Monday, April 22, 2013

Apr 22 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.

April 2013April 2012 
Wk 1Wk 2Wk 3Wk 4
Uncond. Sales116
258
410
586
New Listings345
662
983
1470
Active Listings4323
4417
4488
 4638
Sales to New Listings
 34%
39%
42%
 40%
Sales Projection510
567
601
Months of Inventory
7.9

Relatively strong sales as we've seen, but not overly so.  At the same time last year we had 417 sales, so we're certainly not breaking any records.  Perhaps it will end up at par with last year +- some small percent. Marko reports the SFH average at $644k, while the median is at $544k.

202 comments:

1 – 200 of 202   Newer›   Newest»
dasmo said...

I agree. Nothing to get excited about. More flatness within the +-. More like a halibut spawning ground than a bear trap....

koozdra said...

"Investors are betting against the Canadian dollar in record numbers, as the number of people holding short positions against the loonie has hit an all-time high."

Bets against loonie hit all-time high

Alexandrahere said...

Here are my stats for last week, 15-21 April, 2013:

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

Sold: 28
Avg Sale Price: $572K
Med Sale Price: $585K

Fourteen of the 28 went for below BC assessment and 7 of them had listed secondary suites.

In the SE areas of Gordon Head, Lambrick Park and Mount Doug, within the same criteria, 5 homes sold for an average sale price of $597K.

For comparison, within the same criteria, the week of 16-22 April, 2012:

Sold: 34
Avg Price: $557K
Med Price: $576K


Last week for Townhomes and apartment condos, pretty much in the same areas (including downtown), min 2 beds and 2 baths priced between $548K & %550K:

Apts:

Sold 10
Avg Price: $327K
Med Price: $300K

Towhomes:
Sold: 4
Avg price: $435K
Med price: $422K

Nine of the 14 apts and townhouses went for below BC assessment.

koozdra said...

Crash averted?

Doesn't look like Carrick is a big fan of Ben.

Crash averted. But will housing spring ahead this year?

koozdra said...

Get ready condo flippers, Canada Revenue Agency is hunting you

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

From the article noted above, "Let’s say your gain is $100,000....."

If condo prices back down to 2006 levels I don't think too many people are pocketing a $100,000 gain.

Marko said...

I mean "With condo prices."

dasmo said...

All good things. A lower dollar benefits me and others too I'm sure. I have a distaste for flippers having shopped for houses. Plus, the tax exemption is for a primary residence. Flipping a presale tax free is not taking advantage of a tax loophole (which I am all for). It is lying and cheating.

Leo S said...

If condo prices back down to 2006 levels I don't think too many people are pocketing a $100,000 gain.

Well this is a case where Victoria is demonstrably different than the rest of Canada. As far as corrections go, we've had a multiyear head start while the rest of country continued to go nuts on housing.

patriotz said...

If condo prices back down to 2006 levels I don't think too many people are pocketing a $100,000 gain.

It's not about "are pocketing", it's about "have pocketed". You think they're only interested in properties sold this year?

dasmo said...

Don't cheat the tax man... Minimize your taxes through all legal means. There is a big difference!

koozdra said...

"The latest data on housing-construction activity in Canada illustrates the depths to which investment in home building has slowed in the country in recent months – including alarming plunges in some provinces that don’t come up all that often in Canada’s housing-bubble debate.

Statistics Canada’s monthly numbers on investment in new housing construction, published Monday, show that in real terms (i.e. adjusted for inflation), spending nationwide in February was down 25.5 per cent from its peak of just five months earlier. This set of data takes the housing story a step further down the process than the more closely watched housing-starts numbers, as it indicates actual construction spending rather than building intentions – and speaks directly to the sector’s actual contributions to gross domestic product."


Investment in home building takes plunge across Canada

koozdra said...

"Bring us your offer; Sellers are ready to move!"

Price: $724,888
Assessed: $734,000

Outrageous pricing. Throw some eights in, maybe that will help.

320584

koozdra said...

Lots of properties like this starting to hit the market. Time to cash out grandpa and grandma.

http://www.realtor.ca/propertyDetails.aspx?propertyId=13089712&PidKey=-626384838

koozdra said...

Greatest leading picture I've seen a while.

"Very COOL Home"

http://www.realtor.ca/propertyDetails.aspx?propertyId=12722496&PidKey=-1866172630

subprime11 said...

I'm trying to determine the moi for homes $1.5M - 2.5M? There are 51 homes in that range for sale in Victoria now. Just wondering if anyone can filter the sales history and do a calculation as I am statistically challenged. I have a feeling moi is extremely high in this segment.

koozdra said...

Canadian House Prices 62 Per Cent Higher Than U.S. Prices: BMO

dasmo said...

“The good news is that we believe that most of this yawning gap will be closed by a rebound in U.S. home prices,” he writes. “After all, it’s U.S. affordability that’s off the charts now.”

Leo S said...

Last post we were debating whether US house prices could recover to peak levels by 2016. Maybe they can maybe they can't.

Now let's look at the chart in that article.

Chances of US home prices not only rebounding past their 2006 peak but also rising another $100,000 past that in a reasonable time frame? Negligible.

koozdra said...

I think we all know what happens next.

dasmo said...

This is much more likely

Leo S said...

@dasmo. That's round about my guess as well. Maybe oscillating around a $300k center rather than above it, but certainly they will meet somewhere in the middle.

koozdra said...

You think that that in 09 if the gov't didn't come to the aid of the housing market with emergency unprecedented low rates that it would have levelled off? Nope.

It would have continued it's downward trajectory. Same thing that will happen next.

dasmo said...

I have no idea. We didn't have the wave of foreclosures that created the domino effect down south... Shall I repeat the story of my pal down south? The one who had his local bank bring in a young gun who cut him off at the knees? If they let him be he could have finished his houses he was building and carried on. Perhaps with a tighter belt but probably still in his house. Instead the bank took it and dumped it on the market for half the price it cost to build....

Just Jack said...

It's tough to determine how many properties are under foreclosure.
There are some 3,050 properties for sale in Greater Victoria. Around 550 of these properties are vacant of which 125 are new construction.

Obviously not all of them are foreclosures. But then not all properties under foreclosure are vacant either.

Leo S said...

You think that that in 09 if the gov't didn't come to the aid of the housing market with emergency unprecedented low rates that it would have levelled off?

Well it would have eventually.

It would have continued it's downward trajectory. Same thing that will happen next.

I don't follow the logic. Lower interest rates raise the level of support for house prices. Those low rates are still in place and will be for the forseeable future.

koozdra said...

"I don't follow the logic. Lower interest rates raise the level of support for house prices. Those low rates are still in place and will be for the forseeable future."

It's all about the reason for the current decline. In Victoria's case it's an acceleration in the decline.

Interest rates have not moved. If anything they have gone lower as banks are competing with each other over the remaining people out there who can still afford homes. This means that, even with these extremely low rates we are experiencing an increase in the decrease in the rate of housing related economic activity.

Why is that? Why is the stimulus, in the form of low interest rates, not as effective anymore?

I think we have reached a very interesting point. Canadians have exhausted their capacity to borrow. Even with low rates and CMHC insurance we are hitting a wall.

How have we as a nation been able to nearly double the US in terms of house prices?

We would need another round of extreme stimulus to turn this one around. The stimulus of middle class debt accumulation has been run it's course. We are in for a serious correction.

Introvert said...

How have we as a nation been able to nearly double the US in terms of house prices?

Um, we didn't cause and experience the biggest recession since the Great Depression.

Stupid question.

Leo S said...

>> Um, we didn't cause and experience the biggest recession since the Great Depression.

Doesn't change that fact that in the long run you would expect the two countries to have similar house values (with the US perhaps slightly higher, since they can write off mortgage interest and get better rates on their mortgages than we do)

koozdra said...

