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.
February 2013 month to date (previous weeks in brackets)
Net Unconditional Sales: 121 (19)
New Listings: 405 (104)
Active Listings: 3886 (3786)
Sales to new listings ratio: 30% (18%)
February 2012
Net Unconditional Sales: 497
New Listings: 1318
Active Listings: 3977
Sales to new listings ratio: 38%
Sales to active listings ratio: 12% or 8.0 MOI
Publishing this prematurely given the volume of comments in previous post, thanks Leo for putting the draft together. One of us will update the numbers tomorrow once they're known.
In the meantime, how about a game to predict the weekly sales volume? Enter your guess in comments, all guesses will count until Marko updates us with the actual numbers. Winner gets to brag endlessly here and elsewhere until the end of time--sorry, no real prize here other than the undying admiration of your HHV blog peers. ~ HHV
Leo edit: Koozdra takes the prize with a guess of 80 and actual sales of 102. We all guessed low, but last year at the same time we were on a sales pace of 22/business day, while we're tracking 20 right now, so still down. New listings rate is slightly behind last year (67 to 69 per business day).
Publishing this prematurely given the volume of comments in previous post, thanks Leo for putting the draft together. One of us will update the numbers tomorrow once they're known.
In the meantime, how about a game to predict the weekly sales volume? Enter your guess in comments, all guesses will count until Marko updates us with the actual numbers. Winner gets to brag endlessly here and elsewhere until the end of time--sorry, no real prize here other than the undying admiration of your HHV blog peers. ~ HHV
Leo edit: Koozdra takes the prize with a guess of 80 and actual sales of 102. We all guessed low, but last year at the same time we were on a sales pace of 22/business day, while we're tracking 20 right now, so still down. New listings rate is slightly behind last year (67 to 69 per business day).
204 comments:
1 – 200 of 204 Newer› Newest»67
80
120
72
Marko, Can you tell me if 8993 Marshall rd sold or was taken off the market? If it was sold how much? It was on MLS a couple of months ago and I'm curious what happened to it. Thanks!
Also, can someone tell me do PCS accounts indicate if a house is sold vs taken off market? If it does I'll set one up and can stop bothering Marko.
I will be moving from Victoria to Montreal in March. This blog has been tremendously valuable in pointing me to specific information on real estate trends and statistics on the west coast, but there seems to be little information regarding Montreal. Is it as bad in Montreal (notably Westmount, Outremont, and the Plateau) as in Toronto and Vancouver/Victoria? Any web sites I should follow to keep track of the trend in Montreal?
Here is an article about the Montreal market.
I will be moving from Victoria to Montreal in March. This blog has been tremendously valuable in pointing me to specific information on real estate trends and statistics on the west coast, but there seems to be little information regarding Montreal. Is it as bad in Montreal (notably Westmount, Outremont, and the Plateau) as in Toronto and Vancouver/Victoria? Any web sites I should follow to keep track of the trend in Montreal?
Thanks Koozdra, most useful!
Thanks HHV. I guess 75, which would make it 94 so far this month.
Also, can someone tell me do PCS accounts indicate if a house is sold vs taken off market? If it does I'll set one up and can stop bothering Marko.
Yes, it tells you. The PCS system is a bit more informative than Matrix, but either will tell you the sale price, and whether it was taken OM.
62 new sales for the past week, for a total of 81 for this month so far.
Who will go the highest?
http://i.imgur.com/KRSbVhk.jpg
8993 Marshall...listing expired.
78 sales this past week, for a total of 97.
Tuesday February 12 2013 8:15am
MTD February
2013 2012
Net Unconditional Sales: 121 497
New Listings: 405 1,318
Active Listings: 3,886 3,977
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
We're all terrible guessers. :)
I'm quite pleased that sales are higher than expected. I have a relative that must soon sell, and I expect higher volumes allow for higher prices.
are the PCS and Matrix systems only available to realtors...I'd also like to be able to track selling prices without calling my agent every time..is there another way??
Well, sales are higher than our bad guesses, but still down from last year. We've got 20 sales/business day while last Feb was 22 (based on the update from Feb 13, 2012)
I'd also like to be able to track selling prices without calling my agent every time..is there another way??
If your agent hasn't already set you up with one, fire them and find another :) Tons of agents will set you up no obligations with the criteria you want.
"Construction and the FIRE industries (finance, insurance, and real estate services) collectively account for more than 27 per cent of Canadian gross domestic product. (The U.S. peaked at 24 per cent.) The growth in these industries during the current housing boom is quite striking."
...
"There are 1.3 million individuals employed directly by the construction industry. This represents roughly 7.3 per cent of all jobs in Canada. This is well above the historical average. To realign with the long-term average share of total employment, the number of Canadians employed in construction would need to fall by more than 200,000."
http://www.theglobeandmail.com/report-on-business/economy/economy-lab/why-a-soft-landing-for-housing-could-still-hurt-the-economy/article8466015/
Oooh... You caught me making an error, Introvert! Now is that worth a silver star or any gold star next to your name? Oh, but if you did that - it would be rather extrovert of you...
Sorry for picking on you, DavidL. You're not the only one who misspells his name.
Marko's probably too polite to correct anyone; but I'm not!
:)
DavidL, seem like the grammar Head Master is searching for a new whipping boy.
http://www.youtube.com/watch?v=c3y0CD2CoCs
Haha, love the mitchell and web look.
And the comments grind to a halt...
I miss totoro.
Here's a comment:
Speaking of being a good landlord, does anyone have any tips of things to look for as a renter when finding a place?
Some of you will probably read this and think, 'Ha! what an idiot that stuff is obvious!' but here it is anyway.
In our case, looking back on the 2 times we viewed our current place, there were some warning signs: the landlord seemed super laid back (which at the time were liked), there were a couple of kitchen cabinet doors whose facing had cracked (we didn't think it was a big deal; landlord said they'd be replaced), the curtains and curtain rods were a bit shabby (we planned on buying our own anyway), the bathroom was dated (the landlord said she wanted to redo it, but had just installed new windows and done the drain tile - but basically hinted it would be done within a year), and there was an odd line cut into the concrete of the front step (we didn't ask).
Turns out all the little oddities + the laid back landlord has resulted in it taking forever to get things addressed (kitchen cabinets), or not being addressed at all (bathroom - which is terrible in practice, way worse than it looks). That line in the front step is because when it rains the gutter leaks at that corner and water puddles there. To some extent were were swayed by the fact that the place was in a nice neighbourhood, had a great looking back yard, and was almost twice as large as the place we left.
I didn't think requesting copies of the previous hydro bills was an absolute must, but after this place costing us $350 for November and December and the landlord having said it would be about $100-150, that's going on our list of things to look for.
We did do an inspection together, but again, the laid back attitude resulted in us just standing in the kitchen and her writing average for just about everything ('poor' for the bathroom). I realize now we should have insisted on physically going around and looking very closely at everything. For one thing it turns out the previous tenant didn't clean the baseboards or window sills which we got stuck doing.
I guess if there's anything else to be learned from our experience it's that a landlord can be nice and friendly and still be a bad landlord that completely frustrates you as a tenant.
Dave3
"last year at the same time we were on a sales pace of 22/business day, while we're tracking 20 right now, so still down."
It's hard to believe there is anyone who would want to buy right now - who are they? With all the negative news out there, I have to wonder why anyone would want to jump in today - Why not wait and see what happens? Maybe by waiting, they could save $$$$$'s. I don't think anyone believes prices will go up in the immediate future. So, why not have a little patience and hold off.
Dave, isn't it horrible when you trust that someone is honest with good standards, and that back fires on you? Happens to me all the time! :(
(sorry, previous post deleted to repost with proper grammar...)
(sorry, previous post deleted to repost with proper grammar...)
