Monday, January 21, 2013

Jan 21 Monday Market Update

MLS numbers update courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.

January 2013 month to date (previous weeks in brackets)
Net Unconditional Sales: 177 (87, 32)
New Listings: 701 (407, 161)
Active Listings: 3759 (3681, 3574)
Sales to new listings ratio: 25% (21%, 20%)

January 2012
Net Unconditional Sales: 372
New Listings: 1088
Active Listings: 3715
Sales to new listings ratio: 34%
Sales to active listings ratio: 10% or 10.0 MOI

Sales are starting to pick up a bit, but last January at this point we were at about 220 sales and 665 listings.  So not only are sales way behind last year, we are now outpacing on listings as well.  

The low sales volumes in January put a proviso on any percentage comparisons, but this doesn't appear to be business as usual like we've seen in the past year.

236 comments:

1 – 200 of 236   Newer›   Newest»
totoro victoria said...

Iggy_12 posted this on the last topic and it bears re-posting as a PSA for any landlords out there.

http://www.cbc.ca/news/canada/british-columbia/story/2013/01/18/bc-badtenant.html


koozdra said...

"Holtby told her he was a software expert."

Ugh, he's giving us all a bad name.

Al + TOH said...

If you are a member of ROMS BC, these people are probably in their "bad tenants" list that you can check when running credit checking through ROMS, as part of the application process.

I will send ROMS this link and ask them to confirm.

ps We don't work for ROMS, just a regular member (helping friends managing their house), and $133 /yr ROMS membership fee really worth it, for all the help one can get from them; to be a good landlord, to get good tenants, and to handle problems when there are issues.

totoro victoria said...

For those of you wondering about the Garth Turner strategy of investing vs. paying down a mortgage this site is worth checking out. It is worth checking out anyway:

http://www.mrmoneymustache.com/2012/02/24/pay-down-the-mortgage-or-invest-more-a-winwin-question/

MMM is a Canadian living in the states. He retired in his early thirties and lives very well on his investment income and rental income.

While the site has lots of Americans, many Canadians post as well on things like investments (RE and stocks), HELOCs, TFSA and RRSPs.

Happy camper said...

I've bought and sold houses in several markets in Canada, both geographically and economically. This is the first market I've rented in before buying and I did this after viewing homes on my first visit and doing some economic analysis. I have a rule of thumb, for each market I live in I will not buy anything over the average price of a home in the area. As I look at homes here, and I'm a serious buyer, I am baffled at the approach. This is the first market where it feels like people do not have house-pride. I arrive at homes that have no lights on, front doors that are difficult to open, steps or pathways that need cleaning up, painting on the outside of the house that is peeling off. I could go on and on about the lack of presentation. Sure, you might want to suggest that I look past the presentation at the value, and believe me, I can do this, but it ain't there. A home at the mid-point in the price range is still a lot of money. Much to my surprise I may have become more than a temporary renter because I'm not spending my money on an important item that doesn't demonstrate either pride of ownership or a bloody good price.

totoro victoria said...

Well, you would be in good company with others here who have chosen to rent.

When I run the numbers I find it hard to justify rental property here in Victoria.

My Okanagan property does much better and if I was more motivated I might choose Thunder Bay or Hamilton instead.

I own two properties in Victoria. Both fit my personal criteria for investment - but they are not the best investments you could make.

I'm biased towards owning as I dislike renting. I don't mind being a landlord so rental income means that my housing cost is close to zero each month. In another market - like Thunder Bay or Hamilton or Las Vegas or Phoenix - I'd be making a lot more.

My place in the Okanagan has better ROI than here too. However, if you are looking to settle down and like to own, you have the options that are out there to work with.

totoro victoria said...

Also, despite not being the best place to invest in Canada for rental income, owning works out well if your costs are covered by rental income because of equity paydown.

In ten years, my Victoria tenants will have paid $200,000 down on my mortgages and I will have gained the monthly after tax equivalent of what I would have paid for rent. No investment of my down-payment monies would bring me this return imo - or the level of satisfaction I have with RE.

As Patriotz and others will point out, who knows if prices will be where they are today in ten years. My bet is that they will. We will see.

In addition, the calculation is more complex than this - look to Rogers rent v. buy calculator for all the variables.

a simple man said...

Local RE ads are now having to be more creative - softer than the "act quickly or lose out!" messages of the past.

http://www.youtube.com/watch?v=75iCwl-CM54

CS said...

"Local RE ads are now having to be more creative ... "

A terrific deal if you like sliced peppers.

But at a price that exceeds the life-time disposable income of the average Victoria family, it makes Happy Camper's position seem rational.

After all, if you don't want to rent for ever, there are other pleasant places to live in Canada, and even on Vancouver Island, and many of them offer comparable employment opportunities if you're not part of the academic/medical/university bureaucracy.

a simple man said...

Happy camper's view is pretty on par with my experience here after moving from out of province. I am now afraid to get my hands dirty and improve a place, but when you are asking three-quarters of a MILLION dollars? Come on.

Thus, I wait and rent until a acceptable situation presents itself.

Saw an open house on Dover this weekend - nothing special with some seriously strange floorplan limitations. $950K. Crazy.

a simple man said...

^"not" afraid to get my hands dirty. We do need an edit function!

totoro victoria said...

Re. satisfaction of ownership.

I can't tell you how satisfying it is for me to know that my intention is never to move again from the unit we occupy.

Every single thing I do to fix up my primary residence is now done with this in mind.

I can personalize all I want. I can paint whatever I want.

I can build an office in a double closet.

I can install a pet door.

I can install a woodstove knowing that others might not like it, but it will bring our heating costs to almost nothing for the next forty years.

I can add a south-facing solarium on for extra passive solar gain and gardening purposes.

I can build raised beds and put a upright freezer next to my freezerless fridge in the kitchen cause I like it that way.

In short, I can match my home to my personality without fear that it won't appeal to another buyer.

I just don't feel the same way about stocks.

Personality is a huge part of ownership of a home. That is why some of the positions here don't match up imo.

koozdra said...

Putting "motivated seller" in the description isn't enough any more. It's time for price drops to attract attention...

http://www.theglobeandmail.com/news/news-video/video-sellers-get-surprise-after-listing-home-100k-below-neighbours/article7573216/

Al + TOH said...

Heard back from ROMS about the scam tenants as in lggy_12's post:

"Thanks for writing in!

The bad news is that a tenant cannot simply be added onto the list; there needs to be documentation (a notice to end tenancy or an order of possession) and a submission form from the landlord. The good news is that this man and his wife are both on the list - each more than one time."

dasmo said...

Forget the price drops, just ask for it yourself. Unless you want to be competing against 200 other buyers...Shows there is some pent up demand building....

Marko said...

Despite the slow market to start the year, 4 sales so far this month in Sun Rivers!

The average for the previous 6 months had been 1 home sold per month.

info said...

"As Patriotz and others will point out, who knows if prices will be where they are today in ten years. My bet is that they will. We will see."

Scotiabank disagrees with you. Remember, when a Canadian bank says something negative about the future of real estate in Canada, it carries a lot of weight.

Canada house prices to drop, stay down for a decade, causing unemployment.

Leo S said...

Shows there is some pent up demand building

An underpriced home attracts interest. I don't see how that is in any way indicative of pent up demand. Boxing day attracts massive crowds because of the prices. Doesn't mean there's pent up demand for TVs.

Leo S said...

Scotiabank disagrees with you.

Actually Scotiabank agrees with Totoro.

The article says "The report notes that previous housing market downturns -- in the 1970s and 1990s -- took eight or nine years to bounce back to price levels seen before the decline."

Which means they expect prices to regain or surpass the peak within 10 years, just like Totoro does.

It sounds like they don't agree because ScotiaBank is presenting it as a negative, while Totoro is presenting it positively.

Leo S said...

I still don't understand these old properties coming up as sold. There are lots of them recently. Something about the beginning of the new year?

1534 San Juan.
Listed: 2012/02/02
Pending: 2012/04/04

3181 Mars
Listed: 2012/06/01
Pending: 2012/06/29

Both changed status today on matrix.

dasmo said...

Over 200 people at the open house is a lot of interest! It hints to me that there is a growing number of buyers out there that are in a wait and see mode. Hell, Half this blog fits that description.

