Monday, February 18, 2013

Feb 18 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.

February 2013 month to date (previous weeks in brackets)
Net Unconditional Sales: 209 (121, 19)
New Listings:  632 (405, 104)
Active Listings:  3964 (3886, 3786)
Sales to new listings ratio: 33% (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

No signs of life out there yet.  At 20.9 sales per business day we're running behind last year's 23.9 at this stage while listings keep pace.  Of course this February also has 2 fewer business days than last, so any YoY comparisons aren't going to look pretty.  We'll probably end up somewhere close to 425 sales for the month.

185 comments:

DavidL said...

@Leo S
We'll probably end up somewhere close to 425 sales for the month.

I think that sales will be even lower - at around 375. Six years ago , there were 663 sales in February 2007.

Marko said...

Surprised no one has posted this yet....

http://www.marketwire.com/press-release/minister-mackay-announces-major-infrastructure-upgrades-canadian-forces-base-esquimalt-1757884.htm

a simple man said...

It was only released 40 minutes ago from McKay's office, so you should not be so surprised.

Good for Esquimalt - they are getting some new docks for the military boats. Will be $500m in spending. I can think of much more needed projects, but I am not writing the cheques - we just pay them.

DavidL said...

Bad News is Good News for VRMs
Hundreds of thousands of borrowers with variable-rate mortgages (VRMs) are rooting for prime rate to stay low.

For those people, this past week’s dreary economic data had a silver lining. Mortgage rates generally move with economic growth expectations, and those expectations dimmed this week. That led more economists to push back their forecasts for the next rate hike (yes, again) to 2014.

Chris said...

Marko,
If you're counting on Victoria ever seeing any of that 500M in steel jetties, or the billions in shipbuilding projects, I have an old blue bridge to sell you, to make up for how much your property taxes are about to rise. As you can see, our govt's already deep in the red. Just imagine how many projects will be cancelled when they finally realize our resource boom is over and their coffers runneth dry.

Cause we all know what happens if they don't reign in the spending. Open season on our bond market and interest rates. Spain and Greece, you haven't seen nothing yet.

DavidL said...

I find it hard to understand that half a billion is needed to replace the two jetties. Considering that the current utility corridor is costing $20 million, I would have thought that $100 million would be enough for jetty replacement.

Introvert said...

Cause we all know what happens if they don't reign in the spending. Open season on our bond market and interest rates. Spain and Greece, you haven't seen nothing yet.

Looks like HHV's version of Glenn Beck has returned...

The very fact that Canada has its own currency precludes Canada from ending up like Spain and Greece. Sorry.

Also, if there has yet to be an "open season" on the Japanese bond market (a country with a debt-to-GDP ratio of 230) then what is the likelihood that Canada, with a debt-to-GDP ratio of 85, will face problems with borrowing any time soon?

Introvert said...

We haven't heard from info for a while. I wonder if he bought a house.

koozdra said...

"Surprised no one has posted this yet...."

1400 temporary jobs. This is amazing news.

koozdra said...

"$2500 Appliance Allowance upon Completion."

Now it'll sell for sure.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12652709&PidKey=-1469350917

Leo S said...

I think that sales will be even lower - at around 375. Six years ago , there were 663 sales in February 2007.

That would mean sales rate would slow down from here. Usually it speeds up through February.

Introvert said...

Over the last 20 years, what's the average or median number of sales in February?

DavidL said...

@Leo

You are correct that sales should pick up, but there are only eleven days left in the month... 60% of the month has already passed us by! If sale rates in the next 11 days are 30% higher than so far this month, this works out to 384 sales.

DavidL said...

@Introvert

The VREB site is only listing monthly sales data from 2006 onwards. Perhaps someone has a more complete data set? I would be curious too...

Leo S said...

Over the last 20 years, what's the average or median number of sales in February?

Average for the last 20 Februarys (had to look that spelling up): 483
Median: 492

Leo S said...

You are correct that sales should pick up, but there are only eleven days left in the month... 60% of the month has already passed us by! If sale rates in the next 11 days are 30% higher than so far this month, this works out to 384 sales.

Depends how you want to measure. I like to use sales/business day, but I'm not really sure if it's any more accurate than sales/day projections.
19 business days this month, so at the current rate that is 397 sales. Hence the prediction of about 425 if it picks up.

Sometimes I see sales marked pending on saturdays though, and very rarely on sundays so likely neither is really great.

DavidL said...

I just prorate based on the number of calendar days... I'm sure house sales are completed on weekends, with these sales being entered into VREB on Mondays. There is only one weekend left this month.

Appie Kappie said...

Does anyone here know how to get a hold of the kind of hisorical list price data shown at http://vancouverpricedrop.wordpress.com? I reckon it is only available to realtors, and that they willl not give or even sell that data to clients? Clearly it would be of great value to prospective buyers to have access to such data for a particular area and house category of interest...

Introvert said...

Average for the last 20 Februarys (had to look that spelling up): 483
Median: 492


Sales are clearly in the tank, then. Oh well.

Craig said...

"The very fact that Canada has its own currency precludes Canada from ending up like Spain and Greece. Sorry."

Argentina has its own currency, as did Asian countries in 1998 and the UK in the early 1990s before Black Wednesday hit.

It's debt and capital flight that matters. The Euro was merely a means to increase cheaply (at the time) increase that debt.

"Also, if there has yet to be an "open season" on the Japanese bond market (a country with a debt-to-GDP ratio of 230) then what is the likelihood that Canada, with a debt-to-GDP ratio of 85, will face problems with borrowing any time soon?"

Most of Japan's debt is internal, and financed by postal and other savings systems. That money isn't going to flee anywhere. As such it's foreign debt is about USD19,000 per capita compared with $30,000 in Canada, or 45% of GDP versus 64% in Canada.

patriotz said...

The very fact that Canada has its own currency precludes Canada from ending up like Spain and Greece.

Didn't preclude Canada from having much higher interest rates for almost all of the past, did it?

There are a number of factors which could lead to a return to normal (i.e. higher) interest rates and government debt is just one of them.

Interest rates can remain low going forward only in a protracted Japanese-style recession. And we know how Japanese RE prices held up in that.

caveat emptor said...

"Didn't preclude Canada from having much higher interest rates for almost all of the past, did it?"

No but it precludes Canada from ending up in a situation where we desperately need to devalue our currency but can't. The flawed Spain/Greece comparison was Chris's not Introvert's.

nan said...

"No but it precludes Canada from ending up in a situation where we desperately need to devalue our currency but can't"

No it doesn't. Any government that devalues it's currency in the era of fixed income/ low inflation needing baby boomers will be shown the door.

Heavily borrowing young people should be aware of this - Old boomers vote a lot more than you do...

koozdra said...

Lazy young people these days

koozdra said...

Gotta love the $997,000 pricing. Hoping someone from the proletariat can sneak under the newly imposed one million dollar limit of the CMHC.

C'mon people only 50 thousand gets in the game. Hell, you can even borrow that.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12846313&PidKey=-1575411621

caveat emptor said...

@nan
I can't begin to count the ways in which Canada is different from Spain and Greece. That doesn't prove that Canada can't get into trouble. But if we go down the tubes it will be for idiosyncratic Canadian reasons not because we are "just like Spain and Greece".

Even Spain and Greece are in trouble for very different reasons. Greece was/is a fiscal basket case both pre and post crisis. Spain was actually in good fiscal shape but had a ridiculously large housing bubble.

