference between renting/owning

dasmo said...

@DavidL I agree different animals. Real Estate can be a liability, costing you money in tax, upkeep, repairs etc. You also have a much bigger buy in. From an pure investment perspective stocks are superior because of there liquidity and flexibility.

koozdra said...

Perhaps someone should let the folks at the Globe and Mail know that the wealth effect is only a theory.

Why lower home prices are a national priority

Jack and Cate said...

DavidL said...

"I see that 2878 Glenwood Ave..."

Good points but this is just the beginning. A smarter move would have been to wait it out. There are more of these appearing each week and maybe someone couldn't hold it any longer.

Just saying that as most point out, this is a buyer's market that will be settling in for a long stay..... time I have, money not so much.

koozdra said...

Home truths

DavidL said...

@Jack and Cate

When I viewed the Glenwood property in December, the realtor mentioned that the property was listed at a "reduced price" of $625K, which was less than offers (declined by the owner) made earlier in the year. The house had been listed a number of times over more than a year, and had been vacant for a while when sold. Being greedy doesn't help a seller and being patient can help a buyer.

DavidL said...

Very interesting "Home Truths" article. Thanks, Koozdra.

CS said...

@Caviet emptor:
In the same period the SP500 went up by 4.4x thus the earnings multiple approximately doubled over that time period.

Something amiss here. The PE on the S and P 500 is about 15,the same as in 1990. Way down from the 65+ in 2008 and around 45 at the start of the Second Gulf War.

And if you don't like a PE of 15, there are plenty of stocks trading at a PE of less than ten.

CS said...

And here's why:

I was going to say here's the graph, but then I like colloquiallisms, even if I cannot spell them.

CS said...

From 1981 to 2012, the TSX posted an annual return of 5.45%, excluding dividends.

Excluding dividends: LOL. What do you think people own stocks for? Sure some firms plow back profits rather than pay them out as dividends, but that only causes stock prices to rise if it is assumed that there will eventually be a bigger return to the stock holder than would otherwise have been the case.

CS said...

It must be late, that last sentence makes no sense. Sorry. Cheers.

Watching and waiting said...

Backinvictoria - the Maddison Property has been off and on for sale since 2011 spring if I recall correctly. We looked at it in 2011 - was rented out to students at the time.Nice area but the house needed a tonne of work. It was last listed at 529k if I recall when it was de-listed last year? someone feel free to correct me if I am wrong :)

a simple man said...

@ About - I am not sure I follow your point. I was simply stating that there is a lack of work for carpenters in Comox as evidenced by the ten of them sharing a plane with me to Regina in January. They were there for a long time as the fellow I spoke to said they were building a bunch of houses. If you had work in Comox you would not leave for different work in Regina in January.

The trades had their glory days in Victoria for the past ten years but the tides are now turning. This was supported by the TC article earlier this week detailing that SFH starts were at decade lows for 2012 (at least decade lows, likely more and with a much larger population now, hmmm). And it is just getting started. No work in Victoria? Come to Regina! Take your snow boots and lots of layers.

TC article

Just Jack said...

Are the agents pricing properties lower this year?

A review of asking prices for condominiums in the core districts during the first 11 days of 2013 in relation to 2012, the median asking price is down from $319,900 for a 1,012 square foot condominium to $287,400 for a 961 square foot condominium.

Based solely on this small sampling, it appears that agents are listing condominiums 5 to 10 percent below last year's asking prices.

Houses in the core follow a similar pattern with the median asking price down slightly from $649,900 to $632,450.

It isn't correct to use asking price to estimate market value; however it may be useful to look at how properties are priced when looking at seller's perception of the direction the market is taking. That the typical property is listed for less than last year may show that the perception of vendors for future real estate prices is pessimistic.

Just Jack said...

Last year, there were some 1,635 home sales in the core districts. The areas have been ranked by popularity from the least to the most as follows:

Esquimalt with 4.8% of total sales
View Royal with 5.3%
Oak Bay with 12.7%
Victoria with 21.9%
Saanich with 55.4%

The most popular Saanich neighborhood was Gordon Head where 5.8 percent of the total sales occurred. The typical Gordon Head home sold for $588,000. And, was an updated 1970's basement entry house with 2,240 finished square feet situated on a 8,400 square feet lot.