CS said...

@Toto

"In ten years, my Victoria tenants will have paid $200,000 down on my mortgages and I will have gained the monthly after tax equivalent of what I would have paid for rent. No investment of my down-payment monies would bring me this return imo."

As you don't state your capital investment or your expenses, we have no idea what kind of return you are talking about. But since a stock market investment with a fairly typical total annual return of 7% doubles in ten years, we might infer that your property investment must be yielding more than 7% net. But is that so?

totoro victoria said...

Did you read the report or the article about the report? Scotiabank and I actually agree - our ideas are pretty much identical.

They do not state that in ten years we will not recover.

From the report:

"...we expect average Canadian home prices will eventually
decline a cumulative 10% over the next 2-3 years, as housing demand softens and buyers’ market conditions re-emerge for the first time in over a decade. The
correction will be concentrated in the Toronto and Vancouver markets, where supply risks and affordability pressures have the potential to trigger larger price
adjustments. In contrast, we continue to anticipate relatively more favourable demand and pricing in many other regional markets facing more balanced conditions.

The combination of lower home prices and reduced sales volumes points to a further moderation in household credit growth.

.....

Even beyond mid-decade, Canada’s housing sector faces the likelihood of a prolonged period of relatively modest sales and price gains. Historically, long
cycles of rising home prices have been followed by extended periods of persistent softness, allowing affordability to be gradually restored and generating renewed
pent-up demand. The downturns that followed Canada’s major housing booms of the 1970s and 1980s — defined by having flat or negative real price growth — lasted 8 and 9 years, respectively."

http://www.gbm.scotiabank.com/English/bns_econ/spaug8.pdf

I would agree with most of this. I think we will see a 10% decline and it will take ten years to fully recover.

I have a ten year mortage because I'm concerned that any rise in interest rate will impact my level of affordability.

Is Victoria like Vancouver and Toronto? Definitely has had a good run up - not sure we are in the same league anyway.

As I have already posted - with numbers to back it up, even if prices are exactly the same in ten years as they are today my rent vs. buy calcution strongly favours renting because of leverage and rental income and the fact that you are going to pay to live somewhere anyway.

If I took my downpayment amounts and put them in any other investment with some margin of safety my ROI would be far below what I will receive.

totoro victoria said...

Sorry Leo - thanks. I did not read the posts after infos before posting.

CS said...

"The report notes that previous housing market downturns -- in the 1970s and 1990s -- took eight or nine years to bounce back to price levels seen before the decline."

Bounce back to what? The decade-before nominal price or the decade before real price?

Since inflation is always with us, without specifying real or nominal prices their statement is vague to the point of meaninglessness.

totoro victoria said...

CS - again, TOTO is a Japanese toilet brand, Totoro is a wonderful little Japanese anime character not associated with toilet talk. Just an FYI that my preference is to be referred to as the latter.

Numbers.. I will ballpark for you.

Downpayments on two properties are $200 000 - 20% on primary and 10% on rental plus closing costs.

Ten years later I will have $200,000 in additional equity paydown by renters if no appreciation or depreciation - prices same as today.

But, I live for free because of rental income - even after tax because my mortgage is largish... Hmmm... lets say $2000/month benefit grossed up to $2600 a month because we pay rent with after tax dollars. $2600x120 months equals $312 000.

So in ten years without any appreciation at all I am up $512,000.

Lets say prices rise 4% each year after that.... why thank you, I will take that tax exempt additional $50,000 in appreciation per year.

But wait, I haven't factored in that I plan to invest the $2600/month in other investments each month (stocks, maybe real estate, improvements which increase equity and/or rents) for the next eight years or so...

If you can make $200,000 net of taxes and $2600/month to invest (put it into an RRSP and get the tax deferred?) over the next ten years from a $200,000 equity stake I will congratulate you. I'm not confident I can.

What's the catch?

I'm a landlord. Some would hate it.

I live in 1400 square feet. Some want more.

I'm engaged in some renos that feel neverending sometimes. I have been getting a bit tired of this lately, but it will end - it did for my other places. I wish I was handier.

My primary residence is not a high end home, but I really enjoy the room to improve.

I have the regular homeowner maintenance.


info said...

Are you a potential first-time buyer in Victoria?

Now is not the time to buy. House prices across Canada have started to drop and this trend will continue for years. The Teranet house price index for November shows price declines in 10 out of 11 major cities in Canada. That is something that has not happened since the last housing crash in Canada in 08-09. December results have not been released. The crash of 08-09 was stopped by a major government intervention, otherwise prices would have continued down.

Much lower prices are on the way. Many economists around the world are predicting a major, multi-year housing price correction in Canada.

The Internation Monetary Fund (IMF) sees a bubble in the Canadian housing market.

Robert Shiller, the famous Yale professor who correctly predicted the US housing meltdown, has recently talked about the Canadian housing bubble.

“I worry that what is happening in Canada is kind of a slow-motion version of what happened in the U.S.” - Robert Shiller

David Rosenberg, a well-known Canadian economist, recently said that "Canadian housing prices are not sustainable."

Renting while the housing market corrects is a no-brainer.

Recently in Victoria , there have been houses listed on the MLS for 34% and 36% below assessment. The correction is happening right now in Victoria.

2013 property assessments in Victoria were lower compared to last year. Remember that these assessments were done in the summer, which was 6 months ago. Prices in Victoria have continued to decline since the summer.

Hold off from buying right now. Keep your down payment and let it grow while you watch house prices decline. Most people who bought in Victoria in the last 3 years with a small down payment already owe more on their mortgage than their property is worth. You do not want to be in that postion.


yogurt said...

Marko wrote: "Despite the slow market to start the year, 4 sales so far this month in Sun Rivers!"

I'll be curious to see which ones!
We sold our Sunriver Estates home in March 2011 and felt like we were getting out just in time. I still watch the neighbourhood through PCS.

The great thing about tracking that neighbourhood is that there's only a handful of floorplans, so it's fairly easy to compare price changes over time.

totoro victoria said...

and that should be that my rent vs. buy calculation favours buying (not renting).

yours might be different if you have cash and no plans for rental income.

if I was sitting on $600,000 worth of cash it would be hard for me to spend it all on a house knowing that it was only going to grow on appreciation. i'd have to be really sure we were at bottom and there was no-where to go but up and in a short period of time (like Phoenix two years ago).

totoro victoria said...

hard for me unless:

a. I was financially independent otherwise; or,
b. interest rates skyrocketed.

info said...

"Scotiabank disagrees with you."

"Actually Scotiabank agrees with Totoro."

The article says "The report notes that previous housing market downturns -- in the 1970s and 1990s -- took eight or nine years to bounce back to price levels seen before the decline."

The fact that a Canadian bank is currently predicting house prices to drop over the next 2-3 years is enough proof that now is not a good time to buy. Normally, of course, Canadian banks are very bullish when it comes to Canadian real estate.

Scotiabank notes that the market downturns in the 1970s and 1990s took 8 to 9 years to bounce back to previous price levels. However, the price run-up in real estate this time lasted about 13 years, which was much longer than the two previous boom and bust cycles. They are attempting to compare apples to oranges.

They did not mention that there was much more stimulus thrown at Canada's current housing bubble compared to the bubbles in the 1970s and 1990s. The degree to which credit was loosened during the formation of our current bubble far exceeds that of any other housing bubble in the history of our country. This also provides evidence that it will take longer for prices to bounce back this time. Extreme, excess credit for too long has tapped out the pool of potential buyers much more than it did at any other time in Canada. Canada has reached 70% ownership levels, which is extremely high. This also suggests that prices will take longer to bounce back to previous levels than at any other time in the past.

Household debt is at a record high in Canada, which will also lead to a much longer bounce back time.

Scotiabank didn't bother to mention any of this in their report, which is what we should expect from any Canadian bank.

info said...

"if I was sitting on $600,000 worth of cash"

How many first-time buyers have that amount of money saved for a down payment?

totoro victoria said...

"if I was sitting on $600,000 worth of cash"

ummm... where was I referring to a first-time homebuyer?

I actually had Patriotz in mind as he has let us know that he does have enough to buy cash and is waiting for a downturn to do so. He is immune to rate rises if he is paying cash. I am not so I like low rates even if I pay slightly more.