The right wing narrative that we have to cut our spending or we will be just like Spain and Greece is a crock.

Re a government that devalues the currency being shown the door. The Canadian dollar was devalued (against the US) by 1/3 between 76 and 86 and again between 91 and 02. Then revalued by 75% between 02 and 07. All of these movements didn't get any governments thrown out, didn't cause inflation and didn't panic the bond markets.

Obviously a government that caused hyperinflation would probably get shown the door but we are so far from that it is laughable.

nan said...

@ caveat emptor:

You are talking about FOREX, I am talking about inflation. They are different.

Chris said...

Caveat, nobody said we're just like Spain and Greece. For instance, Spain's debt-to-GDP is only 74.6%, while Canada is 86.7%. I was merely pointing out that if capital gets scared and decides to flee our bond market, bond yields will rise just like they rose in Spain. Their 10 year yield is over 5%, ours is 2%. Are you trying to tell me that investors will never demand a higher interest rate (5% on 10y) due to our bubblicious debt levels?

caveat emptor said...

@Chris

It's a transparently true statement that if investors stop buying Canadian bonds then bond prices will fall and yields will rise.

But without some evidence that investors are likely to do that who cares

"Are you trying to tell me that investors will never demand a higher interest rate (5% on 10y) due to our bubblicious debt levels?"

No, I am not. In fact it is a near certainty that interest rates will be higher at some point in the future.

However you told us that a continuation of current spending in Canada will lead to a situation worse than Spain or Greece. I call big time BS on that.

caveat emptor said...

@nan
OK - but the statement "devalue currency" usually means relative to something else. And as Introvert pointed out having our own currency is one of the more salient distinctions between Canada and the so-called PIIGS.

In any case your statement about governments being shown the door will be tested in Japan since they are specifically trying to create inflation AND currency devaluation there.

caveat emptor said...

http://www.calculatedriskblog.com/2013/02/update-real-estate-agent-boom-and-bust.html

Real estate agent numbers in California

CS said...

No but it precludes Canada from ending up in a situation where we desperately need to devalue our currency but can't.

But it doesn't preclude regions of Canada "ending up in a situation where [they] desperately need to devalue ... but can't."

Remember Canada is four times as large as Euroland, with an economy at least as diverse. So the C$ may at some point prove as inappropriately valued in some regions of Canada as the Euro is to Spain and Greece.

In fact, Canada's monetary union must in some degree be responsible for the three-fold difference in unemployment rate between Calgary and Iqaluit.

Introvert said...

It's a transparently true statement that if investors stop buying Canadian bonds then bond prices will fall and yields will rise.

But without some evidence that investors are likely to do that who cares


Exactly. Many folks here like to highlight scary possibilities. Yes, certain possibilities are scary, but what these people purposely do not highlight is how unlikely they are.

Another example of this came recently from Just Jack. He wrote something about what a huge spike in foreclosures would mean for the Victoria market. Scary stuff, but how likely is it to occur?

Chalk it up to fearmongering and depraved wishful thinking.

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

In fact, Canada's monetary union must in some degree be responsible for the three-fold difference in unemployment rate between Calgary and Iqaluit.

One city is a frostbitten shithole; and the other is Iqaluit.

Robert Reynolds - HMR Insurance said...

I've been lurking unless I have something useful to contribute.

I ran into this today and nearly spat out my coffee.

http://www.youtube.com/watch?feature=player_embedded&v=HaR6PGU97Aw

LOL

caveat emptor said...

@CS
I agree that even within Canada a single currency can be difficult. Newfoundland probably could use a different monetary and fiscal policy than Alberta.

But at least Newfies are a lot more likely to move to Alberta for jobs than a Spaniard move to Germany

Chris said...

"But without some evidence that investors are likely to do that who cares"

Yeah, you're right. No evidence anywhere. No sign at all of rising debts and deficits, slowing growth. Not in debt-to-GDP, rising household debt, revolving (c cards) and non-revolving (s loans), debt to disposable income 160+%, publically funded housing bubble debt among other hidden debts, falling govt revenues, falling employment (-22000 in Jan) to be able to pay for all the debt.....
The Spaniards had the same "who cares" attitude as you, not long ago.

koozdra said...

"I ran into this today and nearly spat out my coffee."

The video is from Oct 18, 2012.

That guy needs to make less videos and get on a treadmill.

koozdra said...

Yay we did it!!

600 Billion!!

Canada Debt Clock

Oh who cares, the CMHC is at 600 billion also. Too bad it's considered an asset not a liability. Interesting times ahead...

koozdra said...

It's fun go back and read articles from last year.


CMHC Insurance Limits: A Wake-up Call for Lenders

"
Here’s some reaction on that:

TD Bank economist Sonya Gulati tells CBC that not increasing the limit “may serve to tighten the housing market."

RBC economist Robert Hogue told Global News that increasing the limit “…would be, policywise, a very delicate balance to strike."

The Post quoted an unnamed industry source as saying: “...What will the government do, not increase (CMHC’s) limit? This could kill the entire housing market.”
"

Well "unnamed source" you are exactly correct, it will kill the entire housing market.

They didn't raise the limit of course. Instead they let they loosed the OSFI dogs on the CMHC, thereby crippling it even further.

PRICES WILL NEVER COME DOWN!!!

CS said...

But at least Newfies are a lot more likely to move to Alberta for jobs than a Spaniard move to Germany

Not sure about that. The are are no end of Bulgarians and Romanians who have moved to Britain, and the Albanians are just waiting for their turn:

The Sun: The UK is much better than Romania. All my mates will come in 2014

Leo S said...

I ran into this today and nearly spat out my coffee.

Nice one :) Love that massive grin at the end. That is the grin of a man that knows he is the bees knees of wit.

Introvert said...

Yay we did it!!

600 Billion!!


Wow. That debt clock really doesn't worry me.

$17,385 per Canadian? Seems very manageable to me.

Also, Krugman teaches a good lesson:

People think of debt's role in the economy as if it were the same as what debt means for an individual: there's a lot of money you have to pay to someone else. But that's all wrong; the debt we create is basically money we owe to ourselves, and the burden it imposes does not involve a real transfer of resources.

That's not to say that high debt can't cause problems — it certainly can. But these are problems of distribution and incentives, not the burden of debt as is commonly understood. ...[T]alking about leaving a burden to our children is especially nonsensical; what we are leaving behind is promises that some of our children will pay money to other children, which is a very different kettle of fish.

Introvert said...

Furthermore, economists understand that having no debt would pose a number of problems for a country.

For example, a debtless country cannot sell treasury bonds, one of the safest places for investors--domestic and foreign--to park money. Things like mortgage rates are tied to the interest rates on treasury bonds. And pension funds invest a lot of money in T-Bills.

And if a country like the U.S. ever became debt-free (as it was projected to do, based on Clinton-era surplus extrapolations), the world would have no place to park its money as U.S. Treasury bonds have historically been--and still are today--regarded as one of the safest places to park money. In short, the world has come to depend on them.

Too much debt is bad, but so is too little.

koozdra said...

At least we're going to have a balanced budget here.

caveat emptor said...

@Chris

We are going in to recession/slow growth according to some of the factors you listed.

And that is supposed to cause bon yields to spike? That's not the historical experience - usually a slowing economy equals lower bond yields (unless the solvency of the country is called into question. But heck maybe this time is different! Or maybe you believe that Canada is actually going to default.

