Victoria, BC real estate blog - "because we never know when interest rates will be increased to stimulate the economy" ~ VREB
Friday, April 12, 2013
Weekend update
Wow, north of 250 comments.. Time for an update to hold us until Monday. Quite amazing how few sales there are right now. There were slightly fewer back in the late 90s, but keep in mind the Victoria CMA had 15% fewer people back then.
I have compiled a very comprehensive list of down payments,amortizations, GDS ratios, various loan programs over the years. I don't want to paste the whole article as it is very long. I figure that many people here will be interested in it.
How many listings are being held back due to decreasing y/y sales and more importantly negative media attention? Could be a tidal wave of new listings as sellers' pressures to cash out overwhelm waiting it out. Prices have only one way to go then.
Realtors are keeping their sold signs up for longer and longer periods of time. Also the "new listing" addition to the top of the signs are not moving.
Wonderful bit of speculation in the article: one month of non-negative seasonally adjusted sales data "suggests the Vancouver housing market may be stabilizing after a long slump". A long slump is less than a year?
How many listings are being held back due to decreasing y/y sales and more importantly negative media attention? Could be a tidal wave of new listings as sellers' pressures to cash out overwhelm waiting it out. Prices have only one way to go then.
How many buyers are sitting on the sidelines waiting for the market to drop? Could be a tidal wave of new buyers as they realize we won't see a meltdown.
Do you really think that there is a pent-up demand by prospective first time buyers who are waiting on the sidelines? That viewpoint would be contrary to the current record levels of ownership and the unusually high vacancy levels for rentals.
Realtors are keeping their sold signs up for longer and longer periods of time. Also the "new listing" addition to the top of the signs are not moving.
Can't believe how many people use to complain about my "new listing" topper. Sometimes I thought, "Do people have nothing better to do?" About two years ago it got so annoying I switched all my toppers to www.markojuras.com ....can't complain about nothing now! Still get emails thought "you should be embarrassed you took a photo with the toilet seat up," so painful to reply to them politely.
Worst is Dean Park. They make you have their "approved" person install the Dean Park style sign and then neighbouring properties call me complaining when the sign starts leaning over.
We've passed the "bull trap" stage. Some buyers will feel that things are "returning to normal" and purchase a home which supports the market temporarily.
One thing that I'm noticing is the widening of the gap between Fair Market Value and the selling price of homes under foreclosure.
When the market was more active there was no discernible difference between the two. Today. I notice the gap can be as large as 10 or 15 percent.
As an example, there is a property currently listed for sale on Legacy Drive. The listing says that there is an accepted offer at $440,000. You can still make an offer as the court date isn't until April 23.
In May of 2010, the home was bought for $577,000. And in June 2008 it was purchased at $562,000. And the last time the home was purchased close to the current offer was back in June 2005 when it was bought for $430,000. Averaged at $523,000.
My question to those looking to buy a home is would you consider buying a foreclosure? And if not -what reasons would turn you off?
@Marko Do you really think we'll see a magic point where inventory floods the market because all of a sudden everyone decides to cash out?
I've never suggested that there will be a quick crash... I've always maintained that the "slide" will be a long protracted affair. Inventories will continue to gently rise as the supply exceeds the demand. This (along with other factors) will continue to put downward pressure on prices. When inventory drops, prices will remain flat.
Who are these people holding back listings? Do they live in the house, if yes, then they have to buy something else. I know a few people who want to sell and buy up, but can't because they are in negative equity on the current house.
Pent up demand is one of those statements that sounds good but impossible to quantify.
Our market is in a demand-driven downturn. There can not be pent up demand when you are in a demand-driven downturn. And that's why property values are moderating downwards and will continue to do so into the forseeable future.
If we were in a market driven down by supply - our prices would be declining similar to what happened in the 1980's. As people were selling their homes at deep cuts before their mortgage renewal time. As they could not afford the higher interest rate upon renewal.