Also, it is interesting that one one post you state that I should really pay attention to what Scotiabank says and that what they say carries a lot of weight, and in the next you state that their report is deficient and what else can we expect from a bank.

totoro victoria said...

While it is good to have input from a variety of sources it is only helpful for decision making if you actually consider the information carefully,evaluate it, and incorporate it if you deem it valid in some way.

If you are just on a mission to dismiss opinions and/or facts that don't mesh with your entrenched opinions this might affect your credibility.

patriotz said...

If I was sitting on $600,000 worth of cash it would be hard for me to spend it all on a house

It's the people who are borrowing to buy who really should be more careful, as they are the ones who are going to get into trouble if prices fall or rates go up (or likely, both).

You're spending $600K on the house whether you put it all down or just 5% down. In the latter case you have an obligation to pay the 95% back.

But as often happens in life it's those who borrow money who are least careful with it.

totoro victoria said...

Maybe, although I don't have a problem with borrowing for a business backed by a solid business plan or for RE that is similarly analyzed.

You have to start somewhere unless you get a windfall in life. I didn't.

Saving $600 000 cash if you are making an average salary and have a family is pretty tough. I would expect that the vast majority of folks here are going to borrow to buy.

If you are going to rent a place anyway then you might as well put those dollars to work for you as best you can.

I find it way less rationale to borrow for a new car/boat/vacation...

Leo S said...

Saving $600 000 cash if you are making an average salary and have a family is pretty tough. I would expect that the vast majority of folks here are going to borrow to buy.

Sure, it makes sense to get a mortgage to buy a house, but in the end you're still going to have to "save" $600,000 by paying down your mortgage (well actually you're going to have to save more like $900,000).

dasmo said...

By the time it takes you to save 600k the darn thing will cost you 1.2 million....

DavidL said...

@totoro
TOTO is a Japanese toilet brand, Totoro is a wonderful little Japanese anime character not associated with toilet talk.

I laughed so hard when I read this. My kid's love Totoro and I am a fan of all of Studio Ghibili's productions ...

Animal Spirit said...

January SFH (in area) stats to date:
Average sales price: 548000
Median sales price: 490000

Average list price: 570300
Median list price: 499900

Average and median sales to list (same house basis): 96.3%

# of million plus sales: 1

Low sales with sales predominantly in the lower priced areas (Sooke, Langford, etc), and quite a few of these being new house sales. The middle to upper end resale market has been really soft.

Any insights on this would be most welcome - are max mortgages being tightened? Are marginal buyers moving to the lower end new / new used houses in Sunriver, Westhills and Happy Valley? Are Realtors (C) populating new house sales in MLS to make total house sales look decent? Did Just Jack run around Oak Bay again buff naked?

koozdra said...

"and quite a few of these being new house sales"

Home buyers plan expiring soon could account for a spike of new home sales.

Animal Spirit said...

Median is quite sensitive to increasing if a few additional above median sales come in - right now there are 8 houses within 20K lower than the median and 3 within 20K above.

Current median house: 1213 Cumberland Court in Saanich East - Lake Hill, a 1986 house listed 509,900 sold at 490,000. What would this one have gone for a couple of years ago?

patriotz said...

Saving $600 000 cash if you are making an average salary and have a family is pretty tough.

If everyone had to save to buy (rather than borrow) it would be nowhere near $600K in the first place.

CS said...

TOTO is a Japanese toilet brand,

TOTO may be a toilet brand, but Toto is the name of Dorothy's dog (in the Wizard of Oz.)

In any case, totoro, the merit of your RE investment strategy seems difficult if not impossible to fathom without knowledge of the capital value of the property and of the expenses, which you decline to reveal -- as is your right.

totoro victoria said...

Dog, toilet or magical friendly animated woodspirit...

Leo, you are not going to have to "save" $900,000. Assuming you don't live for free in your parents basement for the next thirty years you are going to be paying rent.

You need to save the mortgage plus cost of ownership less rent. Rent for a house for 30 years is likely close to $900,000 and you own nothing at the end.

Yes Patriotz, if everyone had to save full price to buy land costs would likely be lower and there would be way fewer landlords except those who inherited loads of cash.

dasmo said...

If house prices follow inflation then that 600k house will be 1.7 million in 25 years. You will need to have socked away 2k a month and have gotten a 7% return over that period to pay cash for the house. It's like chasing a rainbow....

totoro victoria said...

"In any case, totoro, the merit of your RE investment strategy seems difficult if not impossible to fathom without knowledge of the capital value of the property and of the expenses, which you decline to reveal -- as is your right."

I've given you my bottom line calculations with projected ROI. It is not impossible to follow the logic, but it is impossible to understand the details or verify them.

I'm never sure how much to put out there on the internet but information sure does tend to circulate.

I think in the end, if you don't have my numbers, maybe you should use your own? It is a good exercise to fill in a RE analysis spreadsheet and there are some good free ones out there.

Leo S said...

Leo, you are not going to have to "save" $900,000

Save as in accumulate, not save as in compared to renting.

totoro victoria said...

Still does not work. You mean spend not accumulate I think. Still, the spending has to be net of rent to make a meaningful statement... unless, of course, you are actually living rent free in your parents' basement???

Leo S said...

You have to have the money to spend it.. Nevermind, I put the "save" in quotes for that reason, but clearly it wasn't a clear way to express myself.

totoro victoria said...

Oh dear, you do live in your parents' basement don't you... hey, can't fault the strategy.

totoro victoria said...

Allows you to save and accumulate.

Dave said...

Speaking of saving, we recently posted our rent savings on our fridge to remind us how much we're saving. In black felt it says:

If flat, we save $19,633yr
If -5% for 5yr, we save $35,657yr
Total savings by waiting to buy til 2018 = $178,285

We're hoping to get lucky and be able to buy our place by then so we don't have to move. Math is based on a comparables sale price from a while ago now, so possibly we've already saved some of it.?

I just noticed If house prices follow inflation then that 600k house will be 1.7 million in 25 years.
If prices follow inflation they will be 700k in 25yrs, not 1.7million.

Dave said...

That's at last year's inflation rate. Anybody's guess what could happen over 25 yrs.

totoro victoria said...

If you are saving almost $20,000/year by renting even if the market is flat, I would continue to rent in this market. Does this account for principal paydown in any way?

I think prices will drop 10 but not 25 percent, but who knows. If interest rates don't rise you will be better off.

I also really like posting things myself. I like the "your money or your life" method of recording finances and I like vision boards for overall direction.

Leo S said...

Oh dear, you do live in your parents' basement don't you... hey, can't fault the strategy.

I actually live in your basement.

DUN DUN DUUUN!

dasmo said...

I just took a random 25 period from the past to calculate inflation. If you do 1986 to 2011 that 600k house will cost 1.27 million. Whichever way you slice it, it' makes sense to borrow to buy a house especially at such low rates...Not saying anyone should...but if you are...

totoro victoria said...

You have not been paying attention. I don't buy places with basements...

or at least I don't think I do...

wait a minute. By basement do we mean crawl space?

As long as you are quiet and save and accumulate...

totoro victoria said...

By quiet, I mean not too many of the DUN DUN DUUUNS! Especially in all caps.

Dave said...

I almost burst a gut at Leo's comment.

Does this account for principal paydown in any way?

Principle paydown, what's that? lol, yes, it's accounted for.

If you do 1986 to 2011 that 600k house will cost 1.27 million. Whichever way you slice it, it' makes sense to borrow to buy a house especially at such low rates

Not that it matters, nor is this 1986, but I get 1.087 million using BoC calculator ('86 to '11). You may want to ask yourself, why rates are so low. Much of the reason is because inflation is so low. I know people hate this example, but Japan has had near zero rates for 18 years now while they've been battling deflation.

Low rates, high rates, meaningless - until you adjust for inflation, that is. Nevermind, I gave up trying to teach people about real rates vs. asset prices.

patriotz said...

it' makes sense to borrow to buy a house especially at such low rates

Biggest fallacy going. It makes the most sense to borrow to buy (or to pay cash to buy for that matter) when rates are high, because that means that house prices will be lower, and rates are more likely to go down going forward.

Like I did in the 1980's.

totoro victoria said...

What - you borrowed?

1980s hey... who knows if we will see 19% rates again. My window is the next five years for any RE investment.