"Um, we didn't cause and experience the biggest recession since the Great Depression."

Exactly. We're overdue.

a simple man said...

House on Dufferin drops $30K today - a step in the right direction.

CS said...

House on Dufferin drops $30K today - a step in the right direction.

Yeah, if they take four more steps like that, they'll be only $4K above the assessment. But by that time vendors on the South side of Uplands park may face the same reality as those on the North side, which is to say they can sell at 15% off the assessed value or maybe not sell at all.

But hope springs eternal. Here you can buy a really boring Uplands home on a rather small (by Uplands standards) lot for 27% above assessment. Well, good luck with that.

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

The US has already had its recovery. Prices are back to normal.

Bubbles are the disease and lower prices are the cure.

Just Jack said...

In my opinion, it's fair game to compare two different areas, if both are in the same "market area". The only thing that you may have to deal with then is price lags from neighborhood to neighborhood.

What I expect to see over the next couple of years is the months of inventory in the core districts to rise significantly. And the months of inventory in the outlying areas to decrease. That doesn't mean increasing prices for the outlying areas because there will be enough inventory to satiate demand.

In real estate, market activity swings like a pendulum. Today, the activity is in the core as I would suspect most buyers believe that buying in the core is a safer investment. However, money is a seductive mistress and if you are retiring it's much better to have a new house with few major repairs over the next decade or two and a big sum of cash in your investment account - than a character house in Fairfield or Oak Bay.

Just Jack said...

There are 108 houses for sale in Oak Bay. I can never recall that many listed before. Most of the last decade the listings were running at half that amount.

In comparison, Victoria City with a population 8 times greater than Oak Bay, has 133.

In the last 30 days, there have been 25 sales in Oak Bay with the lowest price being 18% below assessed value and the highest selling 21% above assessed value. The average being at assessed at value. The average price paid for a home was at $377 per square foot.

Victoria City has had 27 sales ranging from a low of 28% below to 36% above assessed value with the average at 6% above. Price per finished square foot averaged $332. Last year, at this time, the average price per square foot was $352 in Victoria City and $378 in Oak Bay.

koozdra said...

Wow, Just Jack. Thanks for the all these posts.

Leo S said...

I would not expect the two countries to have similar house values just like I would not expect Victoria and Winnipeg to have similar house values.

That analogy doesn't hold. Those two cities don't have a history of similar priced homes. Totally different factors influence house prices in those two cities.

But the countries should have broadly similar prices. Similar incomes, similar lack of land constraints (countrywide), similar construction costs, similar geographies, similar economic models and policies.

If there was some underlying reason why Canada should have massively higher house prices, then we would see that reflected in prices before 2006. But in fact we see that prior to the US crash, prices tracked quite closely. So unless you're making an argument that Canada suddenly became massively more desirable after 2006, then we can expect prices to again track close to the US in the future.

Your link comparing London to Scotland also doesn't apply. That's comparing one city to a country. Also there is no history of London's prices being comparable to the prices in the highlands of Scotland, so you wouldn't expect them to be similar now.

totoro victoria said...

I'm not sure if the US and Canada have had similar housing medians over time once adjusted for exchange rates or price/income.

For example, in January 2000 the Canadian dollar was worth US $0.60- the dollar is almost par now.

What was the median in Canada in 2000 - in the US it was $165 000.

I suppose you could argue that the exchange rate does not matter and that only price to income matters.

If that is the case, then the US and Canada have historically had, and currently do have, different price to income ratios for housing.

Our economies are linked but not the same. Our real estate cycles can be quite different as our lending policies have been.

At the very least the housing market medians have not been tracking for seven years now.

http://www.theglobeandmail.com/globe-investor/investor-community/trading-shots/why-the-housing-market-wont-crash-in-2013/article6738812/

totoro victoria said...

Also, I clearly referenced Ireland. The article stated:

"The worst affected area of the country during the financial crisis has been Northern Ireland, where the value of the housing stock has fallen by more than 50 percent to 72 billion pounds."

In my view, you have an example of neighbouring countries - with close ties - but both with different real estate cycles.

koozdra said...

Globe and Mail article:

Who is Larry Macdonald?

Leo S said...

For example, in January 2000 the Canadian dollar was worth US $0.60- the dollar is almost par now.

That would make current prices even more ridiculous, not less. So in the year 2000, Canadian prices were about the same as american ones, but about 40% less in US dollars. Now they are 60% more in US dollars.

If that is the case, then the US and Canada have historically had, and currently do have, different price to income ratios for housing.

You can factor our the price part. We already know prices have been historically similar so the only question is incomes. Depends on which measure you look at, but for individual incomes:
2005 median income (25 years and older)
US: $32,140
Canada: $25,614

Household income seems to be higher in Canada than US, but that could be due to different definitions of household.

Our real estate cycles can be quite different as our lending policies have been.

Indeed. For example our lending regulations are tighter, which should lead to lower prices, not higher. Hmmm...

At the very least the housing market medians have not been tracking for seven years now.

And we still don't have a reason for why it might be uncoupled even though incomes are similar. Even if the US prices recover by a lot more, we will still be far above them.

Leo S said...

In my view, you have an example of neighbouring countries - with close ties - but both with different real estate cycles.

What's missing is a history of those two countries tracking each other in the past.

CS said...

Re: comparing cities and countries

JustJack's data seem to show that you cannot even compare districts within the GVA. Oak Bay with an MOI of 4.0 is hot, whereas the region as a whole, with an MOI of almost eight is not.

The fact that OB is still selling briskly indicates that affordability is not a problem for those buying in OB. So what, if anything, will cause the market to decline? Not interest rates, which are soft, thus tending to increase affordability and drive the market up.

Could the BoC's threat to raise rates if people continue deeper into debt kill the market? Probably not, since it seems evident that Carney lacks the nerve to pull the trigger. He knows that if debt expansion ceases, houses will cease to appreciate, in which case, buyers will have no need to rush. But if buyers cease to rush, prices will fall, and if prices begin to fall, buyers will wait even longer, in which case prices will fall further and faster. If that happens, there's little chance of prices in Canada neatly matching rising prices in the US. There'll be mass bankruptcies and real pain.

The market has been driven to a point of instability. The Tories will endeavor somehow to avoid the deluge before the 2015 election. That shouldn't be difficult. If necessary we'll see even lower interest rates, or a return to 40 year mortgages, or maybe multi-generational mortgages.

koozdra said...

It is MORE expensive to live in Canada than in the US. Our income tax rate is insane. EVERYTHING is more expensive. When friends come to visit from the states they are constantly asking "How do you afford anything here"?

Based on non housing affordability of everything our house prices should be lower than they are in the US.

Hopefully we stay in a structural recession for a long time to come so our government can keep interest rates super low.


"...maybe multi-generational mortgages."

Haha, I like it!

Introvert said...

NY Times: Down Payment Rules Are at Heart of Mortgage Debate

koozdra said...

Should we raise down payments?

caveat emptor said...

EVERYTHING is more expensive.

That statement only needs one counter-example to prove it wrong. Doctor Google was able to find several.

The obvious one would be healthcare. The Americans individually and collectively pay more for healthcare than we do (US - 17.6 % of GDP, CAN - 11.4% of GDP). For that extra money they achieve lower life expectancy and higher infant mortality.

Other counter-examples - cost of higher education, cost of electricity, cost of a passport, cost of running for office.

That said the general price level in Canada IS higher than the US, at least partly because our currency is over valued

koozdra said...

"That statement only needs one counter-example to prove it wrong."

Talking in absolutes always leads to folly.

Just Jack said...

The low sales activity in Oak Bay makes any effect the town has on the marketplace insignificant.

Neighboring Saanich alone dwarfs Oak Bay in both sales and listings activity. That means Oak Bay follows the market it doesn't make the market.