CS said...

Hey, yeah, thank God for Canada's debts, at only 280% of GDP that's half a million for a family of four. Ain't that cool.

It means rich folks can get interest on their savings.

Except they're getting less than inflation on government bonds, so that after tax they're taking a loss of several percent.

But all is for the best in the best of all real estate worlds as our very own Candide assures us.

Nothing scary is gonna happen because no one has provide evidence to the contrary.

To point out that our resident optimist has provide no evidence that unprecedentedly low interest rates will remain low for ever, is of course totally unreasonable.

But in fact, the evidence that the tendency of the market is to drive rates up is apparent from the fact that the US Fed is printing $89 billion a month to buy bonds so as to keep rates down.

Actually, that's something of a paradox. Fear of Fed printing is causing bond holders to lose confidence, which justifies the Fed in printing another trillion or two to prevent bond holders from losing confidence.

One day the flood may turn to a deluge. In which case, rates will rise and we will all be in trouble.

Why?

Because private debt is now so great that it cannot be supported except at unprecedentedly low interest rates.

The only hope for the irrational optimists then will be a collapse of the currency that will flush all debts and ruin all those happy confident bond holders.

That a currency collapse is what is coming down the pike is precisely what was predicted this week by a former US Deputy Treasury Secretary, Economics professor and WSJ Editor, Paul Craig Roberts.

But it would be silly and irrational to think about such a possibility. Obviously. Because the resident troll says so.

DavidL said...

@koozdra
At least we're going to have a balanced budget here.

During the past ten years, the BC provincial debt has grown by 38% from $37M to 51M (link). During the same time, the average SFH price in Victoria rose 57% from about $300K to $525K. Rhetorical question: How come when real estate is "booming", the government is spending far beyond its' revenue?

Perhaps we (governments and individuals) are all collectively living beyond our means?

Chris said...

Looks as though the recent downgrade to BC's credit rating reminded our leaders not to mess with their debt holders.
It's a start, now "keep swinging that axe Mikey."

http://www.timescolonist.com/news/local/budget-government-makes-46m-in-cuts-to-higher-education-1.76870
http://www.timescolonist.com/news/local/budget-government-wants-to-cut-health-spending-but-not-transfers-to-health-authorities-1.76861
http://www.cfax1070.com/News/Top-Stories/The-have-and-have-nots-of-the-2013-BC-Budget

"Those properties, in addition to the 13 other ones, are expected to generate $260 million in revenue.
Another 65 properties are expected to be on the market next year."

Sell it all Mikey! Mikey's my man.

koozdra said...

@DavidL

Haha, I know. It's funny that they would even make this claim.

CS said...

$17,385 per Canadian? Seems very manageable to me.

Canada's total public debt in 2011 was $1.1 trillion, or $30, not $17, thousand per person.

the debt we create is basically money we owe to ourselves,=

Krugman talking nonsense, as usual.

If you have a million dollar mortgage, you can't say, "Hey nothing to worry about. I owe it to myself." because you don't owe it to yourself, you owe it to someone else, and if you don't make the payments, it'll make no difference whether the lender is Canadian or foreign, they'll be after you for the money and will put you into bankruptcy if you cannot pay.

In fact, the number of Canadian households owning a significant share of Canadian debt, private or public, is very small. Mostly, the debt held in Canada is held by the banks, and most likely they've pledged those assets to a foreign entity as collateral for some derivatives bet they've made in London.

In any case, much of Canada's debt, $1.1 trillion, is owed directly to foreign lenders.

Introvert said...

Actually, unlike a family, a government can simply raise taxes to reduce the deficit/debt. In this way, the debt can be seen as money that we owe to ourselves.

And despite our hearing it all the time in the media, governments aren't like families. My buddy Paul explains it better than I ever could:

After all, you could view Greece as being like a family that overspent, got itself into debt, and whose members now have to do all the things families do when they get in that position: slash spending on inessentials, postpone medical care and other big expenses, quit their jobs and reduce their incomes — oh, wait.

That’s the key point, of course. When a family tightens its belt it doesn’t put itself out of a job. When a government tightens its belt in a depressed economy, it puts lots of people out of jobs; and this is a negative even from the government’s own, narrowly fiscal point of view, since a shrinking economy means less revenue.

Now, you might argue that slashing government spending doesn’t actually cost jobs — that is, you might argue that if you spent the past few years in a cave or a conservative think tank, cut off from any information about how austerity is working in practice. For the results of austerity policies in Europe have been as good a test as you ever get in macroeconomics, and without exception big cuts in government spending have been followed by big declines in GDP.

Introvert said...

So the BC Liberals are "balancing" the budget primarily on the back of a one-time asset sale?

It's myopic, irresponsible and desperate; and it won't help them get reelected--that's for sure.

And that throne speech of theirs was a total joke. We'll have a trillion dollars over the next 30 years!

Can't wait to see the NDP elected in under 90 days. I'm not naive enough to claim that the NDP won't make their share of blunders or won't do some shady things on occasion, but at this point any party will do better than the Liberals have done in the last few years.

Introvert said...

In my riding of Oak Bay-Gordon Head, UVic climate scientist Andrew Weaver has decided to run for the Greens.

What do you think his chances are? Ida Chong only barely won her seat in the last election. And you'd think that many of the voters who voted for Elizabeth May in the federal election may be emboldened enough to pull the trigger and vote Green provincially for the first time.

And then there's the NDP candidate who is sure to have plenty of support...

Thoughts? Musings?

Jack and Cate said...



Sitting at YVR waiting for my flight to Calgary tonight. Had a pleasant ride with a taxi to the Nanaimo airport with a driver who tells me that he has sold real estate in the Nanaimo/Parksville area for 29 years.

He is driving cab to supplement his income. Says he had plans to retire and bought a house 5 years ago on one of the islands. Ready to retire and move in and he ends up with his granddaughter on his doorstep 4 years ago. She is now 14 with no sign of leaving until she graduates. Gotta take care of family, he says, but I miss my island property which he gets to once a month without his wife who hasn’t quite accepted their present personal financial state.

He says this is the 3rd downturn in his career and the first time he has had to find another income stream. Says he’s not sure when this slide will end….. here’s my card he says, just in case you decide to buy anytime in the future.

CS said...

Actually, unlike a family, a government can simply raise taxes to reduce the deficit/debt.

Ah, yes. So simply.

The US, could eliminate this year's $trillion-dollar deficit with a three-thousand-dollar per capita tax increase.

LOL

Leo S said...

An odd thing is happening. While average prices decrease the Teranet index for Victoria is increasing. Figure me that.

DavidL said...

Home prices in Canada fall for 5th straight month

Home prices in Canada declined for the fifth straight month in January, according to the Teranet-National Bank House Price Index. Prices were down 0.3 per cent over the 11-city composite index. Home prices declined in seven of 11 major Canadian markets from December, according to the widely followed index. Victoria, Halifax, Quebec City and Ottawa saw prices rise.

Huh? The Teranet index for Victoria is at odds with CREA's average home price for January - which saw Victoria drop from $488K in December 2012 to $442K in January 2013.

CS said...

Andrew Weaver has decided to run for the Greens. ... And then there's the NDP candidate who is sure to have plenty of support...

Thoughts? Musings?


The Green Weaver will spoil the NDP's chances, obviously.

Weaver must be a crypto-Liberal designated to insure a tenth term for the Brilliant Ida Chong, who rightly advocated the HST.