:)
It's hard to believe there is anyone who would want to buy right now - who are they? With all the negative news out there, I have to wonder why anyone would want to jump in today
Hard to believe anyone wanted to buy into the dow jones when it fell below 7,000....but a few people did.
Obviously, two way different things but the for the most part when the news is the worst it might not be a bad time to buy.
When you look at some of the worst years in real estate in Victoria in terms of median price and average the volume is down too. 2000 was arguably the best time to buy a home in the last 25 years and it was also the lowest sales volume in the last 25 years.
The 4 month stretch in 2009 from January to April when prices dropped sales volume was also weak.
I would like to write an anecdote about just how ignorant some people can be.
I was at a family dinner during the time of the swine flu stuff in 2009. A girl came and her mom said "wash your hands or you'll get swine flu". Her response was "what's swine flu".
Remember there are people out there that only watch reality television and listen to commercial indoctrinated radio. They read the sports section and use the economics section to change the oil in their truck.
Who is buying? The really ignorant and the bulls that think there is an opportunity. They think that Victoria is rock solid and will never go down. They are in for a big surprise.
@Marko
I would agree that now is a better time to buy than two years ago. I also think that it will be a much better time to buy in two years from now.
@SJ
I could not recommend to anyone that now is a good time for a first-time buyer to purchase real estate. However, sometimes there are circumstances when someone is moving across or even up the market in which case it children make sense to buy. For example, I have elderly parents and inlaws that are needing to downsize (partly financial, party mobility issues). We are considering buying a larger house with a suite to help accommodate them. (I'm a member of the "sandwich generation".) In this case, moving across a market may make sense.
What I'm seeing in my VREBMatrix and PCS are a lot of houses in the $600 to $800K being sold while at the bottom end of the market (starter homes) you can hear the crickets chirping.
When you look at some of the worst years in real estate in Victoria in terms of median price and average the volume is down too. 2000 was arguably the best time to buy a home in the last 25 years and it was also the lowest sales volume in the last 25 years.
Yes, but that's not the only low point. As you said, 2000 was a low year for sales. In fact if you look down to the monthly level, the low was in July 2000 at 4678 sales in the past 12 months.
However there is a lower point: In the 12 months ending in June 1995 there were only 4486 sales. That was 1 year after prices had peaked and were starting downwards.
I think there is a vastly higher chance we are at that June 1995 point than at another 2000. There is no reason to fear that we are at a price low point.
Signs of a starting spring market? 851 Pendene Pl sells for $6000 over asking. Of course that's still $5000 less than the original ask 60 days ago, and $45,000 under assessment (which dropped 13,000 from last year)
@marko
"Hard to believe anyone wanted to buy into the dow jones when it fell below 7,000....but a few people did."
They will want to buy dem homes too ;) once they fall from their P/E=30 to a sane 10-15 like the dow did.
Congrats LeoS
However there is a lower point: In the 12 months ending in June 1995 there were only 4486 sales. That was 1 year after prices had peaked and were starting downwards.
1995 was still a much better time to buy than a few years earlier or 8-15 years later. Also no benefit if you waited until 1997-2001.
Signs of a starting spring market? 851 Pendene Pl sells for $6000 over asking. Of course that's still $5000 less than the original ask 60 days ago, and $45,000 under assessment (which dropped 13,000 from last year)
$425,000 will be a support level in my opinion in the core. I have a few first time buyers right now with over 500k to spend but they want to go 425k to save $6,500 on PTT. In 2012 I was the buyer's REALTOR® on 5 properties the sold between $421,000 and $425,000. 4 were first time buyers and first time buyers on average are 20-25% of my business.
For a couple with two common Victoria jobs, $85,000 down, a mortgage of $340,000 at 2.99% isn't too far of a financial stretch.
As in common I mean professional common jobs (government, navy, uvic, viha, etc.)
but why buy when there is a good chance it will be $50,000 less in a year?
I can afford to buy regular price at the gap and lulu lemon, but I never do.
"NEW PRICE. Down almost $90,000 from original list price"
Why not list at 12 million then drop your price to 749.
The listing could then read:
"Amazing opportunity, only a fraction of the original list price"
Oh and btw, it's still 5 thousand above assessed.
http://www.realtor.ca/propertyDetails.aspx?propertyId=12594070&PidKey=-1980963357
Life is tough if you're trying to sell an entry level home or an upper income property. It's also tough if your property is further from the center of the city - like in Saanich West or View Royal.
That has put the overall marketplace out of balance. Where you have a nice home on 5 level acres of Metchosin forage land selling for less than a tarted up 1940's home in Fernwood.
But that's what happens when the number of buyers evaporates. The buyers become concentrated in the same market segment in the same geographical area. They all seem to be looking to buy the same property in the same hood and keeping those prices high.
That's good news if you're a seller in one of those niche markets and want acreage or waterfront and no longer have to or don't mine having to commute. Absolutely fantastic opportunities are present because of this inbalance.
But alas, most of us are stuck on the same goal of living in the city or finding that rental property with potential. Because of this we have become frustrated at the minimal decline in prices in the properties we want. Maybe we should look at our lifestyle and ask ourselves "Do I really want the same thing as everyone else? Or am I following everyone else and hoping they know what they're doing?"
Because when I dream of retirement, I don't imagine a home in Fernwood - I imagine 5 shady acres beside a river to kayak and fish on.
These inbalances do not last forever, they only occur at the beginning of a down cycle in real estate. Eventually, city prices will come down and the market will be balanced once more.
http://www.youtube.com/watch?v=0MzfDcAUkb8
Carney sees 'considerable' slack in labour market
Bank of Canada Governor Mark Carney says the slack in Canada's labour market is "considerable," reinforcing a widely held view that the central bank will keep interest rates low to stoke economic growth.
Victoria's prices may be declining, but interest rates have nothing to do with that decline--and it looks like they won't for at least the next few years.
This is good news for mortgage-holders, and for first-time home buyers who bought in the last five years.
inbalance, inbalances
imbalance
Victoria's prices may be declining, but interest rates have nothing to do with that decline--and it looks like they won't for at least the next few years.
Because some retiring banker says there's slack in the labour market?
LOL.
What really is the point of such vacuous predictions about "the next few years."
Central bankers will go on trying to promote employment by printing money to keep interest rates low until they think of something else, which could happen well within the "next few years."
The fact that you predict that zero interest policies will continue for the "next few years" implies that the policy, as a means of stimulating employment, doesn't work, from which it follows that something else may soon be tried: like giving money to people instead of bankers, and idea that is under active consideration. The result would be to restore interest rates to something like normal.
That has put the overall marketplace out of balance. Where you have a nice home on 5 level acres of Metchosin forage land selling for less than a tarted up 1940's home in Fernwood.
... The buyers become concentrated in the same market segment in the same geographical area. They all seem to be looking to buy the same property in the same hood and keeping those prices high.
Or, couldn't it be that more people want to live in Fernwood than on a larger property in Metchosin?
And really, should this surprise us?
I'm not quite sure that your "balance" argument makes any sense.
Same goes for your now-familiar Sooke/Gulf Islands comparisons to Greater Victoria: the vast majority of buyers do not regard living in Sooke or on one of the Gulf Islands versus living in the core as a toss up.
Fernwood... the next Oak Bay.
Well Introvert, the feds have only saved home owners by duct taping the Sword of Damocles over their heads. I can understand why first time buyers are shying from the market, none of these government policies are solving the problem. A promise not to raise interest rates on an extremely expensive item. It would be impossible for half of new home buyers to paydown the mortgage faster to compensate for any increase in the mortgage rate. I say that because those that used their RRSP's for a down payment only half have been paying it back.