Usually, the more established closer in neighborhoods are the last to experience a market correction. But they still correct. And there isn't anything to stop those neighborhoods from correcting.

Generally Oak Bay properties have a premium over most parts of Victoria City and that premium remains consistent over time. Sometimes it's not in balance. But you can not have prices in Saanich and Victoria declining without Oak Bay prices following shortly thereafter.

It's called a Marketplace.

Just Jack said...

I don't think you could find a real estate agent in Greater Victoria that would describe the market in Oak Bay as "hot".

a simple man said...

OB market is a cold bath.

totoro victoria said...

Google not working for you?

Larry McDonald:
Larry MacDonald writes for leading business and financial publications in Canada. His home base is at Canadian Business Online where he contributes a regular column and posts daily to a blog called Investing Ideas. He has also been a regular contributor to The Globe and Mail, Investor's Digest of Canada, the Montreal Gazette, and the Ottawa Citizen. He has also authored a book called "The Bombardier Story: Planes, Trains, and Snowmobiles" (2002). Prior to taking up business and financial writing, MacDonald earned a master's degree in economics and worked for several as an economist in the federal government of Canada.

totoro victoria said...

Leo - my point is that the US crash does not automatically lead to a Canadian crash.

To say that it does is to first of avoid and not explain the fact that it hasn't so far, and second, it predicts a future based on a hypothesis that seems as possible as not.

Anyone who says this will happen is talking in absolutes again...

Freddie Caver said...

“Also, I clearly referenced Ireland. The article stated:
“The worst affected area of the country during the financial crisis has been Northern Ireland, where the value of the housing stock has fallen by more than 50 percent to 72 billion pounds.”
In my view, you have an example of neighbouring countries - with close ties - but both with different real estate cycles.”

--Since when is Northern Ireland not part of the country called UK (Britain)???

The main difference with us and the US, aside from the fact we actually are different countries, is we are a major exporter of resources while the US is a major importer. Look no further to explain the last 7 years.

totoro victoria said...

Ummm....

The countries of the United Kingdom are England, Northern Ireland, Scotland and Wales: four countries that together form the sovereign state of the United Kingdom.

http://en.wikipedia.org/wiki/Countries_of_the_United_Kingdom

Just Jack said...

I agree, what happend in the US doesn't lead to a Canadian crash.

But you would be silly not to look at the excesses that occured in the US and not pause to think that it could and most likely was happening here.

It isn't like the US and Canada bank's lending policies were that significantly different from each other. The difference was that Canadian banks were and have always been protected by the Canadian government. That wasn't true of the states. Fannie Mae and Freddie Mac were privately owned companies that failed. The lack of confidence from failed insurers caused the crash.

Our banks didn't fail because they were insured by the Canadian taxpayer through a crown corporation that was manipulated by the government. No one knows how close our banks came to a US style crash because all of that information is hidden from any of us.

But if it was happening in the states, it was happening here in Canada too.

Introvert said...

It's been five years since the global financial crisis hit and Canada's housing market has yet to see a significant decline in prices. Talk about resilient.

If the events of 2008 still have not seriously affected our national housing market five years later, what event would it take to tank Canada's real estate sector in a more timely fashion? A U.S. default? World War III? What?

a simple man said...

No govt intervention to artificially prop up the market would do nicely.

totoro victoria said...

You might be right JJ in terms of the underwriting helping, but I thought there were quite a few differences in lending practices?

"The Canada and U.S. housing market comparison suggests that relaxed lending standards likely played a critical role in the U.S. housing bust. Monetary policy was very similar in both countries from 2000 to 2008, but housing prices rose much faster in the U.S. than in Canada. This suggests that some other factor both drove the more rapid appreciation in U.S. prices and set the stage for the housing bust. A likely candidate is cross-country differences in the structure and regulation of subprime lending markets. That mortgage delinquencies began to climb before the recession in the U.S. but only began to rise recently in Canada (after the economic slowdown began), points to the significance of those structural and regulatory differences in explaining the U.S. housing crash."
http://www.clevelandfed.org/research/commentary/2009/0909.cfm

Introvert said...

No govt intervention to artificially prop up the market would do nicely.

Why didn't the U.S. think of that?

patriotz said...

For example our lending regulations are tighter

No they're not. It's that US that has tighter lending now. For example the federal mortgage agencies (FHA and de facto Fannie/Freddie) have price caps. CMHC has just introduced a cap of $1M.

In Seattle FHA will not insure a SFH mortgage for over $567,500. Can you imagine what that kind of cap would do to the Vancouver market?

FHA limits - Washington State

Freddie Caver said...

Saying Northern Ireland and Scotland are different countries, would be like saying BC and New Brunswick are different countries. You could almost get away with it. I admit it would be nice to get rid of the freeloaders.
Anyhow David Cameron is prime minister for all four. That’s good enough for me. Meantime if you can point out England and Wales on this list of European countries, then I will agree to call them separate countries.
http://simple.wikipedia.org/wiki/List_of_European_countries_in_order_of_geographical_area

I wonder if most of BC could end up over 50% off like N. Ireland, while parts of Toronto could hold values like parts of London have?

Just Jack said...

You don't get home ownership over 70 percent in Canada with "tight" lending policies.

We have a lot of mortgage brokers and a lot of equity lenders in Victoria.

-An equity lender, loans money based on the value of the home not on your ability to pay. You don't have to have a job - to get an equity loan. And since they are all backed by CMHC, Genworth or that other company who cares if you pay them back?

Well you should care and I mean you the taxpayer. If CMHC had been a publicly traded company - you could have seen the audited financials. To the best of my knowledge, CMHC is the only crown corporation that was exempt from these accounting practices.

CS said...

t's been five years since the global financial crisis hit and Canada's housing market has yet to see a significant decline in prices. Talk about resilient.

A bit of revisionism there. Even the Teranet national house price index shows a clear, sharp and quite deep 2009 drop in prices, which would undoubtedly have continued had the government not increased the national debt by a third issuing bonds to generate cash to give to CMHC to buy $125 billion worth of mortgages from the Canadian banks.

Without that intervention the banks would have cut back sharply on mortgage lending driving interest rates up and the housing market into nose-dive.

koozdra said...

Larry Macdonald:

I guess he's just as credible as Garth.

totoro victoria said...

I didn't realize Garth wrote for the Globe and Mail!

Leo S said...

Leo - my point is that the US crash does not automatically lead to a Canadian crash.

Given that isn't what we're discussing, I don't see how that is relevant.

We're discussing the price differential, and whether that is sustainable.

To say that it does is to first of avoid and not explain the fact that it hasn't so far

Not sure who you think you're arguing against. Info maybe?

Leo S said...

The main difference with us and the US, aside from the fact we actually are different countries, is we are a major exporter of resources while the US is a major importer. Look no further to explain the last 7 years.

That only makes sense if it is reflected in incomes. Solely the fact that Canada is an exporter doesn't help me pay my mortgage.

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

Well, in some cases we are cheaper than the US then.

SanFran median house price is $735,000
SanFran median household income is $71,304

Victoria median house price is $510,777
Victoria median household income is $77,820

Leo S said...

SanFran median house price is $735,000
SanFran median household income is $71,304

Victoria median house price is $510,777
Victoria median household income is $77,820


Except that ownership rate in San Francisco is 37%, while in Victoria it's almost 70%. You can't just compare the incomes without taking into account who is buying. The average homeowner in san fran makes a lot more than the average home owner in Victoria.

Nevermind that San Fran is a world class city with a population of 8 million while Victoria is a small island town.

totoro victoria said...

Greater Victoria has a population of 344,615, the 15th most populous Canadian metro region. Hardly a small island town.

The average San Fran owner would have to make more despite their overall lower median wages, their median house prices are more than 43% higher.

You can compare incomes and rates of ownership here and make a conclusion that it is more affordable here. Affordability becomes relative when you look to other countries.

totoro victoria said...