To be sure of re-election all the liberals need do is stick with the HST and promise to pay every voter a share of the several billion thus saved. The promise of a check for a couple of hundred will surely swing the stupid vote that supported the execrable van der Zalm's ridiculous anti HST campaign.

Full disclosure. I'm not a Liberal, thank God.

Introvert said...

The US, could eliminate this year's $trillion-dollar deficit with a three-thousand-dollar per capita tax increase.

LOL


The U.S. could certainly increase its capital gains tax by more than it already has. And high-income earners still are not paying their fair share, IMO.

Raising taxes on the rich wouldn't eliminate the deficit, but it would make a huge difference.

Keep in mind, too, that the top 1% captured 121% of the income gains in the first two years of the recovery. The rich are doing extraordinarily well and can afford to pay a lot more to help the country.

CS said...

While average prices decrease the Teranet index for Victoria is increasing

Does anyone know how many sales determine the monthly reading of Teranet's Victoria index?

Can one or two anomalous sales dictate the monthly trend? The "repeat sales method" of assessing month-to-month price trends may be almost totally useless in a a relatively small market.

Also, the assumption of "constant quality" is questionable. It is well established, I believe, that in a rising market people are much more inclined to make improvements and renovations than in a falling market. As we are just coming off a high, the Teranet method may be seriously biased, by non-constant quality.

CS said...

The U.S. could certainly increase its capital gains tax by more than it already has. And high-income earners still are not paying their fair share, IMO.

Obama will stick the 1% with an additional per capita tax of $300,000 when pigs fly.

And if he were insane enough to try, the 1% would make even greater effort to move their money offshore, where most of it is already. That's why there are 620 banks located in the Cayman Islands, to mention just one tax haven. It's also why corporations such as GE employ almost a thousand accountants to figure out where, on the face of the globe, to move their profits so as to minimize taxes.

But the socialists will never learn, because the don't want to. Their economic ideas have been discredited, but they roll them out election after election anyhow, because it brings in the votes of the disappointed, the resentful and the clueless.

Just Jack said...

I would agree with CS's statement regarding the Teranet numbers.

There are very few re-sales, and those that occurred have had significant updating.

That's a good reason why you should not rely on one way to guage the market. Medians, averages, re-sales and a benchmark property index along with months of inventory, sales to new listings ratios and days on market. All of which requires an un-biased, experienced and damn good looking person to reconcile.

Leo S said...

Does anyone know how many sales determine the monthly reading of Teranet's Victoria index?

Dec 2012: 219
Jan 2013: 125

As a point of comparison:
Jan 2012: 211
Jan 2011: 222
Jan 2010: 266
Jan 2009: 132

So a massive dip in repeat sales for this Jan (lower even than 2009!) means the index may be less reliable than normal.

Alexandrahere said...

This week on my pcs I have noticed a change. For the past year, pretty well every week about 80% of the homes sold went for below assessment. It is early, but this week I have 6 sales and all have gone for above assessed value. Only one sale is in the $500K range.

DavidL said...

@CS

Can one or two anomalous sales dictate the monthly trend? The "repeat sales method" of assessing month-to-month price trends may be almost totally useless in a a relatively small market.

I seem to remember that last year (or perhaps in 2011), Just Jack put together some statistics about the price per square foot for single family homes. I recall that is seems to be a pretty good indicator of sales trends ...

Leo S said...

The sales coming up now are generally new listings. Those are referenced against 2013 assessments, which have dropped. Hence the increase in price/assessment ratio. Also a regular spring market always sees a boost in price/assessment just because new properties replace all the old stale winter ones that no one wants.

Alek buddy said...

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StalJ said...

I have been warned that the Feb hop is over. Every one was getting extremely over confident again since the new year. Stocks, gold, houses....
the U-turn has started. The extreme over confidence will now turn 180*. As someone put it, the US dollar is about to be an absolute wrecking ball.

CS said...

The Teranet index methodology is difficult to follow exactly. What, for example, is heteroskedasticity?

Oh but they don't bother with that. So there's a problem. Maybe!

But aren't the results systematically biased? How far back do they go in finding a matching sale to a current sale?

In Victoria, they surely don't go all the way back to the previous sale of some of the older houses that come to market.

So isn't there a bias toward flipped houses?

And, in fact, in every instance where the current sale follows a relative recent earlier sale, isn't there a quality issue?

If you can afford an old pile in OB, you'll surely make some upgrades. So in the majority of recent sales pairs, won't the price difference reflect a substantial investment in upgrades between first sale and the second?

In a new suburb or where condos are going up by the thousand, the bias will be the reverse. The price of the second of a recent pair of sales will reflect the depreciation that affects anything new.

a simple man said...

Listing on Upper Terrace just dropped to $898,900 from $2.58M. not sure what that is all about, but worth noticing.

Leo S said...

As I understand it, the methodology is similar to Case-Shiller. Probably need to be a statistician to understand it.
Of course nothing is perfect. Some places have increased because of upgrades, some have decreased because of depreciation. Hence the average and some fancy statistical footwork to improve the estimate. As Just Jack said, just another piece of the puzzle.

koozdra said...

"Upper Terrace..."

Listing will read: Great opportunity only a fraction of the original list price.

a simple man said...

I think it is likely a "without new house" option. Pictures should be changed as if that is for $898K, a simple man is in the market.

Let's get the documents signed!

"Bear" no more!

info said...

Interest rates have steadily moved lower over the past 30 years in Canada, creating upward pressure on house prices.

As Garth Turner points out, another major source of upward pressure on house prices over the past 30 years has been the fact that Boomers have been buying houses.

Both of these sources of upward pressure have now run their course and will no longer be pushing house prices higher. In fact, the opposite is now true.

The only thing anyone knows about interest rates is that they will rise substantially. The historical average for the 5-year fixed-rate is 7-8%. Interest rates will now be creating downward pressure on house prices for many years in Canada.

The fact that the Boomers will be selling their houses will be another long-term source of downward pressure for Canadian real estate.

Of any Canadian city, Victoria experienced the biggest boost in terms of house prices from the Boomer generation. Now that this effect has reversed, Victoria will experience the most downward pressure on house prices from Boomers selling their homes. Even worse for Victoria, it appears that the influx of Boomers in recent years is only a fraction of what it once was.

All of this, of course, is completely separate from the current major housing price correction that has already started in Victoria. The same correction that started before the new mortgage rules were implemented.

DavidL said...

Prime Rock Bay family living can be yours for just $499K!
580 John Street MLS 319623

info said...

I've been questioning the Teranet index numbers for at least a year.

The methodologies for both the Vancouver and Calgary HPIs have been revised at least 4 times each since they were introduced. All of the changes resulted in higher index numbers and smaller price drops. We don't know whether or not the Teranet index has been revised in recent years.

The fact of the matter is that the Teranet HPI is put together by banks and banks are motivated to create the illusion that house prices are stable. In contrast, the Case-Shiller numbers in the US come from a completely independent source.

StalJ said...

Love the covered porch! so you can check first if any one is shooting up out front while the kids are getting their booties on for school.

koozdra said...

In case you missed it. A little tidbit that was glossed over during the budget...

sneaky sneaky...

a simple man said...

Wow - 1000 govt jobs lost?

that is significant - even Marko has to agree - they are "solid" jobs.

Just Jack said...