How many folks are willing to wait ten years to own?

Low or high rates are not meaningless for me. I look at affordability. If my mortgage is affordable and locked in for the next ten years I'm okay with that.

Marko said...

Biggest fallacy going. It makes the most sense to borrow to buy (or to pay cash to buy for that matter) when rates are high, because that means that house prices will be lower, and rates are more likely to go down going forward.

Sorry but I don't get it. When I got my variable mortgage in 2011 I went 20% down and the kept the remainder of my savings in stocks.

I just maxed out my TSFA with another $5,500 contribution and it now sits at much more than $25,500. I also keep my RSPS maxed out and I've been lucky there too with Rogers, TRP, and BMO all having a large run up recently + the dividends I've been collecting over the years.

When rates are this cheap and half or more of the payment is going on principal I don't personally believe in paying it off quickly or putting down a huge amount especially if you are buying something that is very affordable. Last year my principal came down a decent junk on its own and the returns in the market were solid, best of both worlds.

If you stretching yourself on a $1,000,000 home then maybe you think about putting 50% down instead of 20% and the remaining 30% into stocks. That seems a little more risky.

koozdra said...

"WIN YOUR DOWN PAYMENT! Call for details"

http://www.realtor.ca/propertyDetails.aspx?propertyId=12756417&PidKey=1830130688

a simple man said...

Marko - can you name the people on this blog that think Oak Bay will drop by 50%?

if you can't, then please do not characterize us as such on other blogs. It discredits the rational discussion here by making us appear to be out of touch with reality.

dasmo said...

"because inflation is so low" depends on what you track. My heating bills went up again, hello high "usage charges". Ferry fairs going up. Gas prices continue to climb, just wait until spring again...Sure if you are buying computers, smart phones, television and other cheap things from China then, yes, there has been almost zero inflation there...But their wages are going up.
It's convenient for the feds to excludes "volatile," products i.e. the ones rising faster than other prices.

Dave, too bad you have given up teaching.
Here is a class that might inspire you to return.

Marko said...

Marko - can you name the people on this blog that think Oak Bay will drop by 50%?

Info :)

if you can't, then please do not characterize us as such on other blogs. It discredits the rational discussion here by making us appear to be out of touch with reality.

Us? What does that mean? Almost everyone on here is anonymous. I am discrediting anonymous bloggers...great.

As I've said this blog is probably one of the best blogs going but you can't compare this blog to a professional forum like VV. Just last week I interviewed Dave Chard, owner of Chard Development, for an article to be published on VV. On VV you'll see politicians, developers, etc., engaging in discussion.

HHV as soon as a mortgage broker or realtor appears they quickly insulted and chased off.

This blog is a combination of quality which is improving with Leo_S heading the wheel (much better than Garth's crap), really annoying crap (info), humor (JJ), and a variety of other things. Who would come to this blog to just look at Leo_S charts, no offence to Leo :)

koozdra said...

"a professional forum like VV"

VV is just another engine of real estate advertising.

a simple man said...

I don't think even info thinks there will be a 50% drop in OB, but I could be wrong - but he is the only one.

You are basically propagating the belief that the people here are a homogeneous group that are deluded in their beliefs.

I think if you lifted the veils of a lot of the anonymous posters you may be surprised at who you found.

We are not an ignorant mass.

Marko said...

You are basically propagating the belief that the people here are a homogeneous group that are deluded in their beliefs.

Have you read some of your comments in the last year about home owners in Oak Bay?

a simple man said...

I wrote them, so I take ownership of them. I am not sure what you are getting at.

Jack and Cate said...

Marko, you might want to watch your metaphors and financial advice while blogging.

On one had you are calling Garth Turner's advice and blog crap, while you espouse your personal investment information and suggest other ways of making money work for others.

You have opinions and he has his opinions. It is up to us the readers to sift through "the crap" don't you think?

Just sayin'...if I choose one crap over the other than it's my choice.

I surmise that Mr. Turner has not been kind too your opinions as you with him?....

dasmo said...

I wouldn't call Garth Turner's writing advice. I would call it a sales pitch for his financial services selling ETF's and preffereds. Both of which can only be purchased through a financial adviser...I mean he recommends having a line of credit as your emergency fund? Like the banks will be kind to you if the shit hit's the fan....

I don't really get him. He is very accomplished. I don't understand why he has chosen to be a financial adviser which, IMO, is much more despicable than a real estate agent.

dasmo said...

(sorry Marko)

Marko said...

Low end sales continuing to pour in today, average and median will not look pretty this month.

Marko said...

(sorry Marko)

Why would you be sorry? I am not stupid, I acknowledge the fact that I make way too much given my 6 week course :)

Chris said...

Marko said:
“Sorry but I don't get it.” in response to patriot, i think.

It may help you see it if you consider other things, when interest rates are high:

In the 80s, interest rates were well over 10%, now ____
In the 80s, the TSX was under 2000, now 13000
In the 80s, if you bought a long bond and held, you made fortune
In the 80s, if you bought a few 100k houses in Vic, you are now multi millionaire

Even if you had to initially borrow, you would have made a fortune.

totoro victoria said...

Well, not everyone does well after the six week course. I expect being a realtor will be more difficult going forward as the internet allows alternate sales methods on an increasing basis.

Marko said...

You have opinions and he has his opinions. It is up to us the readers to sift through "the crap" don't you think?

100% agree.

Marko said...

Marko said:
“Sorry but I don't get it.” in response to patriot, i think.

It may help you see it if you consider other things, when interest rates are high:

In the 80s, interest rates were well over 10%, now ____
In the 80s, the TSX was under 2000, now 13000
In the 80s, if you bought a long bond and held, you made fortune
In the 80s, if you bought a few 100k houses in Vic, you are now multi millionaire

Even if you had to initially borrow, you would have made a fortune.


Fair enough, I agree. But what is the argument against borrowing now?

koozdra said...

"average and median will not look pretty this month"

Or more pretty, depending on your perspective.

Marko said...

As I've said many times, I've been wrong before and I'll be wrong again. I am still entitled to my opinions.

However, as a member on the blog has pointed out, Garth has never been wrong. He is batting 100%.

Anyway, time to go put a few offers together. I'll be back tomorrow for more discussion.

Chris said...

"Fair enough, I agree. But what is the argument against borrowing now?"

Now, or soon, we go the other way in the credit cycle for 30 years.

http://seekingalpha.com/instablog/98115-john-lounsbury/91426-60-year-interest-rate-cycle

Marko said...

Okay....finally thought for the day...when my mortgage goes to 10% instead of throwing money at the TSFAs and RSPS I'll pay the mortgage down instead. Worst case scenario I'll pull my TSFA in 5-10 years and put it on the mortgage if the rate on the mortgage is higher than the return in the TSFA.

totoro victoria said...

The 60-year credit cycle....

I see no good evidence of this occurring in the future. Sixty years and I'll be dead most likely and boy are things changing quickly re. influence of internet/electronic data.

Given that we are down now for rates and we don't live forever, this argument actually strongly supports buying now with a ten-year fixed rate if you are going to need to borrow.

patriotz said...

...when my mortgage goes to 10% instead of throwing money at the TSFAs and RSPS I'll pay the mortgage down instead.

Good for you, but the great majority of recent buyers would not be able to do this as they aren't saving anything.

And what are the implications of that?

info said...

"Marko - can you name the people on this blog that think Oak Bay will drop by 50%?"

"Info :)"

Not quite. I assume that you mean that I think that the average price in Oak Bay will drop by 50%. I don't rule out a 50% price drop by the time the market hits bottom. This would be a 50% drop on the Teranet HPI, not VREB's average. But the Teranet HPI doesn't provide numbers specifically for Oak Bay. How would I gauge a 50% price drop in Oak Bay? Here's how. If, at some point, several Oak Bay houses, townhouses and condos sell for 50% below peak or peak assessment, that would clearly indicate to me that Oak Bay experienced a 50% price drop. I look at it from the perspectives of the buyer and seller. If a sale at 50% below peak did happen, the buyer would probably think that the market corrected by 50% and so would the seller. To them, VREB's average price wouldn't mean much.