At this time, the residential market looks like it will die the death of a thousand cuts. Long and painfull.
And the way I see it, every year you wait to buy would see 2 to 3 years cut off your amortization period. Assuming you kept the same payment and interest rate.
Ironic as it sounds, the longer you wait to buy - the sooner you will be mortgage free.
If we could somehow, magically, get to the point where it only took 10 to 15 years to pay off a home at current mortgage payment levels, I think then we might see prices and sales activity increase and prices turn upwards. But as we are now, - that's at least a decade away.
My advice - take your down payment and spend it on a holiday in France or Brazil. Have some fun - there's no point in buying today.
As Mayfair Man elucidated, the move up market has slowed. That's the problem with high leveraged mortgages. As prices contract those that own high leveraged homes can not take advantage of some great deals on housing. One reason why the million plus market is very "soft" and why those hoods that are high priced are experiencing the largest decline both as a percentage and in lump sum cash.
There are two things I could see detracting me from foreclosures. You have to buy the place in "as is" status and dealing with the court seems daunting.
When it comes time to "pull the trigger", I think we will consider foreclosures.
How many buyers are sitting on the sidelines waiting for the market to drop? Could be a tidal wave of new buyers as they realize we won't see a meltdown.
Do you really think we'll see a magic point where inventory floods the market because all of a sudden everyone decides to cash out?
I think there is a small amount on both sides of the equation but they probably cancel each other out.
Factors such as demographics, home ownership rates, and population growth (or lack thereof) tip the scales in favour of buyers for the coming years. Some may be scared to catch a falling knife, others may be indifferent. Either way, inventory is destined to rise and unless Victoria's economy reinvents itself there just will not be enough buyer demand to increase property values beyond their previous peak for some time.
Particularly not owner-occupiers, who almost never decide to sell simply because prices are falling.
I'm pretty sure that JJ and several others think that once enough homeowners realize that prices will continue to fall for quite a while most of them will "abandon ship," sell their house at any cost, and rent, thereby causing and/or accelerating the meltdown.
But if patriotz's above statement is correct, then, sadly for JJ and company, this is not how the story will go.
1983- Minimum down payment increases from 5% to 10 % in response to the unprecedented volume of claims on CMHC's Mortgage Insurance Fund. Very high interest rates and the AHOP program were factors in the large volume of defaults at this time.
It happened before, maybe down payments can increase again...
It's a nearly unanimous view on this blog that a real estate market collapse in Victoria would require--among possibly several things--a spike in interest rates, and yet none is foreseeable.
So unless your idea of "soon" is much broader than most people's, statements like these are just nuts.
I'm pretty sure that JJ and several others think that once enough homeowners realize that prices will continue to fall for quite a while most of them will "abandon ship," sell their house at any cost, and rent, thereby causing and/or accelerating the meltdown.
We know that people try to avoid losses much more than they pursue gains. People won't be selling because they see the market declining, that would be like admitting they were wrong.
Not that it matters. The people that need to sell are driving today's market, and clearly there are more people that need to sell than there are buyers out there. Hence prices dropping.
It's a nearly unanimous view on this blog that a real estate market collapse in Victoria would require--among possibly several things--a spike in interest rates, and yet none is foreseeable.
Strawman.
We're in the middle of a fairly steady decline which has accelerated since last July. I'm quite happy with that, no collapse needed.
Leo, do you acknowledge that saying that mass foreclosures in Victoria will happen soon is desperate and kind of pathetic?
I know this isn't grammar, but the statements "there may be quite a lot of foreclosures" and "there will be mass foreclosures" are not actually identical as you seem to assume.
Spikes in interest rates are never foreseeable. They just happen. They are explainable after the fact. Even the "experts" get it wrong.
"They just happen."
I can see that I'm dealing with quite a mind...
Depends which "experts" one listens to and puts faith in. Not all experts are created equal. Empirical studies on the accuracy of predictions by "experts" show that some are actually quite good at predictions (infallible, no, but quite good, yes).