The other problem with re-sales is if the two sales are say 15 years apart you are no longer comparing the identical property. For example if the home was 5 years old when it first sold, you would now be comparing it to a home that is now 20 years old. The re-sale method does not account for accrued depreciation since the original sale nor does it account for externalities such as new city infrastrucutes or a gas station being built beside the home.

Teranet didn't invent the re-sale method, it has always been one of the methods to estimate price changes.

Just Jack said...

Go ahead Introvert - fill ur boots.

Leo S said...

Govt has been downsizing for a few years. More of the same an part of the reason Victoria's unemployment increased from 3 to 6% from 2007 to now.

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

According to the Teranet HPI, house prices in Victoria are down 3.7% from peak.

Some input from others on this blog would be interesting.

Who thinks that -3.7% from peak is representative of what is actually happening in terms of house prices in Greater Victoria?

I certainly do not.

Just Jack said...

Has Teranet said when peak occurred?

info said...

"Has Teranet said when peak occurred?"

Victoria peaked mid 2010.

Just Jack said...

The 3.7% from peak needs to be qualified. Condos - houses - westshore- downtown?

I go into a David Mitchell rant when I hear statements like that.

http://www.youtube.com/watch?feature=player_detailpage&v=DdF76QhVEFE

info said...

"The 3.7% from peak needs to be qualified. Condos - houses - westshore- downtown?"

The Ternaet HPI does not specify neighbourhoods, nor does it specify the type of property, as far as I know. We know they use pair comparisons and recent sales compared to sales at the same time one year earlier.

Just Jack said...

I have the median price for homes in the core using a sampling of 500 sales at $600,000 for mid 2010. Today the median is $560,000 for the last 500 home sales.

6.7% drop

Detached homes in the core is our strongest market too.

info said...

The Teranet data shows Victoria with two consecutive months of rising house prices. The total increase over December and January is close to 2%, bringing it to within 3.7% of the peak.

I call BS.

Marko said...

Well I did have multiple offers over the weekend on a house that couldn't sell in the fall at the same asking price.

Teranet Data probably correct :)

Just Jack said...

Prices do not typically rise in the Winter months, especially with this years high months of inventory.

I was speaking with a property manager today, and she believes the vacancy rate for condos is 5% and basement suites are higher. She has homes in the city that have been vacant for four months now.

As I have said before, the wild card in this market is the vacancy rate. The effect of an interest rate hike would only be felt at renewal time. A vacant suite has an immediate effect. To wait four months for a tenant may mean missed mortgage payments and calls from your banker.

a simple man said...

people buying now = catching the falling knife.

Leo S said...

The Ternaet HPI does not specify neighbourhoods, nor does it specify the type of property

Sure it does.

Region for Teranet is the Victoria CMA. Housepriceindex.ca -> Victoria -> Description and Geographical Composition

As for dwelling types: "The indices are estimated on a
monthly basis by tracking the sale prices of condominiums, row/town houses and single family homes"

Just Jack said...

We have over 590 houses for sale just in the core districts. Maybe we've had 90 sales in the last 30 days.

If you're looking to buy a home there's lots of selection and chances are that you might be the only bidder.

I doubt that you're going to get any staggering reduction from market value. Unless you're buying something out of the mainstream of what buyers want. Lots of good quality homes under foreclosure in the Westshore, and some Estate sales in need of serious updating in the core areas.

It isn't a bad time to be a prospective buyer. Find a property make a reasonable bid, if the counter is too high move on to the next property. I think in this market you should go in with your best offer and don't get into back and forth counter offers.

And I certainly would not get into a bidding frenzy with some other couple. I say let them have it, a better property will come along next month.

Dave said...

Fellow renters,
lend me your ear.
Rates and prices are about to decline again,
never fear.

Some have been buying on the supposition rates are about to go up - dummies.

Just Jack said...

A rate increase could actually increase sales activity and move prices higher.

A rate increase could get those sitting on the fence of indecision to purchase.

How a single increase in the rate effects price is a bit of a guessing game, it could go either way. However, consecutive increases would push prices down.

I just wonder if all this discussion about interest rates may take away attention from more immediate effects on prices from rising unemployment and vacancy rates.

With the Province going into election mode, it's going to be difficult to sort through the bovine feces to come.

Just Jack said...

A rate increase could actually increase sales activity and move prices higher.

A rate increase could get those sitting on the fence of indecision to purchase.

How a single increase in the rate effects price is a bit of a guessing game, it could go either way. However, consecutive increases would push prices down.

I just wonder if all this discussion about interest rates may take away attention from more immediate effects on prices from rising unemployment and vacancy rates.

With the Province going into election mode, it's going to be difficult to sort through the bovine feces to come.

Introvert said...

So good that he posted it twice!

Dave said...

A rate increase could actually increase sales activity and move prices higher.

Completely agree JJ. But probably not a self-sustaining increase until certain segments make more sense on an ROI basis. Normally markets don’t bottom until smart money is willing to underpin them. They’ll cash in some of their bonds for some riskier RE returns. As far as cap rates go, USA investors didn’t really move in until prices fell enough to push cap rates back into the 6-7% range.

A quick cap rate of here, off MLS.
If you’re lucky it might net after expenses $11k/year, divided by price of $379k, gets you less than a <3% cap. Since I don’t see any upward pressure on rents, that’s what you call “fresh bovine feces”.

Jack and Cate said...

Blogger Marko said...

Well I did have multiple offers over the weekend on a house that couldn't sell in the fall at the same asking price.
____________

Of course must ask the obvious. What was the original listing priced at on day 1 and how much under assessed did it sell? (assuming your client accepts the lowball offers)

DavidL said...

@Marko

... and were they unconditional offers? If heard recent anecdotes (from realtors) that there recently has been an increase in the number of conditional offers that are falling through due to unexpected financing issues (i. e. banks won't lend as much as desired) and offers depending on a current residence selling.

DavidL said...

More Canadians say they'll need to work past 66 to be able to retire: poll - Business - Times Colonist

GregB said...

Some time back, someone published a nice graph of (sale price) / (assessed value). Sorry, but I've forgotten who posted it.

It would be very nice to see an update.

koozdra said...

Price drops not gonna happen bears, market is gonna go up and up!!!

koozdra said...

Buyers left with big bills when home inspectors miss defects

caveat emptor said...

@koozdra
Home inspectors get a lot of their referrals from RE agents. So they are in an immediate conflict of interest since the person that sends them business has a strong interest in the deal going through.

The average home inspection is probably slightly better than no home inspection (they may well identify the really obvious stuff).

Some principles from my own limited experience (1) Avoid the home inspector your RE agent suggests (2) Try to find an honest and thorough inspector (they do exist) (3)Inspect the house yourself in as much detail as you can preferably before the home inspector (4) If possible bring a knowledgeable friend or family member along for your own inspection (5) DON'T rely on anything the inspector says to you verbally but won't put in the report

caveat emptor!

info said...

@Marko

"Well I did have multiple offers over the weekend on a house that couldn't sell in the fall at the same asking price."

The housing market in Victoria has been in a buyer's market for a long time. It is highly unlikely that even the dumbest buyers would choose to be involved in a bidding war at this time, although almost anything is possible when it comes to real estate.

Are you sure you didn't use phantom bids? We all know that realtors have used this tactic for decades. Such tactics are illegal, just like fake buyers.

a simple man said...

I don't think Marko is that kind of realtor.

Leo S said...