For example, Russia's cost for typical upscale housing for 100 square meters income to price ratio is 124.72. Canada's is 16.20 and the US is 27.78.

http://www.globalpropertyguide.com/North-America/Canada/price-gdp-per-cap

neo said...

@ Dasmo : you know better than to compare SF & Vic. You've talked about tech in Vic. I have friends & relatives in SF & Bay Area. They work for goog, aapl, shutterfly, etc, etc. My informal sample is that they make minimum approx 2X and more for the same work as in Vic.

dasmo said...

Ok then how about Berkeley
Berkeley median house price is $620,000
Berkeley median household income is $58,617

Victoria median house price is $510,777
Victoria median household income is $77,820

dasmo said...

I wasn't comparing cities I was comparing house prices VS household income ;-)

So far I have two examples where we are more affordable using those metrics....

Leo S said...

Hardly a small island town.

Hmm.. 8.3 million to 0.3 million. Yeah I'm gonna say Victoria isn't in the same category as San Francisco.

The comparison is completely ridiculous. Average rent for a 1BR apartment in San Francisco is $2700/month. The place is extremely desirable. Comparing only median house price and ignoring the other key differences is meaningless.

For example, Russia's cost for typical upscale housing for 100 square meters income to price ratio is 124.72. Canada's is 16.20 and the US is 27.78.

That measure has more to do with income inequality than housing affordability. They aren't talking about normal housing, they're talking about luxury housing. Surprise, the average russian peasant can't afford a mansion. How you imagine this relates to Canadian valuations I have no idea.

koozdra said...

"For example, Russia's cost for.."

Stop. You have never been there. You have no idea what you are talking about.

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

I retract my comment.

Leo S said...

So far I have two examples where we are more affordable using those metrics....

So far I haven't seen any examples that are comparable. Berkeley is a feeder city for SF and the same arguments apply. Much lower home ownership, and much higher rents.

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

Well, I don't know what to say Leo. If we can compare nations but not cities in different nations I don't understand the basic underpinnings of the logic of the comparison to begin with. Maybe markets are more local than national or international...

Might be better to stick with income/price ratios and try to find comparable cities. I don't have the time to search that all. In any event, I'm not sure that where the US has gone Canada will go so the time might not be well spent.

Introvert said...

So what can we hang our hat on after all of this discussion?

Five years after the world's economy melted down, Victoria's SFH average is at $644k, while the median is at $544k.

Quite the crash--and it all happened so fast!

Leo S said...

You can compare anything you want as long as it's comparable. San Francisco clearly has some key differences to Victoria. Same with Russia.
The US has differences to Canada but many of the key determinants of house prices (incomes, interest rates, and lending policies) are quite similar and as proof we have in the past seen similar national house prices. Accepting the huge divergence as somehow a new normal seems like grasping at straws to me

Leo S said...

3 years after the peak in Victoria, prices are down about 10%

totoro victoria said...

Incomes, interest rates and lending policies are all different in the states.

Right now you can get a 30 year fixed in the US for 3.31%.
http://online.wsj.com/article/BT-CO-20130423-712341.html?mod=googlenews_wsj

Incomes in Canada per capita are 84% of the US: http://www.conferenceboard.ca/hcp/details/economy/income-per-capita.aspx

Lending polices, I just don't know enough about and people seem to have different views.

The US economy is not doing as well as Canada's right now.

I don't know how exchange rates factor in.

Time will tell.

Leo S said...

I was being generous by saying they are similar. Lower interest rates, higher incomes, and ability to write off mortgage interest should lead to US prices higher than ours not lower.

dasmo said...

US household median Income $45,018

Canada median family Income $69,860

fatjay said...

totoro, are you seriously saying that you can't understand the logic behind Leo's argument, are you being willfully ignorant, or are you just refusing to admit that you were wrong?

Leo has made it quite clear why we would expect Canadian prices to track similarly to US prices, slightly to the lower side.

You've listed some differences that would only support lower Canadian prices, and your only reasonable statement was that "the US crash does not automatically lead to a Canadian crash."

True, it does not, but the original statement is simply that "in the long run you would expect the two countries to have similar house values (with the US perhaps slightly higher..."

How can you argue that?

patriotz said...

US household median Income $45,018

Canada median family Income $69,860


A "household" is not the same thing as a "family".

caveat emptor said...

I agree with Leo. There are several fundamental factors that would leave an outside observer to think that Canadian prices should be lower than American not higher. In addition to what Leo listed there is higher population density in the US.

On the other hand there are some fundamental factors that might lead to higher house price in Canada. A few possibilities I can think of:

1) Higher new house construction costs due to climate, smaller number of low paid illegal immigrants, and possibly more onerous planning regulations

2) Different treatment of capital gains

3) Higher population growth rate in Canada (related to more immigrant friendly population)

4) Less poverty in Canada equating to less areas of truly awful housing pulling down average

5) Vancouver having a significant influence on national average. The US lacks any one city that could skew the national average as much as Vancouver does in Canada.

OR it could be that their bubble popped and ours didn't!!

Notwithstanding the factors I listed above I'd expect prices in the long run to be similar

caveat emptor said...

immigrant friendly POLICIES I meant to say

totoro victoria said...

I agree with Leo that lower rates for longer terms should lead to better buying power in the US. Probably will long-term if the US economy recovers.

Right now people in the US have had falling median household incomes for four years. I guess their per capita is still higher than ours because they have a lot of wealthy folks. For the median folks, many people have lost their jobs and their home equity. Buying power is down.

The downward cycle of low consumer and lender confidence (subprime mortgage crisis) plus general economic stability... this is not the situation in Canada right now. Perhaps this explains the difference.

If Canada's economy tanked and interest rates rose (for example) maybe we would end up there too.

Right now some people in the states with stable jobs, savings and an investor bent are buying up houses in areas like Houston as fast as they can. These places are now cash flow positive because of the low price and rates. Low risk because of the prices and 30-year fixed rates.

Maybe this will occur in Canada too, but I doubt it right now.

totoro victoria said...

I haven't been to see this home but, barring significant issues, it seem better value than what has generally been available in the past four years.
http://www.realtor.ca/propertyDetails.aspx?propertyId=13017267&PidKey=-775016796

Oak Bay and bordering areas show odd pricing. A few are lower than past pricing, while many others are holding to the same levels.

patriotz said...

On the other hand there are some fundamental factors that might lead to higher house price in Canada. A few possibilities I can think of:

1) Higher new house construction costs due to climate,


But RE in the colder parts of the US is not more expensive than in the warmer parts. The coldest big city in the US is Minneapolis, which has always been quite cheap by US standards.

In Canada itself the warmest cities (you know where) have always been the most expensive. And the coldest the cheapest.

Construction costs really don't have much to do with RE prices, which are determined by what buyers are willing to pay.

Introvert said...

3 years after the peak in Victoria, prices are down about 10%

That's nice. Zero resemblance to what happened to the U.S. after its peak.

Dave said...

Re: Carnarvon

Is it normal to not have a hood above your range? Wouldn't your ceiling get dirty with grease / oil?
Dave3

Introvert said...

Lower interest rates, higher incomes, and ability to write off mortgage interest should lead to US prices higher than ours not lower.

Yes, if we deliberately ignore the fact that the U.S. created and suffered from the worst recession since the Great Depression, then we can take the above point into legitimate consideration.

Renter said...

@DaveIs it normal to not have a hood above your range? Wouldn't your ceiling get dirty with grease / oil?

Every single place I've ever lived in has a hood, but it doesn't vent to the outside. That means you get grease buildup anyway. And not just on the ceiling, the hood fans make sure it is all nicely dispersed all over the kitchen, including the walls. And if your kitchen is open concept, why there is a fine layer of grease and oil everywhere. It's most noticeable on the walls, if you've lived somewhere like that for 5 years or so. You don't look at the wall and go "ew, gross" - it's not hugely noticeable (though it might be in a few years!) but if you wipe down one part of the wall, you can see the difference.