There is only one direction for the market to go, some times you get a reprieve.
http://www.youtube.com/watch?feature=player_detailpage&v=eVBPGZEVRH0
Because some retiring banker says there's slack in the labour market?
Actually, there are many signs that interest rates will stay very low for the next few years. Obviously.
... from which it follows that something else may soon be tried: like giving money to people instead of bankers, and idea that is under active consideration. The result would be to restore interest rates to something like normal.
Aren't you living in a dreamworld...
What, governments are toying with the idea of cutting people cheques in an effort to stimulate the economy? Never heard that before. Please provide some sources.
Also, were that to happen, I bet it wouldn't have the intended effect: people would probably use the money to pay down debt more than anything, thus no economic stimulation.
I can see that you're hoping hard for "normal" interest rates, but very low rates might be the new "normal" for a while.
"Actually, there are many signs that interest rates will stay very low for the next few years. Obviously."
Are you still under the impression that the government is in full control of mortgage rates?
Are you still under the impression that the government is in full control of mortgage rates?
Not full control. But more than enough control.
Introvert, it's a marketplace.
All real estate is intertwined. The strongest being connected in your general commuting area. Then more widely such as province wide.
Some areas or types of homes lag the market and make your assumption temporarily correct. Yet the market is always adjusting in attempt to balance prices relative to neighborhoods and types of homes. That's why it isn't always smart to follow the herd. But it may be to someones advantage to find out what the market is doing - then do the opposite.
Your personal bias for city living doesn't negate that there are imbalances in the marketplace.
I say that because those that used their RRSP's for a down payment only half have been paying it back.
Don't they have 15 years to pay it back?
Pardon any typos - I miss my Firefox.
Yes, they have 15 years to pay back. But they have to make installments each year or the installment is added to their taxable income. Pay back $3,000 to the RRSP or pay another thousand dollars in taxes each year.
All real estate is intertwined. The strongest being connected in your general commuting area. Then more widely such as province wide.
So house prices in Fort St. John are connected, in some small way, to prices in Victoria? Please explain that connection for me.
Pay back $3,000 to the RRSP or pay another thousand dollars in taxes each year.
If you don’t repay 1/15 of the borrowed amount each year, you'll have to add the amount as income.
Most people didn't have $45,000 in their RRSP, so the payback wouldn't be that onerous.
Fort St. John has oil, natural gas and agriculture. A weakness in these markets has an effect on the economy of BC. That has an effect on prices in Victoria.
As I wrote, the strongest bonds are usually local.
If OPEC slashed their prices would that have an effect on Alberta's housing market!?
Still - half are not paying it back. Onerous or not.
I am trying to educate myself as much as I can about this housing market, occasionally from MSM, but mainly from different sources, like HHV and other blogs. Even Garth - yes, I read his blog every day and while I don’t always agree with him, I enjoy his sense of humour!
Today, in Garth’s post, he talks about the Home Buyers Plan – who knew? Well, I didn’t, but apparently, lots of people did. Two million sales have been associated with this plan. Taking up to $25,000 (each person) out of their RRSP’s to put towards a down payment for a house. His post focuses on the fact that a substantial amount of people are not repaying it back into their RRSP’s at the moment, which in the end will cost them more in income tax.
I am again surprised when I hear or read about yet another “tool” that has helped drive this housing market higher. How many of these incentives were or are still are out there? What next? Makes you wonder what Flaherty has up his sleeve. You can almost picture him sitting at his desk desperately trying to concoct another ingenious scheme to help ignite the housing market yet again. Or, will he be able to leave it alone and let it work itself out in its own sweet way.
What I wonder is: What were they thinking?
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2013/02/disappointing-new-stats-on-the-rrsp-home-buyers-plan.html
Did everybody miss this article when Leo posted it?
"CRA told us last Wednesday that almost one-half of HBP participants (47%) “paid less than the full required repayment amount in tax year 2011.” (2011 is the latest data available.2)"
I wrote this earlier - but I see Just Jack has already posted about the HBP!
The government cuts us all a check for $50K. If you have debt the cash must pay it down. If you are free and clear you can spend the extra cash to stimulate the economy or give it to your kids as a downpayment for a house...put cash in the hands of people has a much greater economic impact than government stimulus. That's the thinking anyway and is being promoted by and economist named Keen.
@ Koozdra
Yes, I missed it!
"ignite the housing market yet again"
Why would they change the rules in the first place then?
They don't want to reignite anything. The unsustainable housing market has become dangerous to our economy. They want it to slow down and prices to leave bubbly territory.
"The government cuts us all a check for $50K"
Why are we beating around the bush, lets just move to full blown communism.
Economist Steve Keen debunking economics on hard talk.
http://www.youtube.com/watch?v=SkesgECRXtM
Actually, there are many signs that interest rates will stay very low for the next few years. Obviously.
"Obviously"?
If that's your best argument you might as well abandon your position.
What, governments are toying with the idea of cutting people cheques in an effort to stimulate the economy?
Never heard that before. Please provide some sources.
I provided a reference here the other day. But you evidently pay no attention to anything that conflicts with your own view.
Here's another. http://itsoureconomy.us/2013/02/a-breakthrough-speech-on-monetary-policy/
I can see that you're hoping hard for "normal" interest rates
You can see a lot of things without any apparent reason that may not be so.
Fort St. John has oil, natural gas and agriculture. A weakness in these markets has an effect on the economy of BC. That has an effect on prices in Victoria.
No, you said that "All real estate is intertwined."
If this is true, then how are house prices in Fort St. John connected to house prices in Victoria?
I really enjoyed the Keen talk at the Canada Centre Of Policy Alternatives.
http://www.youtube.com/watch?v=HGA73-RB5kA
"The government cuts us all a check for $50K"
As you can see from the link I just provided, that's what's being considered. And it seems a better policy that printing money and giving to to the government to spend on our behalf, which is what the US government is doing now — at the rate of $89 billion a month.
Every dollar of government spending is counted as a dollar added to GDP, whereas we know that most dollars spent by the government, for example, on the apparatus of regulation and control, are wasted dollars. In fact a dollar spent by government is generally a dollar wasted twice: once when the government spends it and the second time through its negative effect on the citizen.
Capitalism does not work too well. It's a failed system and we should face it instead of perpetuating it. Look at what it's doing to our planet. While the reefs die we're running around like idiots trying to get rich. It brings out the worst in people. Greed and Fear. Time to change or die. And that's the good news...lol
how are house prices in Fort St. John connected to house prices in Victoria?
Why does someone who pontificates about the future of financial markets, need to ask?
If a downturn in the oil and gas industry is evident in a decline in house prices in Ft. St. John, then provincial government revenue is going to take a hit, which means the bureaucracy of which we have such a large part in Victoria, is likely to be squeezed, which will mean more redundancies or fewer hirings.
Every dollar of government spending is counted as a dollar added to GDP, whereas we know that most dollars spent by the government, for example, on the apparatus of regulation and control, are wasted dollars. In fact a dollar spent by government is generally a dollar wasted twice: once when the government spends it and the second time through its negative effect on the citizen.
Ladies and gentlemen, we are in esteemed company. Ayn Rand is here.
If house prices were decreasing in Fort St. John, one of the reasons would be a weakening BC economy. That's one tie between our two cities.
When cities share common ties such as Social, Political, Geograpical and Economic then what happens in one city will have an effect on the other city. These are the fundamentals of real estate value.
Capitalism does not work too well. It's a failed system and we should face it instead of perpetuating it.
Capitalism is the worst form of economic organization except for all the others that have been tried.
I'd prefer to take my chances in a capitalist market system than rely on the mercy of people like Barak Obama, the Assassin-In-Chief, or crazy create-your-own-reality socialists like Glenn Clark.