It is highly unlikely that even the dumbest buyers would choose to be involved in a bidding war at this time, although almost anything is possible when it comes to real estate.

Why are you doubting multiple offers?
This is the spring market, and desirable places attract attention. It's really not that rare. Out of the last 100 sales of SFH under $550k in the core, 7 of them sold over asking.
Something can sell over ask and still be a good price. Intentionally listing below market value is a very common tactic to get a quick sale.

info said...

@ Leo

"Region for Teranet is the Victoria CMA. Housepriceindex.ca -> Victoria -> Description and Geographical Composition

As for dwelling types: "The indices are estimated on a
monthly basis by tracking the sale prices of condominiums, row/town houses and single family homes"

I'm sure you will agree that this information is quite vague and not specific.

The index does not explain exactly how each property type is weighted in their calculations. The same can be said for geographical areas and how they weight those in their calculations.

For instance, they might include only one condo pair, one townhouse pair and one house pair from Langford. On the other hand, they might be using Oak Bay bungalow pairs as 90% of their data.

That information may be available but I haven't seen it. Then again, I haven't taken the time to look for it.


info said...

"Something can sell over ask and still be a good price. Intentionally listing below market value is a very common tactic to get a quick sale."

Initially, you didn't say that the list was below market value. You should have included that information.

patriotz said...

Note that Marko didn't say that the offers were over list. Just that there were multiple offers.

What matters is not how many offers there are, but what the high bid is.

DavidL said...

@info
Are you sure you didn't use phantom bids? We all know that realtors have used this tactic for decades. Such tactics are illegal, just like fake buyers.

That's pretty harsh to accuse Marko of this without any evidence. Such behaviour detracts from the arguments that you present here in the HHV forum.

koozdra said...

locker room anecdote:

the GF overheard two woman talking in the gym locker room. Woman one said she just bought in a bidding war. Woman two was surprised that that happened in this market. Woman two said that her house had been on the market for two years now. Woman one then went on to talk about how she now has to sell her existing property.

The fools rush in.

koozdra said...

Introvert avert your eyes.

Winnipeg home prices jumped 160 per cent over 10 years: report

"The rest of Canada is learning what most Winnipeg homebuyers already knew — house prices here have been increasing at one of the fastest paces in the country over the past decade."

But... but... I thought Victoria's market went up the most. We're not even in the top 3.

Al + TOH said...

DavidL said:
"@info
Are you sure you didn't use phantom bids? We all know that realtors have used this tactic for decades. Such tactics are illegal, just like fake buyers.

That's pretty harsh to accuse Marko of this without any evidence. Such behaviour detracts from the arguments that you present here in the HHV forum."

++1 (= Ditto)

Leo S said...

I'm sure you will agree that this information is quite vague and not specific.

The index does not explain exactly how each property type is weighted in their calculations. The same can be said for geographical areas and how they weight those in their calculations.


Sure we don't know the exact algorithm. So we can go in with the assumption that they probably know what they're doing and aren't actively trying to bias the index or we can go in with the idea that because it was developed by banks they are probably being deceitful.

I choose to accept that it is an index created in good faith and using a fair algorithm (or at least consistent). The idea that they are picking and choosing sales pairs to understate a decline is waaaay too tinfoil hat for me.

Low sales pair count will obviously decrease reliability, but overall I think Teranet is a good measure. Just one of many, but still good.

Leo S said...

Initially, you didn't say that the list was below market value. You should have included that information.

Market value is what someone pays for it. By definition if a place sells for above list, then market value is above list.

koozdra said...

"I choose to accept that it is an index created in good faith and using a fair algorithm (or at least consistent). The idea that they are picking and choosing sales pairs to understate a decline is waaaay too tinfoil hat for me."

Surely an unregulated national organization would never intentionally deceive the public.

"Statistics published by the National Association of Realtors appear to overstate sales of existing homes by 15 to 20 percent, mortgage and property data aggregator CoreLogic says in a new report that concludes home sales fell more sharply last year than previously thought."
http://www.inman.com/news/2011/02/15/decline-in-real-estate-sales-greater-stated

patriotz said...

Teranet actually operates the land registry in Ontario. The fallout from "cooking" the data for the index, if discovered, would be very severe.

In addition comparisons to real estate association data (either here or in the US) are not apt, since their data comes from actual closings.

Their past index data accurately reflects the crashes in Alberta 2007-9 and Vancouver 2008-9.

I do think they are underestimating the current decline for Victoria. However I would expect a much larger margin of error in the index for a city the size of Victoria compared to the major centres. The Case-Shiller index in the US does not cover any metro smaller than Portland, which is about the size of metro Vancouver.

Leo S said...

Victoria's rental market softens

Just Jack said...

Then there is the question of what date did the property actually sell?


On January 1, you find a home put an offer on the property and the vendor accepts. Subject to financing


On January 15, you are approved for financing and you remove all subjects.


On Februay 1, you transfer title and take possession of the home.

Which one of the above is the sale date?

If you want the most acurate information to determine what is happening in the market - then it would be the first date. The date of the meeting of the minds.

The second date is the one most real estate agents use.

The third date is the one that Teranet uses. In this case reporting data that is already a month old.

A month isn't bad. But depending on the data, the few re-sales that Teranet uses could have some long closing dates. The data that they can realistically use is very good quality but there is very little of it.

info said...

"The idea that hey are picking and choosing sales pairs to understate a decline is waaaay too tinfoil hat for me."

I didn't say that.

The fact of the matter is that nobody knows whether or not these banks have fudged the numbers in some way. Clearly, creating the illusion of a smaller than actual decline would benefit them and they have the power to do that with their index. That's all I am saying.




info said...

In January 2010, the single family home average price in Victoria was $711 K. Last month, that average was down to $535 K, a drop of 25%.

In contrast, the Teranet index shows a 3.7% decline since peak.

Just Jack's numbers show a decline of much more than 3.7%, even for the core.

I think Victoria is down about 15% from peak.

Leo S said...

Clearly, creating the illusion of a smaller than actual decline would benefit them and they have the power to do that with their index. That's all I am saying.

Sure, but until there's evidence of that I'd say it's a good index.

In January 2010, the single family home average price in Victoria was $711 K. Last month, that average was down to $535 K, a drop of 25%

Are you serious? You're talking about an average (which is especially susceptible to bias in the upward direction in the case of real estate) based on 25 sales in Jan 2010 compared to 16 sales last month (by the way the average last month was $513k, not $535).
You can't seriously suggest that that comparison has any validity compared to something like Teranet.

3.7% is understating the decline, but this is temporary. Teranet will decline in the coming months.

info said...

During the crash of 08-09, the Greater Victoria SFH average peaked at $630 K and reached a low of $527 K. A drop of 16.3%.

The Teranet data showed a drop of 9.7% from peak to bottom at that time.

The average SFH price peak for Greater Victoria was $649 K in June 2010 (302 sales). That average dropped to $530 K in January 2013 (138 sales). A drop of 18.3%.

The Teranet data currently shows a price decline of 3.7% from peak.

08-09:
Teranet(-9.7%)
VREB average (-16.3%)

Current:
Teranet (-3.7%)
VREB average (-18.3%)

On top of that, the Teranet data currently shows two consecutive months of price gains (approx. +2%).

The current Teranet data seems very questionable.

Leo S said...

So you have two measures of the market. One shows one decline the other shows a different one. That doesn't tell you anything about which is more correct. All you know is that they're different.

Leo S said...