I'm told that there are hoods that vent outside properly; I'm sure that makes it a lot better.

totoro victoria said...

It is if you have a downdraft gas range: http://www.downdraftgasrange.org/

Introvert said...

Rob Carrick: Potential first-time home buyers: Bide your time

Condo living is another possibility for Gen Y, and so is permanent renting as long as it’s accompanied by aggressive saving and investing. That way, a renter builds the same kind of financial base as home owners gradually paying off their mortgage.

I'm certain that, even among the renters who aren't living paycheque-to-paycheque, many are not aggressively saving and investing. Why? Because the consequences of not doing so don't present a clear and present danger. On the other hand, making your mortgage payment every second week under the threat of foreclosure tends to make the decision rather easy.

totoro victoria said...

Renter - There are over the stove hood fans that don't vent outside - they have filters that need to be changed. If you don't change them they don't work.

koozdra said...

Challenges in buying a home for gen. Y:


1. Saving a large enough down payment: Putting 5 per cent down on a house costing the national average $378,532 requires savings of $18,927 plus an additional amount of up to $15,000 or so to cover closing costs; also, it’s tough to save at a time when rates on savings accounts top out below 2 per cent.


You know we're screwed when affordability is a concern even at 5%.

Just Jack said...

Our market isn't declining like the American market did several years ago.

Our decline is like a rope that is fraying apart. The market is made up of different strands such as condominums, detached homes, Sooke, Oak Bay, new construction, old construction etc. Certain strands of our market have come apart faster than others. Like age restricted condominiums, older housing in the Western Communities, retirement ranch style homes, homes without suites, etc.

The American market was severed quickly with the collapse of Fannie Mae and Freddie Mac. In Canada our market was supported with hundreds of billions of loan guarantees. I think the government has nearly a trillion dollars in loan guarantees now as opposed to $200 billion in 2004.

Our market has been slowly cut over the last few years by tightening lending and dropping demand. Eventually there will only be a few strands left to support the weight of the marketplace. And when they break, we'll have our rapid price decline too.

Because a dozen million dollar sales in Oak Bay are not going to save middle income family houses from falling in price. Nor will those sales save the jobs of carpenters, plumbers, household item salesman, cablevision installers or jobs related to discrectionary income like dog walkers.

Dave said...

Those downdraft ranges seem expensive and tricky to maintain / calibrate as opposed to the traditional style.

Thanks for the info Renter and Totoro.

Dave3

dasmo said...

You aren't screwed Kooz. Renting is very affordable here. As Leo pointed out a 1BR apartment in San Francisco is $2700/month AND the median house price is $735,00...

Leo S said...

@caveat emptor. All good points

caveat emptor said...

Canadian and US real estate fundamentals

Alexandrahere said...

I don't know what the population of "Greater SanFrancisco" is, but I know the city itself is less than one million.

Alexandrahere said...

Interesting: The average Canadian household pays 42.7% of income in taxes compared to 36.9% for food, shelter and clothing combined.

Google "Canadian tax burdern too big for families", for full article.

Animal Spirit said...

bear down

more to follow

Leo S said...

Yes, if we deliberately ignore the fact that the U.S. created and suffered from the worst recession since the Great Depression

Caused by the crash in the housing market and associated fallout.

HachiRoku said...

812,826 - Jul 2011
City of San Franscisco
Source: U.S. Census Bureau

603,502 (2011)
City of Vancouver, Population

80,017 (2011)
City of Victoria, Population

CS said...

3 years after the peak in Victoria, prices are down about 10%

That's nice. Zero resemblance to what happened to the U.S. after its peak.


What happened in 2009 was, initially, very much like what happened in the US, but Canadian Government intervention was more effective than US government intervention. For one thing, on a population adjusted basis it was much larger. For another thing, most Canadians were unaware of what happened and continued buying oblivious of the depth of water in which they swam.

The interesting question that remains to be answered is whether the Feds can and will keep things propped up indefinitely. Affordability dictates prices when prices are rising. But if for any reason prices begin to decline, it's the prospect of loss, not affordability, that dictates the price trend.

At present, the trend is not too clear although at the top end of the market, where the most financially aware market participants are to be found, the trend appears to be sharply downward. The asking on Terrace Avenue, for example, is down by a third yet the property is still not sold.

Ernie Fallows said...

812,826 - Jul 2011
City of San Franscisco
Source: U.S. Census Bureau

603,502 (2011)
City of Vancouver, Population

80,017 (2011)
City of Victoria, Population

April 25, 2013 at 12:26 PM



Typically outlying areas are factored in as well, not just the city proper.

Leo S said...

From Caveat's article: A chart that goes back to 1980 showing Canada's prices roughly tracking those in the US.

dasmo said...

And in the late 80's we were "roughly" 25% more and now we are roughly 35% more. Roughly speaking after the US has finished its recover and we look back 20 years later it will continue to look like it roughly tracks the US....

Alexandrahere said...

Perhaps the "peak" was in 2009. But really, I believe it was around May of 2008. The average price may have went up in 2009 versus 2008, but, for the most part, the same house selling in mid 2008 would have fetched more than at the peak in 2009.

patriotz said...

The City of San Francisco comprises about 1/10 of its metro by population, while the City of Victoria comprises about 1/4. And its metro has about 20 times the population of metro Vic.

So the City of SF carries a much higher location premium than the City of Victoria does.

That's one very good reason why rents there are more than double what they are in Victoria.

Of course if you wanted a West Cost US metro that matched Vic in population you could take Eugene, Oregon, but it would not match Victoria's sense of self-importance.

patriotz said...

And in the late 80's we were "roughly" 25% more

And then what happened? The Toronto bust. That's what kept the average price in Canada more or less flat for the better part of a decade.

The lesson of that graph is when either Canada or the US gets significantly more expensive than the other it's followed by a bust.

Introvert said...

The average price may have went up in 2009...

*cringe*

It should be "may have gone up."

Marko said...

SFH average up to 653k and median up to 552k.

Seeing the occasional home that couldn't sell in the fall getting re-listed and moving close to fall asking price now.

koozdra said...

How often is it that people buy a new house before they sell their own? I can imagine those people are having a tough time right now.

koozdra said...

"Now, in Canada the average term is 62 months. I heard a VW advertisement the other night for 84 months. I actually looked up at the TV. Then I did some counting. Seven years. It took little digging to find out even that was child’s play: 96 months is being offered by some dealers and banks alike."

Many worship the low monthly payment god.

Why 96-month car loans are a very bad idea

dasmo said...

I've never got a loan to buy a car... Bad idea... If you always want a new car then lease it (renting in other words). Otherwise just buy the car you can afford, in cash. This is one of the fastest depreciating assets there is, unless its a Westy....

dasmo said...

"And then what happened? The Toronto bust. That's what kept the average price in Canada more or less flat for the better part of a decade." Exactly... Halibut season....

koozdra said...

My house has appreciated so much, surely I can dip into my future savings to afford to buy a brand new car. After all, Canada's weathered the economic storm. Our housing market is the strongest in the world. Oh did I mention the monthly payments are super low?

dasmo said...

Well....You house won't be worth 5% of what you paid for it in twenty years (nominal dollars)....

Alexandrahere said...

Thanks Introvert. You're right. Have went was used apparently in some old English dialects...so no excuse for me!

Just Jack said...

I'm always looking for a way to tease out sellers' sentiment in the marketplace. One way is to look at "quick" sales. Properties that have been listed and sold in under 30 days.

There have been about 15 of them in the core districts (23% of the total sales so far). And they've sold from a low 10 percent below to a high of 5 percent above assessed value. The average being 3 percent under the BC Assessment. The average days on market being 10.