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

Using the typical Gordon Home as a Benchmark allows one to visualize how prices have changed since the last recession.

1998 -254,000 (110 sales)
1999 -255,500 (108)
2000 -254,500 (109)

2001 -267,250 (144)
2002 -294,950 (146)
2003 -344,750 (158)
2004 -399,250 (132)
2005 -466,500 (120)

2006 -519,000 (127)
2007 -582,759 (150)

2008 -629,000 (105)

2009 -610,000 (138)

2010 -640,000 (93)
2011 -639,000 (110)
2012 -588,000 (95)

Clearly, the "good old days" of real estate are long past us when sale volumes were above 120. We would have to go back to 1989 to find a market that had a significantly worse volume of sales than today. When the typical Gordon Head home sold for $160,000 and sales were only 74.

What I draw from this snapshot of the market is that prices can not increase until sale volumes increase substantially. The last time our prices were stable, over several years, was back in the late 1990's when prices in Gordon Head were flat lined around $255,000. And still more people were buying homes in 1989 than they are today in Gordon Head. That the typical Gordon Head home may have topped out at $465,000 if it were not for the creative financing directed by our government.

Prices have to decline substantially before increasing sale volumes return stability to the market. The typical monthly mortgage payment having to drop between $500 to a $1,000 a month to stimulate higher sale volumes.

info said...

"in 2009 BOC dropped it's overnight rate to .25%. Right now it's at 1%. So, yes, rates can be lowered..."

I did not say that it is impossible for rates to be dropped. The point you missed is that any rate drop now would be very small in comparison to those we saw in 08-09 and would not provide any effective housing market stimulus. The BoC played that card in 2009.

In 2009, the BoC slashed rates from 3% down to 0.25% in a short 8 month period. That is a total drop of 2.75%.

I also pointed out that the US saw a similar massive rate drop in 2009, during their crash, yet their housing market continued to crash for another 2-3 years.

Those of you who are holding onto the hope that the BoC can, in some way, lower interest rates to again provide effective housing market stimulus are delusional. As I said, the BoC played that card in 2009.

dasmo said...

"typical monthly mortgage payment having to drop between $500 to a $1,000 a month"... Good luck with that one. Even in 2003 my house payments were 1200 a month.

Just Jack said...

Any government stimulation can only make prices higher. The government can not increase the number of sales.

The longer the volume of sales is in the doldrums, the longer will be any recovery.

If OSFI ordered CMHC to increase the down payment to 10 percent and decrease the loan to value ratio to 75%, that would probably prick this balloon.

Just because your home has lost value does not mean you'll be foreclosed upon. What it will mean is that the next group of buyers will be able to spend money in the local economy on other things besides real estate. That means jobs and a stronger economy.

The way things are now, real estate is a dead duck. The government has sucked every inflationary penny out of it. Better to stimulate another sector of the economy to create jobs and wealth.

Just Jack said...

I hear ya on that one Dasmo, my grand-parents mortgage payments in 1955 was $35 a month.

Now - what the hell does what you bought your home for in 2003 have ANYTHING to do with what I wrote.

Just Jack said...

Actually that was rude of me, I apologize Dasmo.

Knowing that you bought your home in 2003 and that your mortgage payments were only $1,200 a month, sounds like you squeeked into a starter home in Vic West back in 2003.

If your present financial situation were the same as in 2003, what I wrote would imply that you would not be able to buy the home you live in today. Or that you would be so strapped for cash that you and your dog would be eating from the same bag.

The would be prospective purchasers of today is well aware of this, and that is why there is so little being bought. If today's monthly mortgage payment were less, that would help to increase monthly sales and the local economy would benefit with people dining out more, going to movies, buying sex toys and scented lotions.

But a slow death in real estate just means that you sell the home, eat the dog and move into a single wide manufactured home in Sooke.

I feel so much better taking the high road on this.


Seth Perry said...

Commission cheques - the carrot and stick that puts downward pressure on prices.

@JustJack

Your comments regarding noticeable price reductions in 2013 got me thinking. We all know that real estate agents use price reductions as a technique to speed up results for their clients but what about using it to generate a quick pay cheque? Times are ruff right now and I'm sure many real estate agents are feeling the pinch. They rely on commission cheques to pay bills and to put fod on the table. When sales volumes go down commission cheques go along with them and over time that creates more and more pressure to make sales.