The only thing we do know is that the monthly average is not a good or stable measure.
From Dec 2012 to Jan 2013 it dropped by almost 12%. Obviously the market deteriorated nowhere near that much in a single month. And yet somehow you're more concerned about the Teranet moving 1% a month.

info said...

"The only thing we do know is that the monthly average is not a good or stable measure.
From Dec 2012 to Jan 2013 it dropped by almost 12%. Obviously the market deteriorated nowhere near that much in a single month. And yet somehow you're more concerned about the Teranet moving 1% a month."

As I have said before, the average was likely skewed higher for the last 6 months of 2012. The sudden drop in average price for Jan. 2013 might actually prove to be a sharp turn downward for Victoria's housing market.

It is possible that the numbers for Dec. and Nov. of 2012 were way out there and that Jan. 2013 was creeping closer to reality. Time will tell. You certainly cannot assume that Nov. and Dec. were indicative of reality and then point to Jan. 2013 as an anomaly.

At this point, we don't know. By May or June we will know.

Leo S said...

The point is that comparing two individual months is pointless.

koozdra said...

"The release of minutes from the Fed's latest policy meeting showed that some policy-makers were worried that the bank's $85 billion US in monthly bond purchases could eventually unsettle financial markets or cause the central bank to take losses."

You mean there are consequences to printing ridiculous amounts of money?

http://www.cbc.ca/news/business/story/2013/02/22/loonie-falls.html?cmp=rss

koozdra said...

Oh and from the link above...

"The loonie has shed about 1 1/2 US cents this past week due to a number of factors, including sliding commodities, worries about the strength of the Canadian housing sector and the price differential between benchmark Brent crude and Western Canadian Select from the oilsands."

These housing sector concerns obviously exclude Victoria. Weird that the article didn't mention that.

Introvert said...

From Dec 2012 to Jan 2013 it dropped by almost 12%. Obviously the market deteriorated nowhere near that much in a single month.

In info's mind, it did. It fits so well with his preconceived narrative.


"The release of minutes from the Fed's latest policy meeting showed that some policy-makers were worried that the bank's $85 billion US in monthly bond purchases could eventually unsettle financial markets or cause the central bank to take losses."

You mean there are consequences to printing ridiculous amounts of money?


There are also consequences to not printing ridiculous amounts of money.

And there's always disagreement on the Fed board; that's nothing new.

koozdra said...

"The CMHC expects a pickup in starts to about 194,100 in 2014, as employment and economic growth gain momentum later in 2013 and in 2014."

Why is the CMHC weighing in what the economy is going to do? This is like asking a realtor if it's a good time to buy.

Stick to what you do best. Offering bulk insurance to banks and allowing people to buy outside of their affordability.

CMHC sees housing starts falling in 2013

koozdra said...

"There are also consequences to not printing ridiculous amounts of money."

The consequences are higher interest rates.

You didn't base your buying decision on rates being low forever did you?

Introvert said...

You didn't base your buying decision on rates being low forever did you?

No, I based my buying decision on several factors including but not limited to:

-renting sucked (for me, that is; I know it's all unicorns and rainbows for most of you)

-all-time low interest rates locked in for at least five years (and now possibly another five), which is very convenient considering mortgage interest is heavily front-loaded

-we had a substantial down payment (approx. 18%)

-we wanted to "put down roots," as the saying goes

Leo S said...

Anyone want to give their thoughts on this condo on Dallas Rd?

Colleague of mine is super excited about it and wants to make an offer. I know nothing about condos. Thoughts? Value? Anything about the building?

a simple man said...

- renting sometimes sucks, owning sometimes sucks. Right now renting seems to suck less (income). Rainbows and unicorns extra.

- better to buy at a lower cost with higher interest rates than the inverse.

- 18% is not a substantial downpayment. Means you are borrowing 82% plus CMHC fees.

- we have pretty deep roots in our community already, yet we are dirty, dirty renters. Ohhhhhh.

a simple man said...

Cruise ships = deal breaker.

Leo S said...

- 18% is not a substantial downpayment.

I think 18% is substantial for a first time buyer. I think most first timers have less than that.
However it is a bizarre down payment. If you have 18% why not wait another couple months until you have 20% and avoid CMHC fees?

patriotz said...

which is very convenient considering mortgage interest is heavily front-loaded

And opportunity cost on principal payments, which depends on interest rates, is back loaded.

Rising interest rates cost you regardless of how fast you pay down your mortgage. Even if you pay 100% cash up front.

Introvert said...

better to buy at a lower cost with higher interest rates than the inverse.

Only have one lifetime. Wanted to buy when I was relatively young. Didn't want to spend 5, 10, 15 years trying to "time the market." I'm happy to take the "good" when it works for me, rather than wait an unknown period of time trying to attain the "perfect." If you're not this way, that's fine: everyone does what's best for them.

I'm also not convinced that lower cost/higher interest rate is preferable. Both scenarios seem about the same to me.

18% is not a substantial downpayment. Means you are borrowing 82% plus CMHC fees.

Maybe in your fantasy land 18% isn't a good down payment. For my age, career-position, and place in life, I felt as though it was an ample down payment.

Also, I avoided CMHC; I have Genworth at a lower fee.

Just Jack said...

As for the condo on Dallas.

Your friend should find out when the exterior brick was last re-pointed. Being almost 30 years old, the cement between the bricks may have to be re-placed. The same expensive cost to repair as a leaky condo.

Leo S said...

I'm also not convinced that lower cost/higher interest rate is preferable. Both scenarios seem about the same to me.

The difference should be obvious. Even if the payments are the same, the larger mortgage exposes you to far more interest rate risk, and any extra payments have far more effect (i.e. reduce your monthly payment) on the lower mortgage with the higher rate.

Also, I avoided CMHC; I have Genworth at a lower fee.

So you didn't avoid it then.

Introvert said...

If you have 18% why not wait another couple months until you have 20% and avoid CMHC fees?

We debated this. However, the right house came along and we had been looking for many months.

Also, we did have 20%, but elected to hold back 2% for the emergency fund and for buying some nice furniture.

Again, we sometimes don't mind paying more because we aren't the type to weight financial considerations above all others. Some people do. And that's fine. Everyone does what works best for them.

I'm starting to sound like totoro. I miss her. And where's my boy, dasmo? Geez, it's just me now. :(

koozdra said...

"1st time buyers,live in the 2 bdrm. lower suite & rent the top suite for 1920 monthly."

And how much will it cost me to get in on the ground floor of this amazing opportunity? only half a million dollars!!!

http://www.realtor.ca/propertyDetails.aspx?propertyId=12815342&PidKey=1543746285

koozdra said...

"Zoning allows for a suite."

Oh good, I didn't want to spend a million and a half and not be able to generate some revenue to afford my mortgage payments.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12858192&PidKey=1489357015

koozdra said...

"It's a Dutch Auction. SELLER SAYS BRING AN OFFER!"

Poor Sooke.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12399509&PidKey=-159154725

Introvert said...

The difference should be obvious. Even if the payments are the same, the larger mortgage exposes you to far more interest rate risk, and any extra payments have far more effect (i.e. reduce your monthly payment) on the lower mortgage with the higher rate.

It's still not obvious to me.


So you didn't avoid it then.

Yes, I did avoid CMHC. However, I did not avoid insurance altogether. My goodness, Leo.

koozdra said...

"It's still not obvious to me."

You'll understand soon.

patriotz said...