But there needs to be a framework of laws within which the market works and which provides protection for those unable to care for themselves. Read Adam Smith's The Nature and Causes of the Wealth of Nations and you will have a better idea of what sensible capitalists believe in, which is certainly not the global cartelization of industry which all western governments are encouraging today.
"weakening BC economy"
We are going to be rich from selling natural gas... soon.
Ladies and gentlemen, we are in esteemed company. Ayn Rand is here.
WTF is Ayn Rand?
Captitalism may be a flawed system -but it's the best one we have.
The BC government may be rich from natural gas exports - us - not so much. The government will still make its citizen's pay full market rates for what should be "our" resource.
We are going to be rich from selling natural gas... soon.
That's what BC has always been about. Extracting resources and flogging them in the international market.
What will all the anti-pipeline, anti-gas terminal, and anti-tanker socialists live on if the gas business no longer generates revenue?
"What will all the anti-pipeline, anti-gas terminal, and anti-tanker socialists live on if the gas business no longer generates revenue?"
BC has been surviving on housing related industries for a couple of years now. I hope there isn't a decline coming.
If a downturn in the oil and gas industry is evident in a decline in house prices in Ft. St. John, then provincial government revenue is going to take a hit, which means the bureaucracy of which we have such a large part in Victoria, is likely to be squeezed, which will mean more redundancies or fewer hirings.
Nice contortions. What a pretzel.
What's plain to see is that house prices in Fort St. John have no connection to house prices in Victoria.
How do I know? Because if prices decline in Victoria, they do not necessarily decline in Fort St. John. And vice versa.
Why don't you stick to grammar, Intro. You are better at that than at economics, that's for sure.
BC has been surviving on housing related industries for a couple of years now.
Good point. If the pipelines don't go through, all we'll need is some additional monetary stimulus to get housing back on track!
When cities share common ties such as Social, Political, Geograpical and Economic then what happens in one city will have an effect on the other city. These are the fundamentals of real estate value.
There are no significant social or political ties between Victoria and Fort St. John such that one city's house prices affect the other's.
Real estate in both cities is affected by political and economic decisions made by provincial and federal governments; however, this does not prove that house prices in Victoria affect house prices in Fort St. John, or vice versa.
If this were represented on a flow chart, there would be no arrow between Victoria and Fort St. John, just arrows between levels of government and Victoria and Fort St. John. That's the difference.
1995 was still a much better time to buy than a few years earlier or 8-15 years later. Also no benefit if you waited until 1997-2001.
That depends. If your rent was cheaper than ownership costs then it was a benefit to wait.
In any case, the market now is much weaker than it was back then. It would be a miracle if we get away with 5 years of flat market this time.
On the plus side a sharper decline will probably shorten the correction.
$425,000 will be a support level in my opinion in the core
I agree it will be tough to go much lower than that for a bungalow in good shape. Of course that means the places that aren't in good shape will be $325,000-350,000ish. The DINK professionals won't be buying those places, but there are tons of people that can't carry a $350,000 mortgage.
@ Koozdra
Here's one recent move by the Feds:
Ottawa has increased by $50-billion the amount of residential mortgages that it is willing to guarantee.
http://business.financialpost.com/2012/12/21/feds-ok-another-50-billion-of-mortgage-guarantees-for-private-sector-players/
Introvert, you picked Fort St. John as the example - not me.
As I wrote, the strongest ties are local. Then it's more obvious when house prices decline in Saanich - they'll also decline in Victoria. Maybe a lag of a month or two before the market corrects for the imbalance. What causes the decline is a common social, political, geographical and economic environment. The same is true for the outlying areas of Sooke or the Gulf Islands. The lag time is just longer. Looking back a year ago, Sooke and the Gulf Islands were experiencing high months of inventory and declining prices. And that's where the core market is today. A year or so behind the correction that has been occuring in the outer hoods.
The drop in house price is the result - not the cause.
Capitalism does not work too well. It's a failed system and we should face it instead of perpetuating it. Look at what it's doing to our planet. While the reefs die we're running around like idiots trying to get rich. It brings out the worst in people. Greed and Fear. Time to change or die.
I fully agree.
Captitalism may be a flawed system -but it's the best one we have.
"Flawed" is an understatement. Capitalism is quite literally destroying the air, ground, plants and animals that we humans rely on to survive and to thrive. And it presents us with strange choices like: either we keep polluting the air so that we can pay for hospitals, or...
Or, couldn't it be that more people want to live in Fernwood than on a larger property in Metchosin?
And really, should this surprise us?
I'm not quite sure that your "balance" argument makes any sense.
It makes perfect sense. There is a more or less set premium that people will pay to live in the core. Maybe it's $50,000 maybe it's $100,000, it doesn't matter. If the outlying areas decline, that premium doesn't suddenly increase. When prices in Langford decline, then you are reducing demand in the core, because suddenly someone who was willing to pay $50,000 more for the core is no longer willing to pay $90,000 more. You can't have the outlying areas decline without the whole market declining.
@CS:
Yeah, Barak Obama is such a communist that business profits have increased 171% over his tenure.
Keep eating those rightwing nuttie-o's for breakfast, dude. I think the next thing you're supposed to swallow is "profits increased despite his policies, not because of them".
http://www.bloomberg.com/news/2013-01-17/corporate-profits-soar-as-executives-attack-obama-policy.html
The same is true for the outlying areas of Sooke or the Gulf Islands. The lag time is just longer.
So I'm guessing the lag time between Fort St. John and Victoria is around 400 years.
"WTF is Ayn Rand?"
Author of Atlas Shrugged, Fountainhead and several other excellent doorstops. Which of course brings me to my favourite Ayn Rand joke...
"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs"
Most people didn't have $45,000 in their RRSP, so the payback wouldn't be that onerous.
Thats exactly the point and why this statistic is so scary. If you withdraw the max from your RRSP (as an individual), that is $25,000 and your payback is only $1700/year.
That is not a lot, and still almost HALF of people cannot seem to find this money. And yet these people are still buying places for hundreds of thousands of dollars.
If this is true, then how are house prices in Fort St. John connected to house prices in Victoria?
Because every other market that suddenly becomes very cheap removes some demand from expensive markets.
Say there is a couple starting out and they are looking for jobs. Maybe they are teaching, or some other job that doesn't depend on the location specifically. Maybe if houses cost $300,000 in Fort St. John they decide to stay in victoria because it is nicer here and they'll work harder to afford the place. But suddenly houses only cost $200,000 there and the temptation is suddenly much stronger. Why not go and live somewhere else where you can actually own a house rather than being a slave all your life they might say?
And it's not Fort St. John of course. It's every other city in BC, and to a lesser extent the rest of Canada and the US and other countries. The further you get the less the impact is, but there is an impact.
"Ottawa has increased by $50-billion the amount of residential mortgages that it is willing to guarantee."
Yes, your right. And yet... buyers seem to be evaporating.
There were many things that were tried during the US collapse. They all failed just like they will fail here.
Your choice of Fort St. John was to show an extreme example.
You were the one who said "province wide" was applicable.
With all respect to the mentally challenged, Introvert you're just being a retard.
I think some other people reading our back-and-forth might come to a different conclusion.
@caveat emptor, lol
I removed the reference to you and the mentally challenged because it was an unfair remark.
It would be a miracle if we get away with 5 years of flat market this time.
Isn't it the objective of government policy to promote inflation, while keeping interest rates near zero? If this is the outcome, then a flat to rising RE market seems possible.
But the outcome for RE would depend on expectations. Would people go on making large leveraged bets on RE during an inflationary period in the expectation that interest rates will not rise?
If so, this may be as good a time as any to buy. However, prolonged bouts of monetary stimulus tend to result in uncontrollable bouts of higher than expected inflation. For example, if the velocity of circulation of all the newly printed money picks up, as is happening now in the US, it is difficult for the central bank to suck back most of the money it spewed to start the recovery. Then it becomes impossible to maintain nominal interest rates near zero.