Looking at all the 66 sales that sold reveals that they sold on average 6 percent below assessed value. The average days on market at 76.

Things that make you go hmmmmmm!

koozdra said...

"Well....You house won't be worth 5% of what you paid for it in twenty years (nominal dollars)...."

What I'm saying is that in the last ten years my house has doubled in value. All that equity is just locked in there. Surely I can treat myself now. I knew that buying a house was a good investment and it's finally paying off. I'm hundreds of thousands of dollars richer now. The monthly payments are low and I NEED a new car.

DavidL said...

@Animal Spirit
bear down ... more to follow

You got me curious ... what's up?!

koozdra said...

Since there is no risk in the housing market there is no risk in taking out a heloc. We definitely won't have a crash so I might as well treat myself to some of that juicy money.

I went to the bank and asked the teller how much of my home value I could get loaned to me. I was surprised to learn that the lender could receive government backed insurance for up to 95% of my home's value.

95%, that's crazy. Way to much for me. How about something a little more reasonable, like 50%. I mean, I'm sure we're not going to have a crash so what's the point in worrying. A 50% crash, that's unthinkable. It won't happen.

Your house has doubled in value. You are rich. You have lived through the greatest time in Canadian history. Our value doubled. Our glowing nation was a beacon of light in the dark. An economic stronghold.

Oh Canada.

DavidL said...

@koozdra
95%, that's crazy.

Since last July, the maximum you can borrow on a HELOC is usually 80% of the equity in the home. See: Borrowing on Home Equity.

koozdra said...

95% was around for a long time.

totoro victoria said...

There is no reason to borrow to buy a depreciable asset imo - especially a car. Dasmo is right, buy what you can afford with cash - buy used. Better yet, move somewhere where you don't need a car - they cost a fair bit to own apart from the purchase price.

koozdra said...

I wonder if Bear Mountain ate everyone in this segment? This segment is crazy over built.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12963407&PidKey=1593802683

koozdra said...

"There is no reason to borrow to buy a depreciable asset imo - especially a car. Dasmo is right, buy what you can afford with cash - buy used. Better yet, move somewhere where you don't need a car - they cost a fair bit to own apart from the purchase price."

But the interest rates are low. There is no risk to borrow against your house. Canada's housing market dipped in 2009 but bounced back because it is most resilient market in the world.

My newly earned money is trapped in my house. Borrowing against it is the smart choice. I need the money now to buy the things that I need. When I sell the house If anything I'll make money. There is no risk in the housing market. A crash won't happen here.

So what's the problem?

Like, even if we have one of those "cyclical downturns" surely it won't be so bad. You know a couple percent down, no biggy.

Leo S said...

"And then what happened? The Toronto bust. That's what kept the average price in Canada more or less flat for the better part of a decade." Exactly... Halibut season....

Depends which city you were in. Toronto wasn't exactly halibut season back then..

Given current conditions, I would expect big declines in Vancouver, Ottawa, Quebec, vacation destinations, the Toronto condo market, etc Medium declines in places like Victoria, and flat or no declines in places like Calgary.

Leo S said...

Since last July, the maximum you can borrow on a HELOC is usually 80% of the equity in the home

If you're borrowing from an OSFI regulated lender (all national lenders), it's down to 65%. You can get an additional 15% mortgage to make it 80%, but that 15% has to be amortizing.

Marko said...

There is no reason to borrow to buy a depreciable asset imo - especially a car. Dasmo is right, buy what you can afford with cash - buy used.

I disagree with this. I naturally lease because of my business; however, if I wasn't in a business I think I would finance the large majority of cars I would be interested in.

Most imports (Honda, Toyota, etc.) the cash purchase incentive is not high enough to offset the benefit of 0%, 0.9% or 1.9% 48 to 72 month loan.

For example if a Toyota is $20,000 at 0.9% at 60 months or you can buy it for $19,500 cash why would you ever pay cash? Doesn't make sense.

If you can get it for $17,500 cash different story.

dasmo said...

I would never buy a new car off the lot unless I could afford to buy it cash... If I could get 0% financing I would take it but only if I could buy it cash. I would rather buy a 50k car that's ten years old for 12k cash....

Leo S said...

Toyota Corolla: $21,170
72 months at 0% financing to bring those payments down to $294/month.

Or you can get $2500 off for a cash purchase.

So in reality you are getting 72 months at 4.23% interest. There is no such thing as a 0% car loan.

So you better be making about 6% before tax on that $20,000 in order to beat paying cash.

Marko said...

Toyota Corolla: $21,170
72 months at 0% financing to bring those payments down to $294/month.

Or you can get $2500 off for a cash purchase.

So in reality you are getting 72 months at 4.23% interest. There is no such thing as a 0% car loan.

So you better be making about 6% before tax on that $20,000 in order to beat paying cash.Toyota Corolla: $21,170
72 months at 0% financing to bring those payments down to $294/month.

Or you can get $2500 off for a cash purchase.

So in reality you are getting 72 months at 4.23% interest. There is no such thing as a 0% car loan.

So you better be making about 6% before tax on that $20,000 in order to beat paying cash.


Look at the base Corolla....only $1,000 cash back....

Some other Toyota models have no cash back incentive but have very low financing rates.

Marko said...

I would never buy a new car off the lot unless I could afford to buy it cash... If I could get 0% financing I would take it but only if I could buy it cash. I would rather buy a 50k car that's ten years old for 12k cash....

You can buy 120k cars that are 10 years for 20k (Mercedes S-Class, BMW 7 series, etc); however, good luck with maintenance.

The best deals I've ever come across are private lease take overs which I've done twice in the past on an Acura and a Honda. Everyone Joe recognizes a good deal on a cash purchase price on usedvictoria but seems many pass over crazy lease takeover deals.

Renter said...

Highlands acreages are in a sudden race to the bottom. All winter one was lucky to see one under $550,000 - they weren't selling, they were just sitting there. And now a couple of new entrants have decided that they must sell now. I was pretty surprised when 664 Blacktail Rd listed 3 weeks ago at 479,900 - and they have already dropped to $459,888. I wonder what 419 Jayhawk is going to do - they had recently dropped to $462,900 in order to beat Blacktail as the lowest priced acreage reasonably close in to Victoria.

If only Central Saanich homes would take the hint. :-) There's one that have been on the market for a year but it's sitting pat at $699,800. I'm looking at you, Gliddon.

Blacktail
Jayhawk
Gliddon

Renter said...

Sorry, Introvert: "has"

Ernie Fallows said...

Highlands acreages are in a sudden race to the bottom...

Blacktail
Jayhawk
Gliddon



Those first two places are pretty nice. IMO something a little newer in build as long as it's build soundly is the way to go. Too many asbestos issues in older houses and the foundation code in anything below the 80's is suspect.

totoro victoria said...

I bought my Toyota used with 30 000km on it for $8000 cash. Still going strong at 120 000km. Low maintenance and no financing charges whatsoever.

As for leasing, have you run the numbers for this? You can write off lease payments for cars, but I can charge mileage on a personal vehicle to my corporation for business trips. This works out better for me because I drive long distances sometimes for work and the client pays mileage.

Totally paid for the Toyota this way - it makes me money when I travel for work now.

The rule of thumb is if the work mileage is high it is better to own the vehicle personally and receive a mileage allowance and if the mileage is low it is better for the corporation to own the vehicle.

Just because you can "write off" lease payments does not make them free. It gives you the corporate tax rate on the costs but impacts your bottom line profits that could be dividended to you...

Leo S said...

I'm gonna go out on a limb and say that the appearance of the car plays some role as a realtor. Not that you need a Jag but at least something newish and presentable

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

I'm gonna go out on a limb and say that the appearance of the car plays some role as a realtor. Not that you need a Jag but at least something newish and presentable

Most definitely....a certain percentage of the consumer still associates a fancy car with success.