I'm also not convinced that lower cost/higher interest rate is preferable. Both scenarios seem about the same to me.

Haven't you already told us that you bought some years ago at a lower cost/ higher interest rate?

So what's the difference between your costs and those of someone buying the same property today at a higher cost/lower interest rate?

Introvert said...

You'll understand soon.

"Soon" is a word that has been used a lot on this blog over the past five and a half years.

Introvert said...

Haven't you already told us that you bought some years ago at a lower cost/ higher interest rate?

Nope. I bought near the peak.

patriotz said...

Retirees, purchase this property & produce a 3200+ monthly retirement income.

This is a magic house that has no property taxes, insurance or maintenance costs.

patriotz said...

Nope. I bought near the peak.

So it was higher cost/higher interest rate? OK.

koozdra said...

"...on this blog over the past five and a half years."

Oh Introvert...

Introvert said...

So it was higher cost/higher interest rate? OK.

WTF are you talking about? Low interest rates didn't just happen yesterday.

patriotz said...

What I'm talking about is that both prices and interest rates were higher at that time than today.

Alexandrahere said...

Things are picking up somewhat on my pcs. So far this week I have 13 sales with 10 of them going for above assessment.

Introvert said...

What I'm talking about is that both prices and interest rates were higher at that time than today.

Yes, they were.

There's an unbelievable amount of nitpicking going on right now. First Leo, now you.

Since this nitpicking isn't my cup of tea today, and since my weekend's gonna start in about an hour, I think I'll bid you all adieu.

Dave said...

There's an unbelievable amount of nitpicking going on right now.

1) Irony!

2) Anyway Leo - you should know better than to argue semantics with Introvert.

3) Introvert's situation provides someone an opportunity to demonstrate the calculation for everyone - show how payments decrease the monthly payment if the purchase was made at a lower price with a higher rate. I'm not trying to rub it in your face Introvert, just a useful exercise for other people for whom it wasn't or isn't obvious.

Dave3

Leo S said...

It's still not obvious to me.

I'll write you an article explaining it.

Yes, I did avoid CMHC. However, I did not avoid insurance altogether. My goodness, Leo.

My goodness indeed. Clearly CMHC in that context was used as a synonym to mortgage insurance. The whole point is that 18% down is so close to the point where you don't need to pay that anymore and has nothing to do with whether you chose CMHC or their less popular clones.

info said...

@ Introvert

"From Dec 2012 to Jan 2013 it dropped by almost 12%. Obviously the market deteriorated nowhere near that much in a single month."

"In info's mind, it did. It fits so well with his preconceived narrative."

Where did I write that? Read what I've written again, you might learn something.

info said...

@ Leo

"The point is that comparing two individual months is pointless."

You missed the context of the post as a whole. I was providing different ways of quantifying the price drop in Victoria from peak. Nowhwere have I said that the monthly average is the best indicator of where the market is, however, it is very useful. If you read that post again, you might understand the context. I also stated Teranet's price drop and referenced Just Jack's numbers as well. This was done in a comparative manner. Just Jack's number's probably jive with the opinion of many on this blog who have been closely watching the market. In my opinion, Victoria's market is down 12-17% from peak. Very few people on this blog, aside from Marko, Introvert and dasmo, will argue against that. Even you agreed some time ago that prices in Victoria were down 10%.

Right now, for whatever reason, Teranet's data seems very questionable. There is no way that the Victoria housing market is off 3.7% from peak.

Yearly assessments taken last summer showed drops in value of houses in Victoria. The market was down from peak before the summer of 2011 and has come down more since the summer of 2012, on either side of latest assessment period. More proof that 3.7% is not indicative of the price drop from peak.

reasonfirst said...

There's an unbelievable amount of nitpicking going on right now.

What's left to do now it's clear the housing market is on its way down!

Leo S said...

I was providing different ways of quantifying the price drop in Victoria from peak. Nowhwere have I said that the monthly average is the best indicator of where the market is, however, it is very useful.

Of all the measures commonly used for the Victoria market, comparison of the average price between individual months is probably the worst one because every data point has a +- 10% proviso on it. So when you're talking about a drop of less than 20%, it's impossible to determine with only two data points.

Trent Sze said...
This comment has been removed by the author.
totoro victoria said...

Well, go away and nothing really changes hey.

Oak Bay's prices are holding high on the listings. I did notice one property that is lower than expected though:
http://www.realtor.ca/propertyDetails.aspx?propertyId=12828765&PidKey=1764315088

Haven't looked at it so I don't know if it is condition or market bringing the drop.

a simple man said...

Welcome back, Totoro - I have missed you.

Apparently the house in question needs a lot of work.

SJ said...

Re: 2571 Dalhousie.

Well, they’re still buying! This one didn’t take long – gone pending after 13 days!

Lovely Oak Bay character house (but could use updating as well), with 4 bedrooms, a large south-facing back yard.

Sold for $892,500 - almost $100,000 over assessed value. Oh dear, I thought those days were over, but then I guess all it takes is that one buyer!

When will Oak Bay drop?

CS said...

Whatever the price trend last month, it looks as though we're in a new world now. The pound sterling is off six cents in a month, the C$ off 2.5 cents in a month, and this at a time when the US Fed is printing over $1000 per month per family of four.

It looks as if we are entering a world of inflation. If it keeps up, property prices could zoom, unless central banks get cold feet, in which case interest rates could zoom.

Leo S said...

It looks as if we are entering a world of inflation.

Uhh. It looks absolutely nothing like that. Inflation is at a 3 year low and slowing.

koozdra said...

"THE LOCATION GIVES THIS PROPERTY LASTING VALUE IN ANY MARKET"

We'll see about that.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12862257&PidKey=1287825912

Leo S said...

This one seems like good value.

Quiet street, big lot, 2008 build. $629k is still a little over our comfort level, but when you compare that for $50k less all you get is 50year old places that are smaller it seems like a comparatively good deal. Surprised it hasn't sold yet.

Leo S said...

Goofy lot I guess.

info said...

Reasonfirst posted this recently:

2 month median price (Nov-Jan) change Victoria.

2006/07 +9.1%
2007/08 +7.8%

2008/09 -1.0% (during the crash of 08-09)

2009/10 +7.8%
2010/11 +13.2%
2011/12 +7.2%

2012/13 -14.0% (Nov. - Jan.)

House prices in Victoria have clearly been dropping hard since November. This is much worse than what was happening in 08-09 during the crash.

Just Jack said...

Murphy's Law #1,312,198

Property values will decrease everywhere except in the neighborhood that you want to buy in.


Murphy's Law #1,312,399

Property values will increase everywhere except for the neighborhood you want to sell in.

a simple man said...

Dalhousie is a special street, so that sale is no surprise. I would not be surprised if the house was torn down.

Catching a falling knife.

Animal Spirit said...

Info - median on a small sample is essentially meaningless. Perhaps compare a three month rolling median year to year and then there may be something to talk about. Feb median as of last Monday was 520 K.

Yes, prices did come down, and yes the jan median was as low as we've seen for four years, but to get hyper is a bit irrational.

Leo S said...

Your friend should find out when the exterior brick was last re-pointed. Being almost 30 years old, the cement between the bricks may have to be re-placed. The same expensive cost to repair as a leaky condo.

Thanks. Passed it on.

STIFFLER JHON said...

dropping rate is very high.. prices are quiet satisfied. property values are increasing.

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