The potential outcomes over the next, say, five years include the following:
1. Moderate inflation (3-5%), continued low interest rates, RE flat to rising.
2. Significant inflation (5% plus), continued low interest rates, RE rising.
3. Significant inflation, interest rates to match, RE falling.
4. Inflation out of control, e.g., due either to failure of central bank policy or to the ending of the $US dollar's role as the world's main reserve currency and the massive increases in the price of commodities and imported manufactured goods, RE probably collapsing.
Since RE prices are at an all-time high relative to incomes, it appears that deciding what to do will be a huge challenge for many people.
Fortunately, cognitive disonance reduction will ease the stress of living with one's decisions, as Introvert's comments confirm.
It still is applicable, Introvert.
Distance may not be a strong factor on the time lag. Like I said, if OPEC slashed its prices - what would happen to Calgary? And I don't expect that would take 400 years either. The lag would be more associated with how strong the ties are with each area.
As I have said, the fall in prices is the result - not the cause.
Haven't people been buying real estate as a hedge against inflation for the last decade? A way to protect their wealth? Is there any way for them to continue to do so?
IMO, real estate has been tapped out as a hedge against inflation.
Talking of suites the other day, this new build can get you two suites to help pay the mortgage and heat those 15 ft ceilings! One legal and one possible!
“Impressive NEW 3421 sf home that's boasts a terrific CONVENIENT LOCATION + the latest architectural design! Beautiful 4 - 5 bdrm, 4.5 baths features (2) inlaw suites; a legal 1 bdrm suite + a Theatre Room, which could be an optional bachelor suite”
The price: a mere $878,000 (gulp), but don’t worry, the HST is included in the price. The only drawback is you’ll have to wait until they finish it.
http://www.realtor.ca/propertyDetails.aspx?propertyId=12828805&PidKey=1296657715
@ Koozdra
I agree - buyers are evaporating and I think this decade long house mania is finally coming to a close, government intervention or not.
1. Moderate inflation (3-5%), continued low interest rates, RE flat to rising.
2. Significant inflation (5% plus), continued low interest rates, RE rising.
3. Significant inflation, interest rates to match, RE falling.
4. Inflation out of control, e.g., due either to failure of central bank policy or to the ending of the $US dollar's role as the world's main reserve currency and the massive increases in the price of commodities and imported manufactured goods, RE probably collapsing.
5. Low inflation or deflation, interest rates low, RE falling.
Seems much more likely to me.
Low inflation or deflation, interest rates low, RE falling.
That would suit me. But I thought we were all Keynsians now, and if so, do we not have a technology, the printing press, that will insure we never again fall into the liquidity trap?
Maybe if houses cost $300,000 in Fort St. John they decide to stay in victoria because it is nicer here and they'll work harder to afford the place. But suddenly houses only cost $200,000 there and the temptation is suddenly much stronger.
The number of people living in Victoria who might be tempted by house prices in Fort St. John is absolutely negligible, making this argument weak.
Take even Nanaimo vs. Victoria, two cities that are quite close to each other. There is a big difference in house prices, but the vast, vast majority of those living in Victoria wouldn't consider moving to Nanaimo on the basis of house prices. Why? Because there are factors that, one their own and especially in combination, trump house prices. Examples of which include location of family members/relatives, desire not to uproot kids from friends and from a particular school, and inconvenience/fear of starting over in a new city.
In conclusion, I really don't buy your "temptation" theory of city-to-city price influence.
@rukid,etc.
Yeah, Barak Obama is such a communist that business profits have increased 171% over his tenure.
I find it difficult to accept the Assassin-in-Chief, as true believer in free and fair competitive markets.
Also, you have to remember that it was the elite in the Soviet Union, as much as in the West today, who rode roughshod over the proletariat.
One really needs to read more if one doesn't know who Ayn Rand is.
OK, I've blogged more than enough today. I best get back to my actual job...
One really needs to read more if one doesn't know who Ayn Rand is.
Ha! No we know where Introvert gets his wacky ideas about economics: from reading a far-right-wing extremist novelist, and mentor of Alan, Can't-Tell-a-Bubble-when-I-See-One Greenspan.
I prefer the classics, Smith, Ricardo, Keynes, etc.
The number of people living in Victoria who might be tempted by house prices in Fort St. John is absolutely negligible, making this argument weak.
Yes, maybe it's just 3 or 4. And then maybe it's 2 or 3 that feel that way about Prince George, and Lilloet, and Nelson, and Fernie, and Salmon Arm, and Kamloops, and and and.
As nice as Victoria is, every other place in BC is also livable and the premium for Victoria doesn't just increase when other places get cheaper.
Take even Nanaimo vs. Victoria, two cities that are quite close to each other. There is a big difference in house prices, but the vast, vast majority of those living in Victoria wouldn't consider moving to Nanaimo on the basis of house prices.
I have no idea what the average house price is in Nanaimo. Let's say it's $400,000. So people will pay a $150,000 premium to live in Victoria over Nanaimo. Now let's say Nanaimo declines to $300,000. You don't think that will cause some people to think twice? Of course it will. That doesn't mean all of Victoria will pull up and move to Nanaimo, that means that some people whose jobs allow it will look much more seriously to Nanaimo than they did before. It also means people coming from outside Victoria or Nanaimo will be more likely in aggregate to choose Nanaimo than they were before.
Like Just Jack said, it's a marketplace. It's not really a theory you can be against. We can debate the magnitude of that effect, but it certainly exists.
You don't want to believe that Fort St. John is connected, you feel a bit more ambiguous about Nanaimo, so how about Duncan, or Shawnigan Lake, or Sidney, or Langford, or just past McKenzie? Clearly it's a question of degree and not a question of whether this effect exists.
There is quite a difference between capitalism, where corporations are at the "pinnacle of power" - and with a free market, were the consumer effectively votes with their money to determine the success of each corporation.* Interestingly, what we see in real estate is a free market system - with property sales directly competing with each other. The consumer decides ...
* If you have the time and inclination: check out the movie "The Corporation" for a primer ... it can be downloaded legally for free.
@SJ
"I agree - buyers are evaporating and I think this decade long house mania is finally coming to a close, government intervention or not."
The size of intervention in 2009 that was directed at the Canada-wide housing crash is much bigger than what most people can even imagine.
CMHC and private residential insurance totals doubled from 2009 until now, in less than 4 years, to about 1.2 trillion. That total in 1990 was only 50 billion.
If the government was to turn the market around now it would have to show up in these numbers again. Any such intervention would be much more costly than the last as house prices in Canada are much higher, on average, than they were in 2009.
In Victoria, the intervention really didn't send prices skyrocketing as it did in many other Canadian cities. Instead, the massive intervention resulted in price gains for Victoria, but I think it did more to prevent prices from falling hard over the last 2.5 years. Now that credit has been tightened, the only logical conclusion is that prices will fall dramatically in Victoria.
I don't think that anyone is expecting the government to once again intervene and allow residential insurance coverage (CMHC and private combined) to double from 1.2 trillion to 2.4 trillion over the next 3.5 years (similar to what happened from 2009 until now).
Victoria had already started to correct before the mortgage rule changes, revealing a weak housing market.
Without another massive intervention, Canada's housing market will fully correct. Any smaller intervention, in my opinion, will not stop the correction that has already started.
Again, consider what happened in the US. Interest rates were dropped from 5-6% down to 2-3% in the middle of their crash, yet the crash continued for another 2-3 years.
""Flawed" is an understatement. Capitalism is quite literally destroying the air, ground, plants and animals that we humans rely on to survive and to thrive."