How many price reductions are made solely in the interest of the home owner and not influenced by the agents necessity to earn income? Has the accelerated price reductions? For agents reading this put away your integrity branding for a minute and answer truthfully. Use a throw away account if you have to.

I'm not saying 'shame on you' but it's interesting that we rarely discuss the pressure real estate agents feel during slow times and how this influences price reductions and accepted offer decisions. Mortgage brokers and bankers have similar rewards for 'making things happen'.

Leo S said...

Now - what the hell does what you bought your home for in 2003 have ANYTHING to do with what I wrote.

I think he misread your post as "typical monthly mortgage payment having to drop TO between $500 to a $1,000 a month"

I think you're right about the mortgage payments though. I can't do the detailed analysis you can, but looking at the mortgage payments currently compared to the lows reached in the late 90s, we are $600/month higher than back then. Of course incomes have increased a bit so you could assume that perhaps people can now afford a bit more but payments have lots of room to drop.

dasmo said...

Oops sory JJ I did add the TO in my brain.

Leo S said...

This was supported by the TC article earlier this week detailing that SFH starts were at decade lows for 2012

Indeed they are

Interestingly enough, total starts and units under construction aren't that bad. Maybe the low detached starts is mostly due to Victoria's densification and more construction shifting towards multi-unit dwellings. This chart is not population adjusted (still looking for a good Victoria CMA population source that goes back farther than the late 90s).

dasmo said...

I also can't edit my typo on the phone...interesting that you bring it up because I have freinds that bought a similar starter home in Vic West and still go to movies etc. although less now they have a kid. Mind you Vic West is till 100k cheaper than anywhere else as close to town for a SFH...if you can catch one for sale.

dasmo said...

Also interesting in your chart is the number of unfinished under construction projects. It does bother me that the "capital city center" is selling their units in their first tower for a premium. With the examples of bear mountain, dockside green and others you would think people might actual want a discount for taking the risk of living in a luxury apartment in a construction site for 20 years...

koozdra said...

With the condo market tanking will this project see completion?

Reliance Properties to Restore The Janion Hotel

patriotz said...

How many price reductions are made solely in the interest of the home owner and not influenced by the agents necessity to earn income?

IMHO that is a false dichotomy. The owner wants a sale and the agent wants a sale, and the way to get a sale is to accept the market price.

If a house has been listed for over a month or two and has not sold, it's priced over market.

Granted there may be some agents who don't want to do any work and will underprice from the get-go, but I don't think that's what we're talking about here.

Just Jack said...

You're likely giving the agent too much credit in the final decision process. What's more likely is the agent(s) cutting their commission to sweeten the deal.

The pressure for a real estate agent is when the listing is nearing the end of the contract. The agent has laid out some coin on advertising and doesn't want to lose the listing to another agent.

That may require the agent getting a reduction in the list price or getting a re-listing for another 90 days.

That would make the best time to present an offer near the end of the 90 day contract. Lots of motivation on the agent to get a deal done.

What I've tracked in the past is that the discount agents get a slightly lower price for the property but they take less commission, so the owner nets out about the same.

Which brings up a point about discount agents - are they sales people or are they just sales clerks? If the going price for a gallon of gas is a buck. A sales person would be able to sell you a gallon for $1.10 and you'd be happy to pay it. Selling a gallon for 90 cents - any sales clerk can do that. That's why you pay them differently.

dasmo said...

A month or two is pretty fast IMO. But I get you. Glenwood is a good example. Owners turned down an offer last year that was over 625k. Place was rough by the way. Freinds looked at it. Smelled like piss, decks rotting, crazy wall texture...

Watching and waiting said...

there are certain realtor's in town that I am aware of that NOW refer their clients to Garth's site only if they want to create pressure for a price drop on a home. One in particular had never heard of Garth up until about 2 years ago and jokes he how he uses this tactic now.

dasmo said...

That's just plain cruel!

Happy camper said...

A couple of things jumped out at me in this article: http://www.timescolonist.com/news/local/monitor-that-property-transfer-tax-1.46183

The $60K figure: Real estate CEO Laing said easing the property transfer tax could stimulate more real estate sales, with each MLS sale generating nearly $60,000 in expenditures, including fees for lawyers, surveyors, appraisers and real estate agents, new appliances, furniture and renovations or repairs and more than $9,000 in other taxes.