Some experts have been warning us for many years now that mega inflation is just around the corner; these would generally be the same experts who today warn that a spike in interest rates is just around the corner--or who warn that a spike will "just happen."
I know this isn't grammar, but the statements "there may be quite a lot of foreclosures" and "there will be mass foreclosures" are not actually identical as you seem to assume.
I also assumed that the word "soon" had a generally agreed-upon definition, but the more years that I spend on this blog, the more elastic the definition of "soon" becomes.
As a homeowner in the states, which experts would you be listening to in 2005?
You would succumb to your perspective bias and only listen to people that confirmed your decision to buy.
You would call all the people that were predicting a collapse "doomers" and "pathetic".
Today: If someone said interest rates aren't going to rise, you will accept that because it is inconvenient for you to think otherwise. Interest rates are unpredictable. They follow a chaotic path governed events that cannot be predicted.
Our economy is so vulnerable that any kind of shock would be devastating. Say for example if building slows and we see a spike in unemployment.
I agree with you Leo S, it's unlikely that someone who is comfortably making their mortgage payments would suddenly sell their home or as Introvert ranted "abandon ship".
I suspect, the market will be made up of motivated sellers that are being relocated, some that are moving up, divorces, estates or maybe down sizing.
The market would be characterized as shallow and somewhat dysfunctional depending on the type of home and location. Buyers would likely be fickle in their purchases. One month split level designed homes will sell quickly and then the next month there will be no activity at all for them.
That was what the marketplace was like for most of the 1980's. While people were not abandoning ship they certainly were wallowing through the doldrums.
As a homeowner in the states, which experts would you be listening to in 2005?
You would succumb to your perspective bias and only listen to people that confirmed your decision to buy.
You would call all the people that were predicting a collapse "doomers" and "pathetic".
But just because most people didn't and wouldn't see the collapse that happened in the U.S. doesn't necessarily mean that a) Canadians are doing the same thing, and b) Canada's market will collapse, too.
This is one of my big points that I must keep coming back to.
It's a thousand times too simple to say that phenomenon x happened in the U.S. and so phenomenon x has to happen in Canada because several of the variables are the same in both countries--even though there are just as many, if not more, variables that aren't the same.
And really, are answers to large and complicated economic and social questions likely to be exceedingly simple or are they more likely to be complex, nuanced, and highly contextual? I ask you and the readers out there.
All of this is not to say that a real estate collapse of American-style proportion isn't possible in Canada (I believe it is); however, let us (please!) dispense with the overly simplistic and downright juvenile reasoning that tends to prevail so often on this blog.
Out of 2,745 detached homes sales last year there were around 50 advertised foreclosures. Around 2 percent of all house sales. Estate sales were another 1 percent. Divorce and relocation probably added a couple of percentage points as well.
Not much really and you would not expect them to have any significant effect on the market. Except in those areas or types of properties were the sales activity is almost non-existent.
Older condominiums are an example. There are some large two bedroom condos for sale in James Bay - no buyers for them even when they are priced lower than others that have sold in the same complex.
Being priced right is important - but that does not guarantee the home will sell. You have to wait for a buyer. And that might take more than 3 months.
a 4th fl unit @1519 hillside was sold 300k last month without using agent....( previous owner brought it at 300k) I think the currently owner either did not tell me the truth about the price nor lost his mind....
I'd have to disagree with you on that one Introvert. I don't mind people opining and relating their thoughts to what has happened in other countries. Many, many times that has sparked some fabulous discussions on this blog.
What I don't understand is why you want to put them down and hush them up. I did not rain on your parade when you brought up the study of 900 Texas women commuters. And believe me -it was tough not to reply.
You see Introvert, - you make me want to be a better man.
It's a nearly unanimous view on this blog that a real estate market collapse in Victoria would require--among possibly several things--a spike in interest rates
Certainly didn't in Whistler or comparable markets which have already seen an outright collapse.