Marko said...

I leased a 2012 Civic Si for $310 per month. It has a built in bluetooth (a must in my business), navigation system, plus a bunch of useless stuff but neat to have.

My 2008 Civic Si lease I dropped off and it was in rough shape as I drive 30,000 km per year (had original tires, clutch was slipping, I scratched the front bumper badly and never repaired it). As I was getting a 2012 Civic Si I didn't get dinged. I ran the calculations and it made zero sense to buy it out and carry out the repairs. Time was a factor too....I would have had to go to costco, get new tires, get the clutch replaced, etc., etc.

You have to go on a case by case scenario. In 2007 I bought out my 2005 Acura RSX-S lease at the end for $15,400 and sold it a year later for $16,800. It made a lot of sense to buy it out at $15,400 as it was worth $19,000-$20,000 at buyout time. Often thought buyout is more than what the car is worth - better to just drop it off.

Was my $4,500 1991 Acura Integra that I had 9 years ago way cheaper to operate? Yes. Do I have time these days to order parts online and fix things in my driveway? No.

Dropping off the Civic every 8,000 km for a service is a huge time constraint pain, let alone any additional servicing.

And on a side note....Toyota Corolla would just be way too boring to drive :)

koozdra said...

What is the point of saving anyway?

If I want a car I can get one for low monthly payments. The dealerships are practically giving them away.

Want a house? No problem the banks aren't taking any risks lending you the money because they are insured against any losses. The interest rates are super low, so why not buy? There won't be a crash and interest are going to stay low for the "foreseeable future".

If the government and banks have such confidence in the housing market then it must mean that no crash will happen.

I can have all the things that I want and there is no need to save. When I need to retire, I'll just sell the house that I have paid off by then and reap the rewards.

Saving is something our parents had to do. We don't need to do it any more. Canadian housing appreciation will take care of that.

Financial freedom through infinite growth.

You know what? Maybe it is a good time to buy.

Leo S said...

Most definitely....a certain percentage of the consumer still associates a fancy car with success.


I think that percentage is extremely high. If a realtor shows up on your doorstep in a beat up toyota, most people will think twice about working with them, regardless of how much financial sense it makes to own that car.

totoro victoria said...

I agree that sometimes your car does matter for presentation.

In my work, it does sometimes and I use our other car when it does - a newer nice car that seats us all and the dog and was bought off-lease as Marko suggests.

dasmo said...

If you need to impress for your work then a fancy car should be invested in. If I was an estate agent I would have a luxury car. I would probably lease it because I would want to always be showing up in a new car. This is where a lease makes sense, mid term rental. No maintenance always driving new... Showing up in my Westy just wouldn't cut it....

dasmo said...

It might be a good time to buy but it's positively a good time to rent so why worry?

Marko said...

Saving is something our parents had to do. We don't need to do it any more.

You have to be smart when it comes to saving. Having a paid off car is great....but financing a car at a very low interest rate and using the cash for investments can also be a smart option in my opinion.

Financing a car at a very low interest rate and using 20k to go on multiple vacations in turn....not a smart option (financial speaking).

koozdra said...

"good time to rent so why worry"

Why would it be a good time to rent when there is no risk in the housing market?

I mean, ok, sure there might be some risk in some of the "overvalued" markets, but not here.

In terms of risk assessment there is absolutely none when buying in Victoria. Need I remind you Dasmo that this rise in prices is not unprecedented. Also the crash has not materialized. This is definite proof that it won't happen.

Further, everyone should be buying all the available stock of housing. It is a guaranteed investment. We will definitely have a soft landing. Just a few percent here and there but nothing major.

koozdra said...

"Having a paid off car is great....but financing a car at a very low interest rate and using the cash for investments can also be a smart option in my opinion."

I see a lot of risk in the markets right now, but none in the housing sector. Rates are going to stay low. People will continue buying. I'm just risk averse. So I will buy as much housing as I can. There is no concept of "over extending" in an asset class that can not fail.

totoro victoria said...

it is amazing how much something can be repeated yet never become repetitive.

caveat emptor said...

broken record meet straw man

totoro victoria said...

yep, it's a perfect virtual world.

dasmo said...

Technically it's not a straw man since Koozdra is putting words in her own mouth ;-)

koozdra said...

I'm simply arguing the hallibull position:

There is no risk in investing in Victoria real estate. A collapse will not occur. Interest rates will remain low.

These are the arguments that are commonly held here.

I'm taking them to their natural conclusion.

No risk means safe investment. Safe investment means the concept of "over extending" does not apply.

Where is the straw man?

I will accept broken record though.

Leo S said...

Easier to let the halibulls make their own arguments. Not sure what you're hoping to get from this line of extrapolation.

koozdra said...

The best way to point out flaws in someone's argument is to argue their side and extrapolate the consequences of their basic assumptions. We have some financially prudent people here that think that the housing market in Victoria is immune to "collapse". A very difficult word to define so let's say a US style collapse, 35% peak to trough.

Victoria Real Estate Postulates:

Interest rates will remain low for the foreseeable future.

Even if a national decline occurs, it will not happen in Victoria.

Conclusions:
There is no risk in buying multiple properties.

There is no risk in taking out a HELOC. This applies to you and your lender. The government is 100% sure you are good for it.

The money you have made that is locked in to your house is safe and will not disappear.


These are the things that people here believe. If you believe it then many more non-financially prudent people believe the same thing.

They are the ones you have to worry about.

The decline will happen here just like everywhere else.

dasmo said...

I get you sarcasm Koozdra.... I'm not arguing for anything by the way. I'm presenting my opinion on the most likely outcome as I have based my life decisions on. In my position I could benefit from a collapse in that I could buy more property. Which I would in a heart beat if it were cash flow positive. So far, there is nothing like that where I would put my money.... I can't say I am rooting for a collapse though... since I'm not sure what the fallout from that would be. Careful what you wish for....

koozdra said...

"Careful what you wish for.."

Of course it will be terrible.

I didn't want a doubling of national home prices in ten years either.

info said...

The following Victoria SFH price declines (to the end of March 2013) were calculated using 3-month average and 3-month median data.

Victoria:
Average (-11.6%) since July 2012 /// Median (-10.3%) since May 2012

Oak Bay:
Average (-11.8%) since April 2012 /// Median (-6.1%) since April 2012

Saanich East:
Average (-10.0%) since July 2012 /// Median (-7.9%) since July 2012

Saanich West:
Average (-14.0%) since April 2012 /// Median (-15.8%) since April 2012

Central Saanich:
Average (-10.5%) since March 2012 /// Median (-6%) since March 2012

Langford:
Average (-8%) since July 2012 /// Median (-10.8%) since July 2012

Waterfront:
Average (-28.1%) since May 2012 /// Median (-28.7%) since May 2012

Esquimalt:
Average (-7.2%) since Oct. 2012 /// Median (-5.4%) since Nov. 2012

The data was taken from VREB's website.

House prices in all areas of Greater Victoria continue to cascade lower.

Note that this data goes back about 1 year and does not represent the price declines from peak.

Alexandrahere said...

When you are in sales...especially in real estate sales, I agree that a realtor should have a good looking recent model car. Unfortunately, in that business, it all comes down to appearances. If you look successful, you ARE successful....and you can MAKE me successful.

I have only bought one new car in my lifetime, and I paid cash for it. All others have been classy used vehicles with low mileage and a superior interior and exterior for their age. I've always paid cash....usually got them to throw in something extra such as all new floor mats, and never paid anywhere near asking price. I have found the key to buying used cars is to phone up the salesperson a few days after I got "excited" about a certain one. I then make the deal over the phone.....no sitting in an office while the salesperson goes and talks to the manager. I have been successful in using this technique for others as well.

Leo S said...

@info.

Why don't you use koozdra's complete data set?

reasonfirst said...