Says the owner of private property, recipient of capital accumulation and beneficiary of a pricing system based on supply and demand.
Jesus.
As for environmental destruction, it has been the wealth generated from capitalism that has enabled us to reduce our dependency on the natural environment. It's why North America and Europe are being reforested, city air is cleaner than it's been in centuries and salmon now return up the Thames.
For real damage, nothing apparently compares to that being done to impressionable minds by the Canadian education system.
Just had a conversation with an older couple who moved from Gordon Head to Lands End some 20 years ago. They moved because their kids had gone onto raise their own families and there was not any need to have a home in town anymore.
Today, there are moving from the country back into the city because they want a condo that is easier to maintain.
The pendulum swings from the city to the country. Then from the country to the city. Then repeats itself.
Today, the move is from the country to the city. But that will reverse again, and you'll have people leaving the city for the country. To some degree it's price - but for most it's lifestyle. If you no longer need to commute to the city, the country life is a far better lifestyle without the stress and smoke from cars and cannabis.
Here's a question for all of you pot smokers. If you can cross breed these plants for potency, why can't you cross breed these plants to get rid of the stench?
"Here's a question for all of you pot smokers. If you can cross breed these plants for potency, why can't you cross breed these plants to get rid of the stench?"
Pot that doesn't smell like pot... blasphemy.
I'd prefer to take my chances in a capitalist market system than rely on the mercy of people like Barak Obama
Then what are you doing living in BC, given that Christy Clark (and every other premier) and Stephen Harper are well to the left of Obama on almost every substantive issue - health care being the most obvious.
The city air in the established cities like London may be better than a hundred years ago. Cities like Victoria, the air is worse than it was a hundred years ago.
Salmon may be returning to the Thames, but fewer are returning to Goldstream.
And then you can Google Earth - Fort MacMurray or the Amazon.
But in the defense of those Capitalist pigs, we now have spray on cheese. Bet those damn Communist swine would never have invented that.
I'd prefer to take my chances in a capitalist market system than rely on the mercy of people like Barak Obama.
"Then what are you doing living in BC, given that Christy Clark (and every other premier) and Stephen Harper are well to the left of Obama on almost every substantive issue - health care being the most obvious."
Healthcare is not every issue, and there's nothing free market about Obamacare, which is a mandatory scheme forcing citizens to buy private insurance whether they want it or not. That's the essence of fascism -- and less efficient even than Canada's socialized system of medicine.
Then there's assassination of citizens without legal process, not a feature of what you would call a "free" country in any sense.
And in dealing with clients in more that 50 countries, my impression has been that the Americans, much as I like them, are more bureaucratic than any but the Indians. Certainly more so than the Canadians.
For those interested in the number of detached house sales by area. Here are the January total sale numbers.
Victoria -17
Vic West -1
Oak Bay -5
Esquimalt-4
View Royal-5
Saanich East-29
Saanich West -11
With numbers like these I can see why some posters can get our market confused with London, Hong Kong, Vancouver or Seatle. London likely has this many sales before noon in one day.
One re-sale this month on Fort Street that sold August 2008 for $520,000. Resold this month for $510,000. Last year it was Sooke that had rolled back to 2008 prices, and the Bulls were crying that you can't compare Sooke to Oak Bay. Now its the inner core districts that are at 2008 levels. Seems like you can compare the two afterall.
Another home on Tuxedo sold in May 2005 for $484,000 and re-sold almost 8 years later this month for $625,000. A 29 per cent increase in value. Far from the crazy price increases that we experienced in the past. In contrast the median in 2005 was $434,500 compared with today's $557,000 or 28 per cent. So it seems the median price may be reasonable in relation to at least one re-sale. Hardly seems worth the trillion dollars in taxpayer loan guarantees made to support this 29 per cent increase.
Ha! No we know where Introvert gets his wacky ideas about economics: from reading a far-right-wing extremist novelist, and mentor of Alan, Can't-Tell-a-Bubble-when-I-See-One Greenspan.
*Sigh*
I was trying to say that people who have never heard of Ayn Rand need to read more in general--as in they ought to be more aware of people and ideas that exist.
My statement was intended to be a response to your writing, "WTF is Ayn Rand?"
""Flawed" is an understatement. Capitalism is quite literally destroying the air, ground, plants and animals that we humans rely on to survive and to thrive."
Says the owner of private property, recipient of capital accumulation and beneficiary of a pricing system based on supply and demand.
Oops, I guess I forgot that one cannot criticize any system of which one is a part.
As for environmental destruction, it has been the wealth generated from capitalism that has enabled us to reduce our dependency on the natural environment.
False. Capitalism hasn't enabled us to reduce our dependency on the natural environment, merely to mask that dependency, such that when most of us figure it out, a lot of permanent damage will have been done.
It's why North America and Europe are being reforested, city air is cleaner than it's been in centuries and salmon now return up the Thames.
Climate change.
Species extinction happening at 100-1,000 times the average historical rate.
Pollution.
And in dealing with clients in more than 50 countries, ...
My condolences go out to your clients.
Healthcare is not every issue, and there's nothing free market about Obamacare, which is a mandatory scheme forcing citizens to buy private insurance whether they want it or not. That's the essence of fascism
Time to turn off the Glenn Beck show.
"When the last tree is cut down, the last fish eaten and the last stream poisoned, you will realize that you cannot eat money."
@Introvert. I thought the bears were supposed to be doomers.. So much for that idea.
@Introvert. I thought the bears were supposed to be doomers.. So much for that idea.
I know, eh!
I'm against the Western Capitalist nightmare but quite long-term bullish on Victoria real estate. Go figure.
And, to dispel and forestall any confusion as to my political leanings, in case they are not obvious (ahem, CS), most of my views are very far to the left.
I'm against the Western Capitalist nightmare but quite long-term bullish on Victoria real estate. Go figure.
When we're looking for houses we always look for ones that are at least 100ft above sea level.. If it works out we'll own waterfront in 100 years. :)
When we're looking for houses we always look for ones that are at least 100ft above sea level.. If it works out we'll own waterfront in 100 years. :)
Yes!
Mind you, if sea levels rise that much, then New York, London and Shanghai will also be underwater. So the world economy will be shot and "laws" will seem quaint. Plus all the marauding gangs.
Another cool thing to check out is this Composite Relative Earthquake Hazard Map of Greater Victoria.
And much more information can be found here.
The new, 3789-square-foot house on Stockton is interesting. One block south, there is a similar sized lot with a small no-basement rancher offered for $520 K, suggesting the land value of the Stockton property is between $420-460 K. That would mean that the new house is offered, before HST, at around $110 per square foot. How is that possible? As a well designed and well built house it seems an incredible deal.
Unfortunately, the buyer will also have to pay a relatively huge price for a lot in what is not a prime location.
Evidently, if prices come down another couple of hundred K, we could see a sustained wave of construction throughout Victoria as old, worn-out buildings are replaced at amazingly attractive prices.
The implication seems to be that high property prices aren't necessarily favorable to the construction industry.
Time to turn off the Glenn Beck show.
Who's Glenn Beck. I don't have a TV.
most of my views are very far to the left.
A Commie landlord? An odd creature. Or maybe just confused.
@CS
Regarding 1551 Stockton Crest - who in their right mind would want to pay that much to live in that neighbourhood? When the house is selling for about $200K more than other nice houses on the same area, buyers might just want to look in a more upscale location. I can't imagine that place selling without some pretty substantial price reductions.
And if you are wondering where Sooke prices are this year!?
With 19 months of inventory, Sooke prices have now rolled back to 2004 and 2005 price levels. Back to home price levels before Flaherty started used CMHC to get the Conservatives re-elected.
So what's stopping the core districts to roll back to those levels?