Nor were higher rates required up Island or in the southern Interior to see major bear markets.
Indeed the price declines in the above took place during a period of interest rate declines.
I've predicted 25% nominal decline from peak in Victoria regardless of what happens to interest rates. Use whatever label for that you like - it will not be pretty for a lot of people.
It's a thousand times too simple to say that phenomenon x happened in the U.S. and so phenomenon x has to happen in Canada because several of the variables are the same in both countries--even though there are just as many, if not more, variables that aren't the same.
So what variables do the collapses in Japan, the US and Ireland, Spain, and other European markets have in common? Would you not agree that these are the variables that brought on the collapse and the others are just noise?
Could it be that Vancouverites are feeling the economic pinch and are disposing of their superfluous properties?
Something that happened quite a bit in the States too. With destination and tourist towns being hit hard during the economic downturn.
Suddenly it no longer makes sense owning that second vacation home. And you certainly don't want to buy into something that can't sustain itself with its rental income.
Depends which "experts" one listens to and puts faith in. Not all experts are created equal. Empirical studies on the accuracy of predictions by "experts" show that some are actually quite good at predictions (infallible, no, but quite good, yes).
Been watching the SFD homes in the Mt Doug area for a little while now. Marko, know anything about mls320213? Was removed recenly and I noticed a price reduction just before that. Maybe taken off the market? Found an old link.
MLS seems limiting. Is there something else that provides stats on assest value, duration on market, price reductions and sold price? It would be been nice to see more detail. I have a few others I'm tracking and I wish I could have more detail.
Hey guys. I'm interested in possibly buying one of the new houses in the Hazelwood development near Happy Valley Rd. I'm fairly new to the city and don't have a realtor (yet). It seems like the realtor at the development could write up an offer for me, but I suspect she is also the realtor for the builder. I'm not sure if this is standard procedure, or if I should get my own realtor to represent me in the transaction. Any advice would be greatly appreciated.
MLS seems limiting. Is there something else that provides stats on assest value, duration on market, price reductions and sold price? It would be been nice to see more detail. I have a few others I'm tracking and I wish I could have more detail.
Email me at markojuras@shaw.ca and I'll set you up on a better system no obligations.
Hey guys. I'm interested in possibly buying one of the new houses in the Hazelwood development near Happy Valley Rd. I'm fairly new to the city and don't have a realtor (yet). It seems like the realtor at the development could write up an offer for me, but I suspect she is also the realtor for the builder. I'm not sure if this is standard procedure, or if I should get my own realtor to represent me in the transaction. Any advice would be greatly appreciated.
Hi Carly, unless you are a very experienced buyer and or know a lot about new home construction probably best to have your own represenation who can give you an honest opinion of what you are buying. Whether the roof sheeting is 3/8'' OSB, 1/2'' OSB, or plywood is just one of many important factors to assess when looking at the quality of a new home.
I am a local REALTOR® and I know quite a bit about new home construction. I also run a promotion where I give you, the buyer, a portion of the commission back on completion - it amounts to cheque in the $1000s for you. You can find more info on my website at www.markojuras.com under the "Buyers" section "70% Cash Back Program" tab.
When you are a buyer not familiar with the market in a development such as this it makes senses to use a realtor if you can find a good one. In this case it would cost you nothing and Marko and you might both gain.
If you are an experienced buyer looking at a home that is not moving you can sometimes have a listing realtor reduce the price by the commission they would have paid a buyer's realtor if you don't have one. I've done this.
Yes, as the article sums up, don't be an imbecile and spend half a million dollars on something without even looking at it.... Sheesh. Everyone in that article should go to jail. The seller, estate agent and home inspector for fraud and the buyers for extreme stupidity....
If you want an opinion on Hazel Wood, I say they look cheaply built. You also have no yard at all. I think there is better value out there in older places Like this place. You can see how they have weathered. Note how the "features" for Hazel Wood are things like "BBQ hookup!" Who cares, it should be about the envelope build, the roof, the windows... Anyway, get a realtor, Marko seems like an honest one to me, and put them to work for you. The selling agent isn't going to give any of their commission away even if you negotiate a lower price. You might as well have someone on your side... Also, NEGOTIATE!