As I have said before, in the early 90s, Toronto experienced a devastating housing market crash. Officially, the average price indicated a drop of about 25%, however, many houses in nice neighbourhoods were sold for 50% below peak or less. More recently, Calgary and Edmonton were hit hard by the crash of 08-09. The average price drop in those cities was 15-20%, however, plenty of townhouses and condos were sold for 50% below peak.

For Oak Bay, I predicted that, by December 2013, we would see some house sales at 25% below peak or peak assessment. My prediction will need to be revised if there is any government intervention providing stimulus to the market, which I doubt will happen.

info said...

"Given that we are down now for rates and we don't live forever, this argument actually strongly supports buying now with a ten-year fixed rate if you are going to need to borrow."

Nothing suggests that now is a good time to buy. Everything suggests that now is not a good time to buy.

We are at the peak of the biggest housing bubble that Canada has ever been in, by far. Interest rates are at extreme, emergency levels. The combination of extreme, bubble prices and emergency rates makes it the worst time to buy real estate in the history of Canada.

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

"I wouldn't call Garth Turner's writing advice. I would call it a sales pitch for his financial services selling ETF's and preffereds. Both of which can only be purchased through a financial adviser...I mean he recommends having a line of credit as your emergency fund? Like the banks will be kind to you if the shit hit's the fan....

I don't really get him. He is very accomplished. I don't understand why he has chosen to be a financial adviser which, IMO, is much more despicable than a real estate agent."

You need to understand that, generally, Garth writes about two main subjects - the first is predicting where the housing market is headed and the second is financial advice. If you don't like his financial advice, ignore it. If you let yourself understand what he is saying about the housing market, you will have much to gain.

In terms of the housing market, it cannot be disputed that Garth correctly predicted the crash of 08-09, stopped by a massive intervention that nobody could have predicted. He also predicted the current correction that has already started across Canada.

Starting about a year and a half ago, Garth wrote that, in order for many Canadians with paper equity in their overpriced houses to realize the maximum gain, the time had come to sell. If you had listened to his advice then, you would be in a position now to buy back at much lower prices in the future. Most Canadians missed that opportunity and are currently watching that paper equity erode, unable to admit to themselves that the market is falling.

dasmo said...

I would argue that 2008 was the worst time. Prices were close to their high and rates were at around 5.5% for a five year fixed. I bought a place last year for 10% less than it was bought for in 2007 because an earlier sale fell through and I had no competition. I locked in a 2.99% rate.

Take a hypothetical 500k mortgage @ 5.5% and interest paid over a five year term for that is 129k. Take that same mortgage at 2.99% and interest paid over a five year term 69k. That's a 60k savings. Remember mortgages are front end loaded for interest...

koozdra said...

"Take a hypothetical 500k mortgage"

Soon we'll be seeing a lot less of these...

dasmo said...

I don't have one that's for sure ;-)

patriotz said...

I would call it a sales pitch for his financial services selling ETF's and preffereds. Both of which can only be purchased through a financial adviser...

Completely untrue of course, which is why I buy them through a discount brokerage.

dasmo said...

I take back "Both of which can only be purchased through a financial adviser..." and apologize for flippant assumption.

Leo S said...

As far as I know there are still some offerings that can only be bought with the help of a financial advisor. Not ETFs, but other things (clearly I'm an expert on this).

patriotz said...

and apologize for flippant assumption.

Probably what Garth would like people to think, so not so flippant really. :-)

DavidL said...

@Leo_S
... there are still some offerings that can only be bought with the help of a financial adviser

It's hard to find preferred shares and various new issue offerings if you have your own self-directed brokerage (as I do). Otherwise, most other securities/transactions are possible.

dasmo said...

I've never tried to be honest. I'm a meat and potatoes equities guy. Especially after years of mutual funds pushed by my former financial adviser that did nothing. Part of where were my distrust of these "professionals" comes from. I finally canned him and moved my RRSP (which I only have because it was created when I was an employee and getting natched) to a self directed brokerage when he started to pressure me to give him a grand a year to "manage" my accounts....Also sold all my mutual funds and put that money into Facebook and RIMM. Made back that 1k loss in the mutual funds in short order...

I can say I do agree with Garth when it comes to RRSPs...

totoro victoria said...

You've never tried to be honest? Well, at least you are honest about it.

Al + TOH said...

@DavidL: "It's hard to find preferred shares and various new issue offerings if you have your own self-directed brokerage (as I do). Otherwise, most other securities/transactions are possible."

We are with TD waterhouse (self-direct discount brokerage), setup to get emails whenever there is new issue on Prefs and Bonds with rating BBB and above. As long as you can catch the emails fast enough (say getup before 7am pst), you can catch them (the good ones are normally sold out within 10 or 15 minutes).

dasmo said...

He he totoro... Insert coma.

Introvert said...

60-year interest rate cycle? Are you fu**ing kidding me?

Leo S said...

Lots of low end sales..

Leo S said...

Demographia survey updated with 2012 data. Victoria severely unaffordable as usual.

totoro victoria said...

Does anyone else find the Demographia survey odd? It attributes lack of affordability in Victoria to urban containment policies defined as:

"more restrictive land use policy, which is referred to in this survey as "urban containment"
(there are also additional labels, such as "smart growth," "urban consolidation," "compact city policy,""growth management," and "densification policy"

I really don't see that as a huge local factor. Densification is limited in, say, OB, but I think current prices are more a result of credit/interest rates and a market cycle.

dasmo said...

I agree, it is a bit odd. "house prices in these markets have been driven extraordinarily higher relative to incomes by urban containment regulations."This is a gross simplification. Also, I don't think it's true. There has be ton's of new housing built on the "fringe" "venting" demand. The report has a strange focus on deregulating land development. No thanks....

totoro victoria said...

Others have found it odd and flawed:
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10554387

I don't believe you can rate affordability on a multiple of median income without accounting for interest rates. Not to say that Victoria is not an expensive place to live, just that countries do not have the same rates right now. The US is lower... NZ is much higher...

I thought this was an accurate critique:

"A close reading of the Demographia data shows "affordable housing" is found largely in flat terrain with extreme climates, high levels of crime, dying economies, few natural amenities, and limited prospects for academic and professional achievement for the next generation."

As opposed to areas with liberal planning policies.

dasmo said...

(sorry Introvert)

patriotz said...

Does anyone else find the Demographia survey odd? It attributes lack of affordability in Victoria to urban containment policies

They have an ideological opposition to urban planning.

The best rebuttal to their argument is that prices crashed across the US without any relaxation in planning policies, therefore the planning policies could not have been the cause of the bubble in the first place.

If you want to get more local, note that the Gulf Islands have seen among the largest price drops in Canada, yet they have among the strictest planning controls in the country. They also have the best weather.

Leo S said...

I think there is better evidence that restrictive land use or geographical land constraints are correlated with a volatile housing market. Can't find the paper at the moment though.

Marko said...

OTTAWA (Reuters) - The Bank of Canada held its overnight interest rate at 1 percent on Wednesday but dramatically revised its projections to say any hike would be further away than previously thought, because of excess capacity, soft inflation and stabilizing household debt.

totoro victoria said...

Great news for me personally. I have one property I am going to lock in next year and I was concerned about rates.

Locally, I believe this news will somewhat counter the lower assessment news - I revise my prediction for OB to be only 6% down by December 2013 and not 10%..

totoro victoria said...

Leo - I would agree with some geographical constraints - but not with the restrictive land use as a primary driver.

Restrictive land use and price impact can be seen in OB, but I do not believe it is a driver of current high prices.

Some towns have no room to grow for various reasons but if there is no economy or other features to draw the prices don't rise higher than neighbouring communities. Look at Penticton vs. Kelowna.

Leo S said...

I don't think anyone seriously expected rates to rise (ok maybe Garth). As the housing market in the rest of Canada follows Victoria's example this year, any remaining upward pressure on rates will vanish.

Victoria said...

I see the Bank of Canada announcement differently. Any pressure anyone may have felt about buying before interest rates begin to climb will now be dissipated.

Waiting and watching becomes even easier.

Those who have to sell now have to make it even more enticing to any prospective buyers.

How to do that? Price.

Downwards we go! Faster and faster!

dasmo said...

Should time perfect for me. Three years and then another sub 3 lock down. That is many thousands in savings.

reasonfirst said...

"stabilizing household debt"

= lower consumer spending and slowing housing market.