And one more link for our very own blog breaker.
http://youtu.be/Ovi7uQbtKas
Incentives for renters in Vancouver.
Vacancy rate is climbing but our friends in the CMHC say rents aren't coming down soon. They are just as wrong about this as they are about the housing market remaining steady.
http://www.cbc.ca/news/canada/british-columbia/story/2013/02/13/bc-vancouver-rental-incentives.html?cmp=rss
The new, 3789-square-foot house on Stockton is interesting. One block south, there is a similar sized lot with a small no-basement rancher offered for $520 K, suggesting the land value of the Stockton property is between $420-460 K. That would mean that the new house is offered, before HST, at around $110 per square foot. How is that possible? As a well designed and well built house it seems an incredible deal.
Unfortunately, the buyer will also have to pay a relatively huge price for a lot in what is not a prime location.
Evidently, if prices come down another couple of hundred K, we could see a sustained wave of construction throughout Victoria as old, worn-out buildings are replaced at amazingly attractive prices.
The implication seems to be that high property prices aren't necessarily favorable to the construction industry.
The lot was purchased for 399k; therefore, the margin must be tight on this home.
Development costs have become so ridiculously expensive that I doubt land values will fall in the core. As for tear downs any drop that has occurred in prices in the last 5 years has been completely negated by new strict WCB and Hartland dump regulations pertaining to asbestos, lead paint, etc. I remember in 2007 my father bought a tear down home, call a big excavating company and it was gone the next day. Totally different story now - takes way longer and adds a ton of expense to demolishment of residential homes.
We were watching that $625K Tuxedo place for some time. They started in Spring 2012 at $725K, I believe.
An interesting enough place, but too rich (and too carpeted) for us.
Meanwhile up island...
Assessed 2013 – http://tinyurl.com/ct77cxo – $847,000
Nanaimo spring 2012 – http://tinyurl.com/c5rpdfq
Fall 2012 – http://tinyurl.com/bqqpdg6
Just relisted today – New hot-sheet from my realtor $689,900 (mls – 350947)
The times they are a changing…
Development costs have become so ridiculously expensive that I doubt land values will fall in the core.
That's backwards. High development costs reduce the profit margin for developers which means that there will be fewer buyers for land and the price that they are willing to pay for land will be lower.
I see it as developers won't develop due to costs involved and there is some inelasticity in demand for brand new homes in the core. Developers choosing not to develop will limit supply of building lots; therefore, their value will be propped up.
There isn't a single municipality that participates anymore in subdivisions. All the costs including services, roads, etc., have been off loaded to the developer. In Victoria what is left is extremely difficult terrain and servicing these lots costs big money. Just go up to Bear Mountain and look at the new lots on Nicklaus. These lots won't drop below 200k and if they do you won't see a single new lot for years.
I guess tears downs might fall a bit in price but as I said any fall of 10% or so is whipped out by expenses added in the last 5-6 years.
Also, in the core I would say more homes are custom built rather than builders/developers.
Owners are willing to pay more as they are not looking at profit margin.
The comments on the blog for a long time have been the lots will be the first two fall based on other markets. In the last two years condos have definitively fallen a large amount and SFH homes a smaller extent.
When I review lot sales there is zero evidence that shows and kind of correction. Completely flat or you could even argue a small uptick in prices.
"When I review lot sales there is zero evidence that shows and kind of correction."
Geez, we're just getting started. Be patient.
Why not just buy the raw undeveloped land or a lot with a home that contributes nominally to the total property value for less?
Since, all the developers are facing the identical development costs, raw land value should drop.
It seems to me that prices are correcting more in Broadmead the other places in the core. Why is this?
Raw land value is just a component of bring a building lots to market when it comes to subdivisions. Look at Bear Mountain, the raw land was only $7 million. The expensive component is the infrastructure, city fees, etc. Same principal applies if you buy a decent parcel in the City of Victoria and you want to subdivide into 3 or 4 lots. The requirements and fees from the city are ridiculous in my opinion. Someone has to pay for 8 people on their "communication team" including the top person on that team making $150k/year.
When it comes downtown to condos most $30 to $50 million dollar projects are sitting on land worth $2 to $3 million.
Tear downs, which we almost exclusively see in the core, are skewed by home owners with money building custom homes.
I don't think building lots in Victoria are simple economics 101.
With so few vacant land sales in the core districts. It would be interesting to see how you came to that conclusion. Especially when you have to show justification for the differences in zoning, location, topography, lot size, HST incuded - not included- not applicable, etc.
There are so few sales, and so many factors that have an effect on land prices, I doubt that a "review" of sales is sufficient to make a blanket statement about land prices.
I respect your opinion, but without the analysis your opinion is simply anecdotal evidence.
"Sold in June 2010 for $447,500, 2013 Assessment is $397,000. Court Ordered Sale."
Listed: $379,600
You have to question the sanity of the person that paid 447 for this hovel.
Oak bay prices are like gold prices, they never go down.
http://www.realtor.ca/propertyDetails.aspx?propertyId=12737380&PidKey=-124603090
"I don't think building lots in Victoria are simple economics 101."
Perhaps you could write an addendum that would be included with future economics text books.
"Usual markets follow the simple rules of supply and demand. There is, however, an exception. Building lots in Victoria British Columbia Canada always have value, regardless of market conditions."
"Some people are predicting a crash in the Canadian housing market because price-to-income and price-to-rent ratios have gone up a lot. But these ratios omit mortgage rates, a key determinant of prices. A better guide, in my view, is the housing affordability index published by Royal Bank of Canada (RBC)."
Ah, the soft landing in real estate theory. Given these factors sales shouldn't be drying up. But they mysteriously are.
http://www.theglobeandmail.com/globe-investor/investor-community/trading-shots/housing-crash-prophets-should-check-their-numbers-again/article8611843/
Economics 101 is not going to be very helpful in the valuation of vacant land in established areas like Victoria City. That leaves you to extract a value by deducting the estimated depreciated value of the improvements. Which means some guestimating on construction costs and the amount of accrued depreciation.
Or by abstrating the value by analyzing the median prices of vacant lots and improved properties. And then allocating that ratio to the property that you want to estimate the land value. This is a nice way to value land in the city, becuase you don't have the subjectivity of adjustments, construction costs or diminished utility.
For bigger projects, you could look at a land residual technique, ground rent capitalization or a subdivison development analysis.
Or you could canvas a bus load of real estate agents to get their feelings.
I'm not a big fan of income to price or price to rent ratios. Neither do I consider the RBC affordability factor any better judge of the state of the markeplace. As neither one incorporates risk into their calculations. Mostly because it is difficult to measure. When prices are rising at double digit rates, a prospective purchaser will max out on their debt service ratios and amortization periods because there is near zero risk in buying. The only limitation to what you will pay is how much someone will lend you.
When the market has turtled, a prospective purchaser allocates a smaller amount of their income to housing and wants to pay that debt off faster. They may still take out a 25 year mortgage, but they will make additional payments to reduce the acutal payback period. Then you MAY find that during a real estate trough, a prospective buyer will limit their debt service ratio to 25 per cent and plan to pay off the mortgage in under 15 years. I would suspect that a prospective purchaser would make sure that the monthly mortgage payment would be less than the monthly rent during a trough.
The point being that prospective purchasers switch from being risk takers to being risk adverse. The amount of contraction is dependent of how these prospective purchasers perceive their future. Maybe that is why cities with more pensioners seem to be less volatile. Pensioners know what their income will be until they die. But someone that works at Best Buy may not have been so so sure. That might also be one more reason why condos crash and burn relative to house prices that just decline.
The wild card is property taxes and utility charges. Increases in these hit pensioners just as hard as first time home buyers. Sewage treatment plants and blue bridges.