Plane tickets are relatively cheap these days (I guess it would be a bit more from the Yukon). Buying sight unseen is not wise....at the very least I would fly out for the inspection so you know what you are getting yourself into before you remove the final condition.
I recently had a situation where a buyer from outside of BC wanted to make an offer on a property sight unseen and after discussing it with the seller we said we wouldn't entertain offers if the home wasn't viewed in person. Had multiple parties interested and didn't want to tie it up with someone who hasn't seen it. Buyer ended up flying out to view and made an offer but it went to someone else in a competing situation....
re: "nearly unanimous view". to record my view, no it will not take an increase in rates, just a slight change in perception. Going from one of rising expectations to that of falling values.
I wonder if Carly was real. Seems unlikely that someone who would be reading this blog and the comments section would make a comment like that. At least it triggered a multi paragraph Marko commercial. Coincidence... maybe.
If I wanted to take the time to setup a fake google account and make a fictitious character to my benefit I think I would not run the scheme on a Sunday night before I announce the numbers the following morning and a new thread gets started.
The Gold bugs are getting squashed that's what happened! Ouch!
I sold a house two years ago for an old guy who kept trying to convince me to buy gold..."Marko, I am telling you, in two years gold will be $3000 an ounce." He ended up taking 300k (about half what he walked away with) from the sale of the home and buying gold, yikes.
"All links to any CREA website must be accompanied by a prominent notice which makes it clear to a browser that the link leads to a website of The Canadian Real Estate Association.
This notice may make reference to the domain name itself (e.g. REALTOR.ca or ICX.CA) or may refer to CREA. No materials, names or marks may be used with the link to give the erroneous impression to a user that the individual, entity or website is somehow affiliated with CREA or any of CREA’s web sites; Unless CREA expressly agrees otherwise, all links to any CREA website must connect to the home page of the website; All links must be displayed in text or by using the graphic buttons used by CREA;The link must result in a new, fully functional, full screen browser window occupied solely by the pages created by the CREA® website."
No more linking to listings directly. You have all been warned. ®®®CREA®®® and the ®®®REALTORS®®® are going to come after you.
The homes in Hazelwood tend to be a new basement entry style with some 2,200 square feet of living space including a suite of about 1,000 square feet. All of which is squeezed onto a small 4,000 square foot lot.
In the last year there have been 121 sales in Langford for homes having between 1,700 to 2,700 finished square feet situated on 2,000 to 6,000 square foot lots.
The median price for homes with these characteristics is $465,000 or $228 per finished square foot.
On average, over the last 6 months there have been 10 sales of homes described above. And there are currently 64 listed for sale. That is a little over 6 months of inventory. Generally 5 to 7 months of inventory is considered to be a balanced market with stable price.
But, this market is heavily weighted with new housing where one developer has control over the pricing of many homes. And that buyers may add features that are not shown in the original listings. Also, many of these prices are contract prices that may not reflect actual market value.
89 comments:
Fewer sales than 2009? Trouble.
Anyone know what happened to 207-1519 Hillside Ave? Was listed for $329k
Listing cancelled.
I have compiled a very comprehensive list of down payments,amortizations, GDS ratios, various loan programs over the years. I don't want to paste the whole article as it is very long. I figure that many people here will be interested in it.
http://saskatoonhousingbubble.blogspot.ca/2013/04/a-look-at-down-payments-amortization.html
How many listings are being held back due to decreasing y/y sales and more importantly negative media attention? Could be a tidal wave of new listings as sellers' pressures to cash out overwhelm waiting it out. Prices have only one way to go then.
Realtors are keeping their sold signs up for longer and longer periods of time. Also the "new listing" addition to the top of the signs are not moving.