And the way the tax supposedly helped keep prices from climbing higher:

The Canadian Centre for Policy Alternatives, however, called the tax a small price to pay to discourage property speculation and quick flipping of houses, which would drive property costs up even higher. “Because we do not have wealth or inheritance taxes, a small PTT is appropriate,” said B.C. director Seth Klein.

koozdra said...

From the article above: (about the property transfer tax)

"It will help to diversify the government’s sources of revenue without placing a disproportionate burden on taxpayers who are not in a position to pay."

Now everyone is "in a position to pay". Just throw it on top of the mortgage along with the CMHC insurance. Don't worry, by the time you have to sell you'll have made a profit. Real estate doesn't go down here.

Until it does.

koozdra said...

"I’m waiting for that bubble to pop that everybody is talking about"

Are stubborn sellers killing the real estate crash?

The statement "buyers don't need to buy" is far truer than "sellers don't need to sell". The people that delude themselves into thinking that this "stand off" will last should do a quick google search on the basics of supply and demand. Welcome to the United States housing market, circa 2005.

Leo S said...

"Before this housing market burns up in flames, it needs some type of spark."

As if "people not buying" is not a spark..

Marko said...

Are the agents pricing properties lower this year?

From my experience (I listed 61 properties last year) 50% or more of the time the seller lists at a higher price than what I suggest.

I think lower list prices are more a function of sellers coming to terms with the what the market is doing.

Marko said...

How many price reductions are made solely in the interest of the home owner and not influenced by the agents necessity to earn income? Has the accelerated price reductions? For agents reading this put away your integrity branding for a minute and answer truthfully. Use a throw away account if you have to.

If a home is not selling and the pictures are great, the description is well written and the seller doesn't make it difficult to show the only big variable left is price.

I have listings with 50+ showings and that haven't sold, what can I do? The 50 buyers haven't seen value in the home. If the seller wants it sold the price has to come down.

To answer your question I do such a huge volume of transactions ($21.5 million 2012, up from $14.5 million 2011) that I am not willing to risk my reputation by trying to beat someone down on price to collect a commission. Most of my business is referrals. I rather do 50 transactions this year and have everyone walk away happy than do 55 and have 5 unhappy sellers/buyers.

Marko said...

It does bother me that the "capital city center" is selling their units in their first tower for a premium.

Shouldn't bother you...they aren't forcing anyone to buy. Anyone that pays what they are asking is paying voluntarily.

Marko said...

What I've tracked in the past is that the discount agents get a slightly lower price for the property but they take less commission, so the owner nets out about the same.

Which brings up a point about discount agents - are they sales people or are they just sales clerks? If the going price for a gallon of gas is a buck. A sales person would be able to sell you a gallon for $1.10 and you'd be happy to pay it. Selling a gallon for 90 cents - any sales clerk can do that. That's why you pay them differently.


Sorry but in my opinion you are wrong on this.

There is "full commission" and "lower commission" agents. The word "discount" is total non-sense. Many lower commission agents may offer better service than full commission agents.

I've been tracking a local lower commission company that has a uniform commission model with all of its realtors. I've plugged over 400 samples (3 years worth) into excel and while I haven't performed a professional analysis yet the trend is extremely clear.

Sellers initially are greedy. From my findings what they do is list, for example, with a lower commission brokerage for $519,900 for 90 days. The home doesn't sell and naturally they blame the lower commission company for lack of offer.

At this point they go with a full commission brokerage which over 90%of the time gets a lower listing price, for example $499,900. The home sells for $480,000.

Only about 10% of the time do you see someone switch from full commission to lower commission; however, this number is slowly but surely climbing as the internet is educating people.

I wouldn't be surprised if this number grew to 20% as sellers become more educated.

The rationale thing to do would be to start with full commission brokerage for $519,900 and if it doesn't sell drop to $489,900 with the lower commission brokerage if you are the type that plans on switching brokerages.

Personally, I do lower commissions and rarely do I get a lower list price. Sellers call 3-4 realtors and get an idea on price and then they list with the one they think makes the most sense.

Sellers won't say, "well, they all said $600,000 but with Marko we save $6,000 so we'll give it to him for $594,000."