When Vancouver began cranking up their taxes and rates in the late 1980's, there was an exodus of retirees to Aldergrove. Luckily, Honk Kong immigrants and investors snapped up those empty West Side war shacks.
I don't think that will happen to Victoria. We may end up, like Houston where property prices are cheap (relative to Victoria) but property taxes and charges are onerous.
I need a word processor program to write this stuff - and then paste it to the blog. This tiny screen to write in is annoying. Maybe then Introvert will get off my back.
Well if someone can find me a standard city lot (50' x 110') for 300k or less give me a call, I'll personally buy it and pay a finders fee :)
Preferred area would be Fernwood/Oaklands.
Perhaps you could write an addendum that would be included with future economics text books.
Has Marko been more prescient over the last five years regarding prices than the bears have been? The answer is yes.
And yet, who's lecturing whom...
risk adverse
That's "risk averse."
"Has Marko been more prescient over the last five years regarding prices than the bears have been? The answer is yes."
I just got here last year.
Or by abstrating the value by analyzing the median prices of vacant lots and improved properties. And then allocating that ratio to the property that you want to estimate the land value. This is a nice way to value land in the city, becuase you don't have the subjectivity of adjustments, construction costs or diminished utility.
I think you really need to go on a case by case basis. In my opinion a 45'x130' lot if far less attractive than a 50' x 110' lot due to a 15' offset and if you've built a few homes the difference between a 35' wide home and 30' is large.
Teardowns even more complicated. Does the teardown weight 20 tons or 80 tons? Is it going to cost $110 per ton for dumping fee alone or $160 per ton to dump based on the home. Many other variables you learn the hard way :)
My father has been looking to buy a lot in the core for the last few months and I look at every property on a case to case basis and prices definitely haven't come down. I can't even find comparable deals to the lot we bought on Shakespeare at the top of the SFH home market in 2010 for 340k.
When the market has turtled, a prospective purchaser allocates a smaller amount of their income to housing and wants to pay that debt off faster.
I want to pay off my mortgage as fast as possible irrespective of mortgage rates, prices rising, prices declining.
Intovert - you have not been around long enough to know Marko's real history here. It is one of multiple personalities and genders.
Genders?
Please elaborate on Marko's history, for the benefit of newbies like me.
@Marko
1238 Lockley Road (MLS 315129) is listed at $299K. The lot is 50 ft. x 120 ft. It comes with a house and is in Esquimalt next to the train tracks. Now, how about that finder's fee?! ;-)
irisk adverse
That's "risk averse."
Not necessarily.
risk adverse = acting against risk.
versus
risk averse = having an active feeling of repugnance to risk.
It may be smarter to be actively adverse than merely passively averse.
But anyway who cares.
The lesson of the Stockton property seems to be that high urban land values force developers to the urban periphery, extending suburbs and creating exurbs, where land is cheap enough that young people can afford a new house.
This seems a highly undesirable form of development, creating inefficiencies in energy use, increasing costs for roads and rapid transit, and wasting people's time in commuting, etc.
Pending a slump in prices, urban redevelopment would be encouraged by rezoning to allow increased densities, and downsizing of municipal halls to reduce development costs.
My heart goes out to the honesty and integrity of our real estate industry this Vday.
http://www.theglobeandmail.com/news/british-columbia/real-estate-firm-confesses-after-employees-pose-as-buyers-in-news-stories/article8688210/
Maybe $425,000 isn't such a magic number after all.
3914 St. Peters dropped to $419,900 for a 2100 sqft place in the core on a 10,000 sqft lot and at the end of a dead end street.
Sure it likely needs some work and backs onto an apartment building, but still pretty quiet.
Assessed at $533,000
@StalJ Wow. What a bunch of absolute scumbags.
We've noticed a couple of other Darren Day listings dropping to 78% of assessed also.
He wants to jump start the low end. Only way for that to happen is if prices start fishing down to see where the buyers are.
@StalJ
Good find regarding the two employees posing as prospective homebuyers in televised news segments!
You can read all the deceptive details over at Whispers from the Edge of the Rainforest: Tues Post #1: Media Manipulation? You decide.
The cottage on Haultain is cute. But cramped. I love how they had to put the TV in the fireplace.
But at four and a half times the OB average family income on a tiny lot, the price seems completely nuts.
Not necessarily.
risk adverse = acting against risk.
versus
risk averse = having an active feeling of repugnance to risk.
Sorry, buddy. It's incorrect. Based on context, JJ clearly meant to write "averse." This is a super common mistake that lots of people make.
Would anyone like to explain Marko's prior gender-bending shapeshifting?
Nurse! He's out again!
Auch on 3500 Upper Terrace...just sold for $930,000. Purchased a few years ago for $1,180,000.
Nurse! He's out again!
It's often the geniuses who are labelled "insane."
;)
Marko, please answer this question honestly: are you a shapeshifting transexual zombie?
Because if you are, your views and analyses on the Victoria market will be rendered invalid. I'm sorry.
"bear watching" haha
http://www.cbc.ca/news/business/story/2013/02/14/imf-housing-vulnerable.html?cmp=rss
Marko, please answer this question honestly: are you a shapeshifting transexual zombie?
Transexual, no. Zombie, maybe.
911 Shirley Rd. Sold for $330,000, $60,000 under assessment. It's a shack with the single redeeming quality being a new roof.
On the plus side, the description says that a "two storey home would give access to improved views".
I think this is brilliant. If there's nothing good to say, just say what could be good.
"Triple car garage would look nice on this property"
"A moat would keep zombie realtors out".
And don't call me Shirley
Here's the SFH fixer uppers (sub $400K) from around the region. There are some with potential and others that need to drop more in price in order to sell.
Doh! Make that "Here are the...". I guess when I was a kid, I spent too much time having fun with Grandpa instead of listening to Grammar.
1238 Lockley Rd Victoria, BC
Has a 6000 sq ft lot and it's about 5 km from downtown - about the same distance as Oak Bay. And it's listed for under $300K.
Could somebody explain this "Victoria is short of land" thing again?
In my matrix, I sometimes see houses listed as "inactive" sometimes after only 2 weeks. How does "inactive" differ from "expired" or "cancelled"?
Thanks!
Sometimes something comes up for the seller and they don't want to show the property for a week or two; therefore, the inactive option.
1238 Lockley Rd Victoria, BC
Has a 6000 sq ft lot and it's about 5 km from downtown - about the same distance as Oak Bay. And it's listed for under $300K.
I don't see anything unusual with the list price as you can buy a lot in Fernwood for 340k that doesn't boarder a commercial complex.
"There is growing concern among many observers and economists that the Canadian housing market is making the country more susceptible to global economic shocks."
"nobody could have seen it coming" - The average Canadian
http://www.cbc.ca/news/business/story/2013/02/15/business-home-sales.html?cmp=rss
"There is growing concern among many observers and economists that the Canadian housing market is making the country more susceptible to global economic shocks."
And what does an economic shock equal? Low, low interest rates! Party!
– Introvert
@ DavidL
Thanks for the selection of what under $400,000 can get you - What a sad bunch of listings.
Compare that to 2001, which isn’t that long ago. You could have bought a 3,200 sq ft home in Gonzales Bay (with a water view). 5beds, 4 baths and an above ground basement with a 2 bedroom suite for $365,000.
Darren Day should change his ditty to “What a difference a decade makes”.
"And what does an economic shock equal? Low, low interest rates! Party!"
There will be plenty of time to party as unemployment sky rockets and the defaults start rolling in. However I don't anybody will be in the mood.
But how many RVs can fit onto the property?
"Long driveway with space to park an RV (possibly multiple RV's if parked tandem)"
http://www.realtor.ca/propertyDetails.aspx?propertyId=12836330&PidKey=352177161
Post a Comment