The Vancouver Sun is declaring the "long slump" is now over.
Vancouver housing prices stabilizing
@ Kevin
Very interesting analysis. Thanks for sharing...
@Koozdra
Wonderful bit of speculation in the article: one month of non-negative seasonally adjusted sales data "suggests the Vancouver housing market may be stabilizing after a long slump". A long slump is less than a year?
@Leo S
With the "Weekend Update" title, I was expecting an SNL skit... ;-)
Thanks for the interesting chart. It looks like we are back to 2001 levels.
How many listings are being held back due to decreasing y/y sales and more importantly negative media attention? Could be a tidal wave of new listings as sellers' pressures to cash out overwhelm waiting it out. Prices have only one way to go then.
How many buyers are sitting on the sidelines waiting for the market to drop? Could be a tidal wave of new buyers as they realize we won't see a meltdown.
@Marko
Do you really think that there is a pent-up demand by prospective first time buyers who are waiting on the sidelines? That viewpoint would be contrary to the current record levels of ownership and the unusually high vacancy levels for rentals.
Realtors are keeping their sold signs up for longer and longer periods of time. Also the "new listing" addition to the top of the signs are not moving.
Can't believe how many people use to complain about my "new listing" topper. Sometimes I thought, "Do people have nothing better to do?" About two years ago it got so annoying I switched all my toppers to www.markojuras.com ....can't complain about nothing now! Still get emails thought "you should be embarrassed you took a photo with the toilet seat up," so painful to reply to them politely.
Worst is Dean Park. They make you have their "approved" person install the Dean Park style sign and then neighbouring properties call me complaining when the sign starts leaning over.
http://www.housepricecrash.co.uk/graphs-bubble-lifecycle.php
Do you really think that there is a pent-up demand by prospective first time buyers who are waiting on the sidelines?
Do you really think we'll see a magic point where inventory floods the market because all of a sudden everyone decides to cash out?
I think there is a small amount on both sides of the equation but they probably cancel each other out.
We've passed the "bull trap" stage. Some buyers will feel that things are "returning to normal" and purchase a home which supports the market temporarily.
That's when the roller coaster ride gets scary.
http://www.housepricecrash.co.uk/graphs-bubble-lifecycle.php
One thing that I'm noticing is the widening of the gap between Fair Market Value and the selling price of homes under foreclosure.
When the market was more active there was no discernible difference between the two. Today. I notice the gap can be as large as 10 or 15 percent.
As an example, there is a property currently listed for sale on Legacy Drive. The listing says that there is an accepted offer at $440,000. You can still make an offer as the court date isn't until April 23.
In May of 2010, the home was bought for $577,000. And in June 2008 it was purchased at $562,000. And the last time the home was purchased close to the current offer was back in June 2005 when it was bought for $430,000. Averaged at $523,000.
My question to those looking to buy a home is would you consider buying a foreclosure? And if not -what reasons would turn you off?
@Marko
Do you really think we'll see a magic point where inventory floods the market because all of a sudden everyone decides to cash out?
I've never suggested that there will be a quick crash... I've always maintained that the "slide" will be a long protracted affair. Inventories will continue to gently rise as the supply exceeds the demand. This (along with other factors) will continue to put downward pressure on prices. When inventory drops, prices will remain flat.
Who are these people holding back listings? Do they live in the house, if yes, then they have to buy something else. I know a few people who want to sell and buy up, but can't because they are in negative equity on the current house.
With the "Weekend Update" title, I was expecting an SNL skit... ;-)
In a way, this blog is not unlike an SNL skit: the fact that most people have been so wrong for so long is quite funny.
Pent up demand is one of those statements that sounds good but impossible to quantify.
Our market is in a demand-driven downturn. There can not be pent up demand when you are in a demand-driven downturn. And that's why property values are moderating downwards and will continue to do so into the forseeable future.
If we were in a market driven down by supply - our prices would be declining similar to what happened in the 1980's. As people were selling their homes at deep cuts before their mortgage renewal time. As they could not afford the higher interest rate upon renewal.