Introvert said...

OTTAWA (Reuters) - The Bank of Canada held its overnight interest rate at 1 percent on Wednesday but dramatically revised its projections to say any hike would be further away than previously thought, because of excess capacity, soft inflation and stabilizing household debt.

This is great news! Could mean that the first 10 years of my mortgage will have been at historically low interest rates--and all the better since mortgage interest is front-ended.

My fingers are firmly crossed!

Introvert said...

I like how the owners here are rejoicing, while the renters/cash hoarders/doomsayers are muttering quietly to themselves...

Dave said...

Welcome to Japan's experience of low inflation for the next twenty years. Low rates equal lost decades.

koozdra said...

I don't think anybody was expecting a rate hike.

totoro victoria said...

I agree there will be no additional impetus to buy and this may exert some downward pressure BUT a rate hike would be way more detrimental (or positive for those waiting with cash to buy) to prices.

In addition, I think folks are worried about rate hikes and news that this is unlikely from a credible source will have an impact. So, I'm taking 4% off my drop prediction.

Introvert said...

I don't know about you, but I'm lovin' these massive, dramatic, unprecedented, emergency interest rates.

Introvert said...

The following is a Public Service Announcement:

If you're a responsible, diligent, financially secure person who wishes to purchase an historically appreciating asset that also serves as a place to live, now is probably an OK time to borrow to make that a reality.

a simple man said...

"I like how the owners here are rejoicing, while the renters/cash hoarders/doomsayers are muttering quietly to themselves..."

Do you really like it? Strange.

The only reason I don;t like it is because it will encourage those who should not be borrowing more to do so.

Introvert said...

The only reason I don;t like it is because it will encourage those who should not be borrowing more to do so.

I understand that sentiment. However, it's the right policy for the economic environment.

And aren't house prices slowly declining all across Canada (except for Calgary)? The reverse-wealth effect of that should dissuade the majority from further substantial borrowing.

caveat emptor said...

"any hike would be further away than previously thought"

hello Garth - no rate hike in Oct 2013!

dasmo said...

This is why the put in the restrictions. They are planning on keeping rates low but want to prevent further over borrowing. Personally I think it should stay at 25 years max and 5% down.

a simple man said...

@Introvert - I agree it is the right policy at this time as they downgraded the economic forecast for the next year.

Predictions are a difficult game.

DavidL said...

@Al + TOH
We are with TD waterhouse (self-direct discount brokerage), setup to get emails whenever there is new issue on Prefs and Bonds with rating BBB and above.

Thanks for the tip ... I have a discount brokerage with TD Waterhouse as well. I will have to investigate how to set up these email alerts.

reasonfirst said...

Declining house prices and low interest rates - how could a bear not be happy?

reasonfirst said...

a bear looking to buy (no rush) that is

Marko said...

This is why the put in the restrictions. They are planning on keeping rates low but want to prevent further over borrowing. Personally I think it should stay at 25 years max and 5% down.

Now is not the time but when things stabilize in years to come they really need to go 25 years max and 10% down in my opinion. Ideally I would like to see 25 years and 15% but politically that would be a disaster for the party pushing it through.

Marko said...

I think right now (as in over the next year) is a good time to buy not because we've hit bottom (I wouldn't know) but because I've always felt that buying the right property is more important than timing the market (to an extent).

Right now rates are very low, inventory is large, and sales are pathetic. The perfect time to take your time, not to rush into anything and to buy a home one can easily afford.

Sure, you could try timing the market; however, you will only know bottom when it starts going up. For example, if it drops another 5% and starts going back up you'll be paying a little less but prices will be going up because inventory is low and sales have picked up increasing the odds of rushing into something that is not ideal.

Believe it or not, some of the stupidest buys I've seen occurred in 2005/2006 before the market peak as some buyers did not exercise rationale decision making during a period of low inventory.

Also as we’ve seen on this blog, some that bought in 2006 and sold recently made a large return and some lost their shirt.

Right property > Market timing.

We this latest news it looks like the final wave of those who bought at the peak in 2008 will be re-negotiating lower mortgage rates this year. If rates had gone up those that bought 2006-2008 would be feeling some pain right now.

Sure there are some that are feeling the pain anyway, but not because of interest rates. Likely, lack of financial discipline or unlucky person circumstances.

koozdra said...

"Right property > Market timing."

This advice would not have done anyone any favours in the US in 2005. Calling a market bottom is easy. When the phrase "stop throwing your money away on rent" turns into "stop throwing your money away and rent", it is time to buy.

info said...

"I like how the owners here are rejoicing, while the renters/cash hoarders/doomsayers are muttering quietly to themselves..."

I like how people like you constantly use words like "hoarders" and "doomsayers" to describe those who are responsible with their money and personal finances in general.

What else can we really expect from Introvert? He can't argue with logic and fact. There is nothing out there that suggests that house prices will not decline dramatically over the next number of years. Name calling is all he has right now.

Marko said...

Calling a market bottom is easy.

If can call the market bottom then you should definitely not buy until such bottom. Start looking for a home 2-3 months before it bottoms out so you have time to find the right property.

totoro victoria said...

Calling bottom is not easy and bottom may not match your age and stage of life.

Introvert said...

I like how people like you constantly use words like "hoarders" and "doomsayers" to describe those who are responsible with their money and personal finances in general.

Sorry, but it's not as simple as you always make it out to be.

Why don't you stop addressing me directly and go back to your general public service announcements that everyone loves so much.

Name calling is all he has right now.

No, I have other things, too.

koozdra said...

"not match your age and stage of life"

My stage in life screams BUY NOW!! However I suffer from the disease of financial prudence.

info said...

Continued emergency interest rates will not stop the major housing correction that has already started in Victoria and the rest of Canada. The US lowered interest rates from 5-6% to 2-3% in the middle of their crash and the market continued to crash for another 2-3 years after that.

Renters, you have every reason to be happy right now as house prices in Victoria have declined over the past 2.5 years. That decline has only started and has a long way to go before there will be any sort of bottom.

Here is what you have accomplished by not buying at the peak of the bubble (2.5 years ago). House prices are down about 15% from peak. The average house price at peak was about $650,000.00. That means you have already saved $98,000.00. It also means you have pocketed $108.00 per day, every day, over the past 2.5 years.

Normally you end up paying 2 - 2.75 times the purchase price of your property by the time you are done paying off your mortgage. That means you have actually pocketed about $270.00 per day by not buying at the peak.

You must feel very good right now.

On the other hand, those who bought at the peak (mortgage holders) have lost about $270.00 per day every day since they bought. Those who bought a decade ago and didn't sell at the peak have seen the value of their property decline $107.00 per day, every day, over the past 2.5 years.

The current housing correction in Victoria will take years to play out. Renters will continue to line their pockets. Mortgage holders, not so much.

StalJ said...

The bottom will be when Marko, intro, dasmo, toto, et cet, all finally sell and openly say "you are crazy to be looking to buy proeprty". It is the same idea as Apple co. shares. It has a religion/cult following around the world just like real estate does in canada. It will be years before it finally bottoms.

totoro victoria said...

Did you just call me toto? Your name is on the list StatJ.

I have no plans to sell my Okanagan place or primary residence in Victoria - ever.

Both will be left to my family after I pass and are for their use while I am alive.

I will sell one place in 8-10 years if the market is as high or higher than it is today.

Even if prices fall 50% I'll still own - why sell if you are cash flow positive and gonna lose equity if you do?

dasmo said...

The bottom will be when I buy another property....

Happy camper said...

Marko said: Right now rates are very low, inventory is large, and sales are pathetic.

The inventory isn't large for my area of interest and my price range. Maybe for those who spend more on housing then I do? I really think there is a loss of perspective on what housing should cost. I don't see the value yet.

Marko said...

I really think there is a loss of perspective on what housing should cost.

When I hold an open house on a 2,000 sq./ft. two level home above grade and young families ask me where the basement/media room is I think perspective is somewhat lost as well.

I know where you are coming from, we've be desensitized to very high prices. If a house dropped from 600k to 500k it still wouldn't be cheap. If you step back that would still be half a million dollars. A huge figure.

a simple man said...

I think it is best top always think of Victoria housing in "millions".

For example, that house is three-quarters of a million dollars!