Marko said...

Same applies to FSBOS, 90% of them will have it on usedvictoria or craiglist for $520,000 and then they will list it on mls for $499,900.

Doesn't make much sense. Should have gone $490,000 on usedvictoria to start (essentially splitting half of the commission savings with the potential buyer).

dasmo said...

@Marko It doesn't bother me that much ;-) However part of it is I don't share their vision of the property either. I just don't understand putting luxury high rise condos in that spot. To me some kind of high density mixed use with more town house family oriented development makes much more sence. I get that that would not make anywhere near the money they can with the towers but it woul be more stable and more appropriate for the location and community. This will most likely be another development that will be sold and sold again not unlike Dockside. Note how the Railyards is one of the few transformative mega projects that continues on. Then again Chris lives here and loves here. They can't all be Le Fevre's I guess...

a simple man said...

Wow - Marko - you are sure stirring up emotion on the greater fool blog.

Marko said...

An individual posted,

"The flood of listings have definitely started in Victoria. There’s too many in my email to look at them anymore. Might as well wait until the smoke clears which will likely be many years."

I tried replying with

"We have 358 new listings Jan 1st - Jan 13th which is below pace of recent years. For example, we had 497 new listing Jan 16th, 2012."

and Garth deletes it? lol what a joke.

At least the traffic to my website is crazy, 330 people have gone to my website off his blog for an average of almost 2 minutes which is amazing.

Everyone is freaking out about my website link, ha ha....I don't understand why he has a place to enter in your website in the first place?

Leo S said...

Indeed. From tonight's greater fool blog:

So Garth, you see a balanced portfolio continuing at 10% while the CND housing market tanks across the country? Do you feel that there is a low correlation between the two?

The real estate market will correct, not tank. The correlation with equities is lower than between your words on the local Victoria blog and your continued presence here. You’re history. — Garth


Looks like Garth reads this blog... Takes me back to when I used to argue with him on there. Unfortunately all those articles from 2010 are missing in the greaterfool archives (site crash I think)

Leo S said...

and Garth deletes it? lol what a joke.

What he liked to do to my comments was hold them in moderation all day, then post them the next day after he had already posted his new article.

Garth is entertaining, but the comments section there is not a place for rational discussion.

dasmo said...

Facts just get in the way of his drama...Also have to delete any evidence of being wrong if you are 100% right...

dasmo said...

I just read a bunch of the comments over there. I can't believe someone called Marko a troll! Oh my... I guess you are as close to a troll as they get over there... I find it rather uninteresting as their seems to be a complete lack of debate as they work themselves into a frothy frenzy smacking their lips at the possibility of a land owner losing equity.

Leo S said...

Looks like this blog is well liked by some commenters there.

"Same in Victoria, all you have to do is read the local blog where the majority are bulls (or fence sitting bulls about to sign on the dotted line), who are spittin’,sputterin’ and posting denials like Pavlov dogs at record rates never seen before. It’s really quite pathetic to read and is the ultimate indicator a major price correction is taking place."

"Regarding the House Hunt Victoria site, I rarely even look at it anymore. Quite a few are obviously RE investors, or hoping their home pays for their retirement (but they’re not ready to sell yet). Some are rather pompous “know-it-all” types."

totoro victoria said...

I don't read the greater fool. I don't find it entertaining. Comes across as drama over substance and a lot of bombastic chitter chatter.

Introvert said...

Thanks for that sampling, Leo.

Wow. I guess if the commenters aren't 98% bears, then it's fair to say that "the majority are bulls."

Pretty funny.

Leo S said...

I don't read the greater fool. I don't find it entertaining. Comes across as drama over substance and a lot of bombastic chitter chatter.

Hidden in the drama is good information. Given that Garth is amazingly prolific he does cover just about every development of note in Canadian real estate. The trick is to go read up on it from the source instead of just accepting Garth's conclusions.

Renter said...

That's amusing. We knew that Garth reads HHV - he's borrowed the graphs on occasion - but to claim the site is full of bulls because of Introvert and Totoro is rather a stretch.

Though now I'd love to see Introvert go over there and start correcting their grammar! Mwahahaha

dasmo said...

JJ is funnier writer than Garth, Leo is smarter, info is crazier, and Introvert is more of a b*stard. It's just plain better over here...