At this time, the residential market looks like it will die the death of a thousand cuts. Long and painfull.
And the way I see it, every year you wait to buy would see 2 to 3 years cut off your amortization period. Assuming you kept the same payment and interest rate.
Ironic as it sounds, the longer you wait to buy - the sooner you will be mortgage free.
If we could somehow, magically, get to the point where it only took 10 to 15 years to pay off a home at current mortgage payment levels, I think then we might see prices and sales activity increase and prices turn upwards. But as we are now, - that's at least a decade away.
My advice - take your down payment and spend it on a holiday in France or Brazil. Have some fun - there's no point in buying today.
As Mayfair Man elucidated, the move up market has slowed. That's the problem with high leveraged mortgages. As prices contract those that own high leveraged homes can not take advantage of some great deals on housing. One reason why the million plus market is very "soft" and why those hoods that are high priced are experiencing the largest decline both as a percentage and in lump sum cash.
Do you really think we'll see a magic point where inventory floods the market because all of a sudden everyone decides to cash out?
Doesn't happen in any bust. Busts happen because demand drops off, not because owners suddenly decide to sell.
Particularly not owner-occupiers, who almost never decide to sell simply because prices are falling.
@Just Jack
There are two things I could see detracting me from foreclosures. You have to buy the place in "as is" status and dealing with the court seems daunting.
When it comes time to "pull the trigger", I think we will consider foreclosures.
There may be quite a lot of them, soon...
How many buyers are sitting on the sidelines waiting for the market to drop? Could be a tidal wave of new buyers as they realize we won't see a meltdown.
Do you really think we'll see a magic point where inventory floods the market because all of a sudden everyone decides to cash out?
I think there is a small amount on both sides of the equation but they probably cancel each other out.
Factors such as demographics, home ownership rates, and population growth (or lack thereof) tip the scales in favour of buyers for the coming years. Some may be scared to catch a falling knife, others may be indifferent. Either way, inventory is destined to rise and unless Victoria's economy reinvents itself there just will not be enough buyer demand to increase property values beyond their previous peak for some time.
Particularly not owner-occupiers, who almost never decide to sell simply because prices are falling.
I'm pretty sure that JJ and several others think that once enough homeowners realize that prices will continue to fall for quite a while most of them will "abandon ship," sell their house at any cost, and rent, thereby causing and/or accelerating the meltdown.
But if patriotz's above statement is correct, then, sadly for JJ and company, this is not how the story will go.
@Kevin. Amazing article. It's so hard to find info about housing policy before the 2000s. Bookmarked that for sure!
Who are these people holding back listings? Do they live in the house, if yes, then they have to buy something else.
They can rent another house.
I know a few people who want to sell and buy up, but can't because they are in negative equity on the current house.
I hope they're not serious.
I find this part particularly interesting:
1983- Minimum down payment increases from 5% to 10 % in response to the unprecedented volume of claims on CMHC's Mortgage Insurance Fund. Very high interest rates and the AHOP program were factors in the large volume of defaults at this time.
It happened before, maybe down payments can increase again...
There may be quite a lot of them, soon...
Pathetic how desperate you are.
It's a nearly unanimous view on this blog that a real estate market collapse in Victoria would require--among possibly several things--a spike in interest rates, and yet none is foreseeable.
So unless your idea of "soon" is much broader than most people's, statements like these are just nuts.
I'm pretty sure that JJ and several others think that once enough homeowners realize that prices will continue to fall for quite a while most of them will "abandon ship," sell their house at any cost, and rent, thereby causing and/or accelerating the meltdown.
We know that people try to avoid losses much more than they pursue gains. People won't be selling because they see the market declining, that would be like admitting they were wrong.
Not that it matters. The people that need to sell are driving today's market, and clearly there are more people that need to sell than there are buyers out there. Hence prices dropping.