Introvert said...

The bottom will be when Marko, intro, dasmo, toto, et cet, all finally sell...

Well, in my case it could be a while before that happens...

And why, exactly, would I want to turn a paper loss--PAPER LOSS--into an actual one?

No, I plan to live in my house, which I chose with deliberate care, for the next 25-30 years. I'm not interested in vacillating between owning and renting in an attempt to periodically make a quick buck; I'm interested in staying put, enjoying the stability that living in one place for a quarter century can provide, and perhaps making a "slow" buck, with any luck.

caveat emptor said...

"Calling a market bottom is easy"

That's why everyone was plowing money into equities in late 2008 early 2009!

With more than a bit of luck I invested a fairly modest amount of money in an SP500 index fund on March 9, 2009 the very day the index hit its recent low. At the time it DID NOT feel like a sure thing, in fact it was really tough to do

I think it is only obvious after the fact

dasmo said...

"That's why everyone was plowing money into equities in late 2008 early 2009!" I did. The 50% off sale was pretty obvious to me. Then again I'm not the bunker building type....

Happy camper said...

Introvert said: No, I plan to live in my house, which I chose with deliberate care, for the next 25-30 years.

Well Introvert - you sound really boring.

mrmike said...

The bulk of the inventory is sh!t and "sh!t adds up at the bottom". With rates this low and prices down IMHO you would be foolish not buying in this current climate.

I have no vested interest in RE what so ever, But I often wonder don't any of you bears have wives to appease, children to raise, lives to live?...just how long are you gonna sit on that fence?

I bought in the last trough, Pre-Y2K, You imagine if I'd said "no sweetie"...we need to wait!
I'd still be shaking my fist!

My balls were a bit bigger then, I was 24 and 230K at 7% was a big mofo payment at the time...but it worked out. Life is a risk.

No crash coming, keep waiting for that and you'll be lucky to buy in Mill Bay.***laughs at you oak bay doomers***

These low rates are a gift, you snooze you lose. Turn off the internet...snap out of it, and get on with life before it passes you by!

Also, I think rates will be held low until 2017 And I think 30-35 yr CMHC covered mortgages will be re-introduced for young qualified borrowers.

Paying down a mortgage has Never been easier...and you can paint your walls, even knock em down!

koozdra said...

"No crash coming, keep waiting for that and you'll be lucky to buy in Mill Bay.***laughs at you oak bay doomers***"

Are you sure?

mrmike said...

Are you?

mrmike said...

People will just stay in their homes as meant be and hammer down the mortgage with these ultra low rates well everyone else...doesn't.

koozdra said...

"These low rates are a gift, you snooze you lose. Turn off the internet...snap out of it, and get on with life before it passes you by!"

If you rent you aren't living?

Low rates are a stimulus measure to keep our economy afloat. Economic growth based on consumer personal debt. When the consumer stops borrowing, the house of cards falls apart.

"Also, I think rates will be held low until 2017 And I think 30-35 yr CMHC covered mortgages will be re-introduced for young qualified borrowers."

All this personal debt is actually a bad thing, believe it or not.

The whole purpose of the restrictive actions the government has taken are to limit debt growth.



There is one alternative you aren't considering. A severe decline in real estate prices. When prices come down to a more affordable level, people will start buying again. Well, with a national 70% home ownership rate, we'll see who is left.

koozdra said...

"People will just stay in their homes as meant be and hammer down the mortgage with these ultra low rates well everyone else...doesn't."

Just like they did the states.

mrmike said...

You could wipe 75% equity from my home and I would be unscathed. Why?
Because I didn't listen to guys like you.

koozdra said...

"You could wipe 75% equity from my home and I would be unscathed. Why?
Because I didn't listen to guys like you."

Why is everybody coming here to say this in the last couple of days?

I believe you.

Unfortunately you aren't everybody. You are you. If we examine the behaviour of the masses, we can predict the way people will behave based on previous situations that are like this one. We don't really have to go far to see how these kinds of things unravel.

mrmike said...

I also believe mortgage debt is NOT personal debt...you gotta live somewhere, pay rent to the Man, pay rent to the Bank. Still out of pocket regardless!

Leo S said...

Hi MrMike. Are going to have a debate on both forums or are you not Mike K?

I have no vested interest in RE what so ever, But I often wonder don't any of you bears have wives to appease

Yes, and my wife also doesn't want to spend half a million on a fixer upper.

children to raise

Not quite yet, but you might be surprised that kids don't give a damn about whether you rent or own a house. I can see that when they start school you might want some more stability, but for us that's 5 years away.

lives to live?

Name one thing that renting would prevent you from doing. I can name quite a few things that owning would complicate (e.g. extended travels, moving easily for work)

...just how long are you gonna sit on that fence?

Current plan: about another 10-12 months. Based on my current theory, prices should drop more significantly this year. If they do, great, we will buy for cheaper. If they don't, then I will turn into a halibut and buy anyway.

I bought in the last trough, Pre-Y2K, You imagine if I'd said "no sweetie"...we need to wait!
I'd still be shaking my fist!


Surely you understand the difference between the late 90s and now?

Also, I think rates will be held low until 2017

Wouldn't be surprised.

30-35 yr CMHC covered mortgages will be re-introduced for young qualified borrowers.

Extremely unlikely.

Paying down a mortgage has Never been easier

Provably wrong. Paying off a mortgage has been significantly easier from 1996-2004, 1983-1989, and several years before 1980. Looking at only interest rates is missing half the picture.

patriotz said...

But I often wonder don't any of you bears have wives to appease, children to raise, lives to live?

Like we're living in our cars or something?

Has it occurred to you that the reason some of us rent is that it allows us to afford better accommodation than if we bought?

mrmike said...

Well, looks like I'm in the bear trap tonight....WHeeeeeeee!

Victoria said...

Mtg holders are doing the ChaCha down Douglas, all the way to the bank where they stop, shimmy once and then - laugh and pass by.

Low rates are GOOD for homeowners and I'm seriously glad for everyone paying the piper once (or twice or even 4 times) a month.

Revenue properties paying down mortgages? All sweetness and nectar!

Smart people get ahead in any market.

I know some real smarty-pants and I applaud them.

I also know some real 'gotta have it' types and boy-oh-boy is the paper loss they are feeling going to give them a massive paper cut when they are forced to reconcile things.

Home equity, while smokin' awesome, does NOT equal wealth unless you sell.



Just Jack said...

"have no vested interest in RE what so ever, But I often wonder don't any of you bears have wives to appease, children to raise, lives to live?...just how long are you gonna sit on that fence?"

I'm a wife that needs to be appeased. If Just Jack bought right now I'd kill him.

We have a child to raise and she couldn't care less if we live in a rental. She does love the life we have because we rent. Trips, activities, camps.

With the overpriced crap that's out there we'll fence sit for a long time if we have to. Heck, I'm even thinking of renting forever or buying a nice place on Pender Island with cash that we saved because of renting.

S2 (JJ's wife)

mrmike said...

@ LEO...unless your "Law Enforcement Officer" I wish to remain anonymous!

-500k is the new norm for quality.
-Kids do care.
-Living a Real life on your own property that you strive to make "pride of ownership" a cool thing!
-Good luck.
-Not much different...more money, but rates are in the basement MAN!
Only the weaklings will come down further. The real meat is still on the bone! If you want the real meat
-Me either.
-Highly likely.

Happy camper said...

Heaven forbid that someone ever call me boring. I just caught the tail end of a TV show called Living Abroad. It showed an American who purchased a flat in the centre of Paris. He had to have a physical including giving blood in order to obtain a mortgage that was over $200,000. It was tied to an insurance policy. This is mandatory according to the TV (a great source for all accurate information !). Anyway, the thing that I don't get is why an asset that is purchased using secured credit would have a life expectancy concern. You die, the bank gets their money by selling the house. Or, maybe their estate laws are different too?

koozdra said...

"500k is the new norm for quality."

I love that term. Except in bubble psychology it is technically referred to as "the new paradigm".

Bubble Psychology

mrmike said...

@patriotz. A guy over in Vancouver lives in a pretty cool van he converted and only pays $200 p/mo.
Living the dream!

Leo S said...

@ LEO...unless your "Law Enforcement Officer" I wish to remain anonymous!