I've been thinking about having my wife wait outside (or me - I am not sexist) when I am negotiating for a car. After the salesperson comes back from the manager with a # I'll say I need to go out and chat with my wife and make them wait 10 minutes before coming back with a new number.

Introvert said...

Glad to see others are now as exasperated by koozdra's unwavering sarcasm as I was a few weeks ago.

I love sarcasm as much as the next person, but it's most effective when it's employed judiciously and in moderation.

The bears are getting annoyed by it: that should tell you something.

Mayfair Man said...

With regards to buying cars: I spoke to an ex-used car salesman and he told me that the lowest they would go is $1,000 under the sticker price “on the road”(taxes, fee’s, ect in). He suggested doing your research and finding the car you want. When you’re ready to buy, go to the lot, one week before the end of the month (they get paid at the end of the month). Let the salesman “sell” you on the car you want, poke around, ask lots of questions and have him put you into different cars until he arrives at the car you want. Give all the buying signals. When they bring you into the room, say that you would pay $1,000 less than the lowest price. They won’t be able to do the deal then. Thank him, say they were great and leave. They will call you back within 2 days willing to do the deal. I followed his advice and it is how I got my car:)

Alexandrahere said...

There has been an increase in townhouse sales lately. The average price seems to be going up as well. Is this the new first time home nowÉ....darn French keyboard is back!

caveat emptor said...

I am sticking by my straw man comment. You are making extrapolations that don't follow logically from ANY of the positions ever presented here. Then you are finding those extrapolations absurd.

1)immune to a decline does not follow logically from "likely flat to moderate decline"

2) There is no risk to purchasing in Victoria does not follow logically from "I am personally comfortable with buying in Victoria"

3) I can have all the things that I want and there is no need to save doesn't really follow from ANYTHING I've ever read on the blog. Some have pointed out that mortgages = forced saving which may have benefits for people that would be unable to muster the discipline to save otherwise.

4) There is no risk in taking out a HELOC does not follow from comments that a HELOC can be useful. (Heck, no less a housing bear than Garth advocates HELOCs instead of an emergency cash stash.

Straw men/women

caveat emptor said...

argumentum ad absurdum

HHV poster - "Exercising is good"

koozdra - "If you run all day on a treadmill you will keel over and die of exhaustion or starvation. The smell of your rotting corpse will make the value of your home fall even further"

dasmo said...

@ Alexandrahere Fabulous negotiation tip! I'll use that one next time. I do all right but I'm not kidding myself. I'm up against an expert and I'm the fish. At least getting out of the tank will help....

koozdra said...

Generation Y disagrees with you Caveat. We are going to rain on your parade.

dasmo said...

Sorry toot's Sarcasm and the four hour work week won't do it....

patriotz said...

"6545 Gliddon Rd
Central Saanich, BC...

Spacious family home with in-law SUITE."

Gotta love it. Spend a lot of money to buy an acreage so you can have some privacy and then have someone living in your basement.

Only in The Best Place on Earth®.

dasmo said...

6545 Gliddon Rd is way over priced...

Alexandrahere said...

dasmo: Thanks. I believe the reason this works is because there is only one hook in your mouth and one jump will set you free. When you are on the lot....there is too much the salesperson can try...i.e. talk to the manager, look up stuff on the computer, take you over to some other cars that are "just as good" and in your price range and so on and so on. When you are on the phone though, you just have to say thank you and goodbye.

I have also successfully used this method when buying a video camera, various used items and even once buying a revenue property.

Renter said...

6545 Gliddon Rd is way over priced...

Agreed! And they've had that same listing for a year (okay, a year next week). They started at $798,000; price dropped to $699,800 on March 1. I guess they're going to wait another 9 months to drop it again. Thus my note about Central Saanich properties not getting the memo. North Saanich properties have started to lower prices - you can get acreages in Land's End and Swartz Bay for under $550,000 now - but Central Saanich remains stubborn.

dasmo said...

$798,000???

Chris said...

Sold listings today in Vanc a wee 74. A typical April day used to see 300 to 400 solds.

There’s a heritage building in downtown Vancouver with a giant commemorative plaque that starts with the words;

“Both JJ Miller and his brother William emigrated from Australia in 1903, made fortunes in real estate, built mansions in Grandview and lost their fortunes in the crash of 1913.”

Things that make you go hmm.

koozdra said...

In the future our crash will be analysed. We'll wonder why we thought we were so much better than the Americans. Did we think that our banking system was more honest? Perhaps our government was "better" at regulating our big six banks than they were in the US?

We'll play the blame game. Who was more responsible the banks or the government when the foreclosures started rolling in?

People on the banks side will argue that the banks were getting guarantees from the government. They had fair and honest balance sheets. They were well collateralized. Any insured loan that was given out was backed by the government. The government was responsible for having enough money in case the banks needed to cash in on the insurance.

Some other people will side with the government. Sure they were providing the insurance, but that doesn't mean that every single dollar needed to be lent out. The banks should have exhibited restraint. They should have done better background checks. They should have informed their buyers that interest rates are unpredictable. The banks competed on rates to draw more and more people into taking out more and more loans that were further insured by the government. They acted with a moral hazard.


The bank people will retort by saying that the banks were just doing what they are designed to do. Make record profits for their shareholders. If there is money that can be lent out they have lent it out to make more money on interest charges.

In the end we'll all shake our heads and wonder why we didn't see it coming all along.

I guess I'll be a bear again.

CFA Joe said...

Don't post much but I find this blog quite insightful.

Few observations:

1) we are seeing massive refinance fatigue. People don't want to borrow anymore money. common to see at the end of a long debt accumulation cycle like this. deleveraging is next

2) someone above made the comment above that "we didn't cause the greatest depression" since WW2. Um, don't know if you have noticed but the s&p500 and tsx has diverged almost 50% in the past 2 years. I think the US is out of their recession and we are in ours.
3) problem is we have nothing but resources and financials, not very promising if you ask me; I remember the 90's where we were a dog with fleas for 10 years. glad I am underweight Canada the past 3 years.
4) anybody see NBC News tonite on the oil sands and the pipeline? Good luck now.
5) I fully expect people to chase the hot money and sell Canada to buy US. as ususal

dasmo said...

" I fully expect people to chase the hot money and sell Canada to buy US. as usual" They would be a little late to the game for that now....

Bitterbear said...

reasonfirst

I recently did some negotiating on a car. I did just as you said. I went inside and got the price, which I didn't like, so he gave me a better one. Then I made a call within earshot saying that I wasn't happy etc. Popped my head back into the office and thanked him for his time but we would be looking elsewhere. He jumped up with a new number. I made another call (within earshot). My husband said good deal,take it etc but instead I responded with "Yea, I don't think so either. I'll be on the 7 pm bus. See you around 9. (I was in another city). When I popped back in, the guy was clearly in sweat. He was frantically calculating numbers then came back with a better deal.

I think the key is don't fall in love with a car and never sit down. That way they know you are ready to walk out at any time.

CFA Joe said...

yes it is late. inevitably greed sets in and people who feel like they are missing out will try to "make it up" and jump in, typically near the top. this happened in 2000 with tech stocks, it happened with RE in the states around 2006, Gold in 2011-12 and it happened here in RE around 2010-11. people will typically buy when the coast is clear per se. true investors buy when the fog is thickest and there is a margin of safety. easier said than done I know. if you don't know what you are doing, people (like me:) will eat your lunch. and people wonder why the rich get richer...

CFA Joe said...

bitterbear,

sounds like a good way to buy a house these days too. oh did I say that out loud:)

Just Jack said...

Bitterbear said "I think the key is don't fall in love with a car and never sit down. That way they know you are ready to walk out at any time."

I agree. A good way to buy a house too.

S2 (JJ's wife)

koozdra said...

Crazy or visionary?

Meet the man who's selling Canada short

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