Victoria said...

My sister is an english teacher. She teaches the english teachers now.

Grammar police got nothin' on her. But she's far too classy to correct anyone - ever, unless it's within her professional scope to do so.

I like the Greater Fool blog. The comment section not so much.

Garth Turner has been prescient about the housing market. I made a lot of money by analyzing his viewpoints and taking action when I agreed with him, which frankly, is most of the time.

I enjoy this blog, especially some of the commentators. JJ I've mentioned before as his reasonings are sound and based on facts as well as what sounds to me like well-seasoned analysis. I like Totoro for much the same reason although I disagree with her conclusions.

Not to jump on the pick on Marko bandwagon from Greater Fool but I have wanted to ask you to clarify some of your statements Marko.

Pls break down your 60+ listings from last year. How many sold, expired, re-listed elsewhere? Of the sold, how many sold over/under assessment and or list?

Further analysis is required when a blanket statement is made. Who, what, where, when and why .

Marko said...

Monday, January 14, 2012 8:00am

MTD January
2012 2012
Net Unconditional Sales: 87 372
New Listings: 407 1,088
Active Listings: 3,681 3,715

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

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

But she's far too classy to correct anyone - ever, unless it's within her professional scope to do so.

I appreciate that shot at me.

In life outside this blog (a.k.a. real life), I would never correct anyone's grammar. I'm actually a reserved and exceedingly polite person.

But let's not confuse who we are in real life with our anonymous blog personas.

For example, I'm sure that in real life JJ's jokes are funny.

Just Jack said...

And your response was:

"I think lower list prices are more a function of sellers coming to terms with the what the market is doing."


Which I took as a yes, that agents are pricing properties lower this year than last year. The list price coming from a discussion between the listing agent and their client.

That you chose to interpret my comment in an argumentative way just comes down to a personality trait.

It is pretty obvious that I was using a rhetorical question to encourage further reading. You don't answer a rhetorical question.

Initially, I thought of double spacing between the rhetorical question and the body of the comment to show a separation. But, I thought no one is that ...

Marko said...

That you chose to interpret my comment in an argumentative way just comes down to a personality trait.

No it comes down to you often making comments with such great confidence, yet often you are wrong and know very little about the subject matter. Someone has to call you on it.

Marko said...

Pls break down your 60+ listings from last year. How many sold, expired, re-listed elsewhere? Of the sold, how many sold over/under assessment and or list?

Further analysis is required when a blanket statement is made. Who, what, where, when and why.


Way to many variables that is why I collect data on listings that expire or are cancelled and then relisted. From common sense and experience, the buyer will pay what they want to pay.

I've sold the last 7 condos at the 834 and at the same time Sutton, Royal Lepage, and Pemberton had listing expire or canceled in the building.

Have I sold the last 7 condos because I am such a great realtor? Absolutely not. Buyers came, saw all the units, made offers on the units that they thought had the best value and I was just lucky enough to be the listing agent on those 7.

Victoria said...

I appreciate you are a young man Marko - trying to work hard and create a career for yourself out of a very tough industry.

It cannot be easy.

When any of us make a definitive statement we must be prepared to back it up.

I don't see the backup in your response to my questions. Which is, in itself of course, an answer.

Again, I don't mean to pick on you.

I enjoy your posts and appreciate that when you are asked for information about a listing you provide it quickly.

Introvert - my grammar comment wasn't only directed at you! Just mostly :-)) And JJ IS funny online!

Marko said...

When any of us make a definitive statement we must be prepared to back it up.

If there was 100% definitive proof the entire full commission real estate industry would collapse over night.

No one wants definitive proof.

The light bulb for me has been going off to a greater extent every subsequent year. For example, last year I had a mere posting and it sold for $542,000. A near identical home on the same street sold the same week for $540,000 with a full commission brokerage. The mere posting buyers saw both homes.

More light bulbs went off when a few more clients canceled their full service listings, dropped the price a bit and sold with a mere posting.

For example, I had one mere posting where their best offer was $425,000 when listed with a full commission brokerage and with the mere posting they sold it directly to a buyer not represented by a realtor for $422,500. They got $2,500 less but saved the entire in commission minus the mere posting fee. They also had a better offer than $422,500 with the mere posting but that buyer had a buyer's realtor (they were going to be out $8,000+tax to pay realtor).