Fine, but if you are Mike K from VV, I find it quite ironic that you heavily moderate that forum, but come here to troll.

-500k is the new norm for quality.

You obviously haven't seen any houses lately.

-Kids do care.

I guess if you've taught them to be superficial and shallow they might.

-Living a Real life

LOL. You should be in infomercials.

-Not much different...more money, but rates are in the basement MAN!

That's the difference between actual analysis and just winging it. Winging it gets you the wrong answer.

Happy camper said...

S2 may have blogged the first possible homicide. That's an interesting example of why some people have to sell in a down market!

mrmike said...

@jjwife.

wait until atleast 4yr old.
My 8yr old would cry.

Introvert said...

Introvert said: No, I plan to live in my house, which I chose with deliberate care, for the next 25-30 years.

Well Introvert - you sound really boring.


I am pretty boring. And I don't even feel bad about it.

Name one thing that renting would prevent you from doing.

Uh, feeling totally secure.

Hard to feel secure when the landlord can toss you out because he wants to renovate or sell the house.

I'm not saying that owning provides 100% security, because of course it doesn't. But please don't try to characterize renting as being risk- and worry-free.

Well, looks like I'm in the bear trap tonight....WHeeeeeeee!

Great feeling, isn't it, mrmike?

dasmo said...

@ Leo, sounds like a solid plan to me...

mrmike said...

@ leo."superficial and shallow"..Lol!
Try bringing your kid to grade 1 without an Ipad. THEN we'll see how "superficial and shallow" you become!

Home ownership IS VERY BIG to them!
ALONG with Pride of ownership.
They own that ROOM until WE say.

NO I'm not mikek...just another dude on these vast interweebz!

Introvert said...

-500k is the new norm for quality.

You obviously haven't seen any houses lately.


Houses in Victoria will be a lot closer to $500k than to $400k from now on, IMO.

mrmike said...

@ leo, "winging it".
WTF? Sizable land in common areas with a livable house at current rates and current prices.."winging it"?
Sorry dude...don't get your reasoning.

mrmike said...

How much do you pay for rent per/sqft Leos?

totoro victoria said...

Ahhhh... the chatter begins.

And quite relaxing that others are talking and walking the talk.

"Name one thing that renting would prevent you from doing."

1. Adding a sunroom...

well, okay, since you started it:

2. Renovating the kitchen exactly the way I want it.
3. Renting to others.
4. Installing irrigation.
5. Building an office into a double closet.
6. Living for free instead of paying rent.
7. Having a fabulous vacation home that more than pays for itself.
8. Planting fruit trees.
9. Not worrying about having to move.
10. Having Leo in residence in the crawl space.

Introvert said...

Chek News video clip: "Victoria is severely unaffordable"

I like how, according to Demographia's standard, the only "affordable" detached SFH in Greater Victoria is a tiny dilapidated cottage out in Sooke.

Introvert said...

10. Having Leo in residence in the crawl space.

Ha! It's amazing what some people will do to save a buck!

a simple man said...

We have owned a few houses, in the city and rural. And we have rented a few houses. My kids (numerous) don't care about the houses one bit.

What they do care about is whether their parents are stressed and have time for them.

The quality of life that I have had renting in Victoria has been the best I have experienced in all my houses, rent or own.

totoro victoria said...

I would actually agree that parents' stress level is waay more important than rent vs. own.

Location is probably also more important for my kids than rent vs. own.

Overall though, I think owning brings some perceived security benefit and my kids seem to like it quite a bit.

Introvert said...

Kermit the Frog: paragon of reason.

Leo S said...

Uh, feeling totally secure.

Hard to feel secure when the landlord can toss you out because he wants to renovate or sell the house.


The chances of that are about the same as you losing your job and being forced to leave Victoria and sell your house. Ie, slim to none. I'm not worried.

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

mrmike and Mike K from Vibrant Victoria are not the same person, although I am sure both a super nice guys :)

Leo S said...

@ leo."superficial and shallow"..Lol!
Try bringing your kid to grade 1 without an Ipad. THEN we'll see how "superficial and shallow" you become!


Thanks for proving my point better than I ever could.

NO I'm not mikek...just another dude on these vast interweebz!

In that case it's funny that you came here before stressing out about your failed attempt to sell your house and looking for advice, and now you're back to troll.

WTF? Sizable land in common areas with a livable house at current rates and current prices.."winging it"?
Sorry dude...don't get your reasoning.


You said interest rates are low, and "Paying down a mortgage has Never been easier". Obviously this is just plain wrong. Interest rates are low, but prices are high. The combination means there have been plenty of times in the past when it was much easier to pay off your mortgage.
That's not even getting into pre-payments, which accelerate your mortgage much faster at higher rates.

How much do you pay for rent per/sqft Leos?

$1.03

Leo S said...

@totoro. I can't say it's my dream to spend my leisure time being an unpaid labourer or an amateur landlord, but hey, whatever your floats your boat.

Leo S said...

mrmike and Mike K from Vibrant Victoria are not the same person

Yes, in retrospect that makes sense. Mike K is very reasonable.

totoro victoria said...

"unpaid labourer or an amateur landlord"
are you calling me names?... because I like it :)

unpaid labourer: really? i make a very good hourly wage and pay for skilled labour as needed. really, the only labour i'm qualified for is unskilled. hey, i'll take it over a gym membership. mindset is everything. i find most improvements very satisfying (albeit frustratingly longer than expected)

amateur landlord: really? what is the difference between amateur and professional landlord?

mrmike said...

@ Leo "Thanks for proving my point better than I ever could."

So you guys going to send them with a note pad? It is what it is.

"In that case it's funny that you came here before stressing out about your failed attempt to sell your house and looking for advice, and now you're back to troll".

Not a troll dude, was a shark testing the waters...I was the one that declined the offer. I didn't fail.

And We're never selling.
We cancelled that listing and had the best night of our lives!

We had a good offer, and I think about it everyday.
I made the right choice.

Axis said...

The best night of my life (so far) was in a village of 200 on a mountain top in Nepal. Course back then I was young and foolish and didn't know you couldn't 'live the life' if you rented.

caveat emptor said...

Know several kids in both public and private school that have made it I-pad-less far as grade 6 without obvious emotional scars. And the lack of I-pad was uncorrelated with renting vs owning or parental income for that matter.

The idea of young kids caring about rent vs. own is a bit ridiculous frankly. So far my 3 year old is displaying few signs of the pride of ownership, nor does he diss the offspring of local renters.

Introvert said...

... nor does he diss the offspring of local renters.

Give him time. ;)

patriotz said...

I think owning brings some perceived security benefit

"Perceived" is correct. There is no economic security benefit. If you have a paid for house you're secure of course, but that's a benefit of wealth not home ownership. A renter with the same amount of money in the bank is actually more secure.

In economic terms a home "owner" with a substantial mortgage is much less secure than a renter.

Having to move in a rental market with lots of vacancies (e.g. Victoria) is not an economic risk. Whether it's an emotional risk depends on you.

totoro victoria said...

There is nothing wrong with renting. Doesn't matter if it is by choice or because you have not yet saved enough for a down payment. Shelter is a basic need.

I've rented. I prefer owning because I'm bent that way but I have no issue with others renting.

My guess is that some kids take on the attitude of their parents somewhat re. owning. Not when they are really young but by about ten or so. If you don't mind they won't. If you have some psychological satisfaction with owning or renting, they probably will feel it too.

As far as perceived benefit of owning goes - we are emotional creatures. The economic benefit is real when you look at the long-term (and in my case, the short-term as well) and the benefits of owning which I've already listed are also real in the short-term.

Security is not just an economic concept, it is a psychological one. Whatever fits your views and values.

Finally, am I the only one that thinks giving kids an ipad is not the best thing to do?

patriotz said...

The economic benefit is real when you look at the long-term (and in my case, the short-term as well)

It's real enough when you look at someone who bought at a much lower price years ago.

For someone who buys at today's prices, the benefit can only be estimated going forward, and it doesn't look good to me.

It's an objective fact that many people who bought in Victoria in recent years and have sold later (for whatever reason) have lost money.

Leo S said...

amateur landlord: really? what is the difference between amateur and professional landlord?

The professional does it full time, the amateur does it on the side. On the plus side you get to attend the olympics.

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