I have unique insight into the system and it surprises me that the public still falls for the "full commission can get you more money."

I don't know...maybe I am bias because I do lower commissions?

Just Jack said...

Marko, I have written so many replies and then erased them.

-Damn, those New Year resolutions!

I just leave you with one word to ponder.

Humility

-you'll probably have to look it up.

...Damn

koozdra said...

Who is the target market for this monstrosity?

"Offers are welcome!"

http://www.realtor.ca/propertyDetails.aspx?propertyId=12700633&PidKey=-1693408799

a simple man said...

Someone's dream is dying. Nice house, but obviously over-reached.

Marko said...

From Garth's blog

"Well #83 Marko Juras on 01.13.13 at 10:45 pm – you should be happy your posts are posted here. I have posted reasonable questions on your “realtors blog” which never appear, unless they are aligned with your realtor speak."

Ha ha...weird....a lot of older realtors for some reason think I own this blog too....

Marko said...

I wanted to go preview that home for my general sake but the location deterred me.

Leo S said...

you should be happy your posts are posted here. I have posted reasonable questions on your “realtors blog” which never appear, unless they are aligned with your realtor speak."

Nevermind that unlike on GreaterFool, comments are not moderated here. I don't have the power (or the desire) to delete comments, and it is incredibly rare that HHV does. Really just when people are being abusive. Whoever this person is, they probably just made a mistake posting the comment, or blogger was acting up.

Just Jack said...

Finally, a re-sale in Fairfield.

Originally purchased January 2006 for $460,000, after 5 days on the market, and just recently remodeled and sold for $522,000 after a market exposure of 61 days.

A 13 percent increase from 7 years ago.

I feel the earth move under my feet
I feel the sky tumbling down
Tumbling down
Tumbling down
Tumbling down
Tumbling down

- Carole King

Okay - I just wanted to hear the song

Better than my first choice...

Oppa's Gangnam style
Oh, oh, oh
Hey sexy realtor
Oppa's Gangnam style

dasmo said...

I must admit I am somewhat amused by the volley of insults between the blogs. It does seem rather tame over here comparatively which has been confused with Bullishness...And to think that it was insinuated that this blog was run by Marko as a "real estate" blog...

dasmo said...

Is that Pinewood Ave JJ? I don't think asbestos abatement was as much an issue in 2006....

Just Jack said...

Realtor is a trademark name and should have been Realtor(tm).

I forgot what is the ascii code for trademark.

Just Jack said...

R U saying that Pinewood had a lot of Asbestos?

Or R U just making a general comment?

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

I have friends looking... This was one place they looked and and turned away from due to the scope of work and the "unknowns". It had asbestos wrapped pipes and a crazy vintage boiler among other things. Fantastic location and lot though.

vawr said...

@introvert

"In life outside this blog (a.k.a. real life), I would never correct anyone's grammar. I'm actually a reserved and exceedingly polite person.

But let's not confuse who we are in real life with our anonymous blog personas."

Quite the admission, Intro.

Presenting a decent guy image in public while being a consummate jerk when anonymously posting online.

Seems clear to me which is the real you.

Mayfair Man said...

I had a question for Marko: Do you discount on buyers side as well? Is the percentage of commission paid to the buyer’s realtor fixed or can it be reduced to get a deal done?

Just Jack said...

I can see people being worried about Asbestos insulation around the pipes and boiler.

Hard to say, if people's reactions are more negative than they were 7 years ago. Several homes we looked at back then, had a similar Asbestos situation around the pipes and boiler. I don't seem to have a greater worry now than I did then.

It would be ironic if a smoker of 50 years was worried.

I'd have to flip a coin on this one.

Maybe Marko could wade in with an opinion?

Just Jack said...

Good God Man, do NOT use the word DISCOUNT.

-Its lower commissioned sales person.

Marko said...

Good God Man, do NOT use the word DISCOUNT.

-Its lower commissioned sales person.


Okay I admit that is funny.

Just Jack said...

Not to say that I'm a smoker of 50 years. It was a thought that I had of how some people's lifestyles are dangerous, yet if they see Asbestos, they go all girly.

Not that there is anything wrong with being girly. I mean I wouldn't have a problem with someone who is girly. Not that I'm trying to meet girly people. I mean you can still be a manly girly. Or a girl girly. I mean a woman girly. I mean...

Oh %&*% it.

Marko said...

"Maybe Marko could wade in with an opinion?"

This type of asbestos also extends to the registers in older homes. It is really bad and usually comes back at about 40% content and is very friable. As a result it breaks down after 50 years and falls into the register and then you fire up your furnace!

That being said it is relatively cheap to remove about $100 per register; the type around the ducting is cheap too. You could probably get it all done under $2,000 depending on the extent.

Vermiculite is what concerns most people but Health Canada recommends you leave it alone, just seal the attic and don't play with it. Vermiculite is very low in content usually 1% or less but it can cost $6,000 to $15,000 to empty out an attic.

In Victoria vermiculite came from a mine in Montana and almost always come back positive 1%; however, you may get lucky and have something called white vermiculite which can come back at less than 1% (not considered asbestos).

WCB defines asbestos as 1% or more.

Marko said...

I had a question for Marko: Do you discount on buyers side as well? Is the percentage of commission paid to the buyer’s realtor fixed or can it be reduced to get a deal done?

For example, if you spend $700,000 on a home the commission offered may be $12,000. I pocket $4,500 and pay Fair Realty their portion and I give you a cheque for $7,500 three to five days after completion.

It can be reduced but I've only done it that way a couple of time due to special circumstances. Listing REALTORS® don't like that as it puts pressure on them to do something with their commission.

koozdra said...

oh Nanaimo

"ASTOUNDING OCEAN VIEWS from "all" of the areas of the home...and what's more, the owner will consider and "all" trades?? You have to like that!! No more waiting around for your next buyer to buy your home before you can purchase! "

Price: $695,000
Assessed: $456,000


http://www.realtor.ca/propertyDetails.aspx?propertyId=12677840&PidKey=572774990

Just Jack said...

Has anyone else noticed that there seems to be a lot of vacant homes for sale? Just an observation on my part, I'm not saying there are more or less, just that I am noticing more of them.

koozdra said...

"Has anyone else noticed that there seems to be a lot of vacant homes for sale?"

I've noticed that also. I can't confirm this but It seems like there are more court ordered sales also.

Marko said...

http://www.youtube.com/watch?v=k3DNWeuoq2I

koozdra said...

You know you are in trouble when couples have trouble coming up with even five percent of the value of the purchase.

No more cash back loans. No more stated income loans. OSFI is being a huge buzz kill for the Canadian housing market.

Leo S said...

No one wants definitive proof.

I would have thought _you_ want definitive proof.

If you can prove that you can get people the same sale price as a full commission realtor, you would think it would be beneficial. Of course the danger is that you go too far and prove that a mere listings is just as good as well, and cut yourself out of your own business.

Just Jack said...

Maybe the solution for a couple getting married is for the groom to hit the bride's parents up for a dowry.

Guys, you're going to have to start "manning up" on this point. And that means finding a balance between Nelly Furtado and a home on Bear Mountain. It may also mean that you are going to have to upgrade yourself too. Getting yourself that Brazilian wax might be the difference between a single or a double garage. Because, I can tell ya - unsightly back hair - is a deal breaker.

Marko said...

mere listings is just as good as well, and cut yourself out of your own business.

Mere Postings will never exceed 15-20% market share (currently hovering around 1%). Most people want some kind of professional help even if it means paying a few extra bucks. However, the consumer deserves options and even 15% market share would be huge. That would be 2000 Mere Postings per year in Victoria.

I would have thought _you_ want definitive proof.

We'll have it in 15 to 25 years. When lower commissions reach critical mass (15%-20% or so) the big players will be forced to make some changes.

patriotz said...

If you can prove that you can get people the same sale price as a full commission realtor, you would think it would be beneficial.

Not provable because you can't list the property with two different agents at the same time and see who gets the best offer. Anyway my own view is that it's the price that makes the sale more than the agent.

I forgot what is the ascii code for trademark.

No need to remember, just google and cut and paste... that's what I do...

REALTOR®

Just Jack said...

REALTOR®
REALTOR®
REALTOR®
REALTOR®

-thanx

Giash said...

What an awesome idea! They look great. Thanks for sharing.....Michael Shah (Specializes in identifying, financing, and managing real estate investments)

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