It's a nearly unanimous view on this blog that a real estate market collapse in Victoria would require--among possibly several things--a spike in interest rates, and yet none is foreseeable.
Strawman.
We're in the middle of a fairly steady decline which has accelerated since last July. I'm quite happy with that, no collapse needed.
Fact of Life: the world rarely ever changes to the degree that one wants it to.*
*Does not apply to investment bankers, lobbyists, and oil company executives.
"..a spike in interest rates, and yet none is foreseeable."
Spikes in interest rates are never foreseeable. They just happen. They are explainable after the fact. Even the "experts" get it wrong.
Where did you get your information?
Leo, do you acknowledge that saying that mass foreclosures in Victoria will happen soon is desperate and kind of pathetic?
Oh Introvert. Surely saying thing doesn't mean it's going to happen. Surely you can dismiss these kinds of statements out of hand.
Leo, do you acknowledge that saying that mass foreclosures in Victoria will happen soon is desperate and kind of pathetic?
I know this isn't grammar, but the statements
"there may be quite a lot of foreclosures"
and "there will be mass foreclosures"
are not actually identical as you seem to assume.
Spikes in interest rates are never foreseeable. They just happen. They are explainable after the fact. Even the "experts" get it wrong.
"They just happen."
I can see that I'm dealing with quite a mind...
Depends which "experts" one listens to and puts faith in. Not all experts are created equal. Empirical studies on the accuracy of predictions by "experts" show that some are actually quite good at predictions (infallible, no, but quite good, yes).
Some experts have been warning us for many years now that mega inflation is just around the corner; these would generally be the same experts who today warn that a spike in interest rates is just around the corner--or who warn that a spike will "just happen."
Does anyone here track rental properties?
I know this isn't grammar, but the statements
"there may be quite a lot of foreclosures"
and "there will be mass foreclosures"
are not actually identical as you seem to assume.
I also assumed that the word "soon" had a generally agreed-upon definition, but the more years that I spend on this blog, the more elastic the definition of "soon" becomes.
As a homeowner in the states, which experts would you be listening to in 2005?
You would succumb to your perspective bias and only listen to people that confirmed your decision to buy.
You would call all the people that were predicting a collapse "doomers" and "pathetic".
Today:
If someone said interest rates aren't going to rise, you will accept that because it is inconvenient for you to think otherwise. Interest rates are unpredictable. They follow a chaotic path governed events that cannot be predicted.
Our economy is so vulnerable that any kind of shock would be devastating. Say for example if building slows and we see a spike in unemployment.
Would interest rates stay low? Maybe.
Yes, I'm sure what koozdra meant by "quite a lot of foreclosures" is that the number of foreclosures a year will go from 60 to 100. Yeah.
I agree with you Leo S, it's unlikely that someone who is comfortably making their mortgage payments would suddenly sell their home or as Introvert ranted "abandon ship".
I suspect, the market will be made up of motivated sellers that are being relocated, some that are moving up, divorces, estates or maybe down sizing.
The market would be characterized as shallow and somewhat dysfunctional depending on the type of home and location. Buyers would likely be fickle in their purchases. One month split level designed homes will sell quickly and then the next month there will be no activity at all for them.
That was what the marketplace was like for most of the 1980's. While people were not abandoning ship they certainly were wallowing through the doldrums.
As a homeowner in the states, which experts would you be listening to in 2005?
You would succumb to your perspective bias and only listen to people that confirmed your decision to buy.
You would call all the people that were predicting a collapse "doomers" and "pathetic".
But just because most people didn't and wouldn't see the collapse that happened in the U.S. doesn't necessarily mean that a) Canadians are doing the same thing, and b) Canada's market will collapse, too.
This is one of my big points that I must keep coming back to.
It's a thousand times too simple to say that phenomenon x happened in the U.S. and so phenomenon x has to happen in Canada because several of the variables are the same in both countries--even though there are just as many, if not more, variables that aren't the same.
And really, are answers to large and complicated economic and social questions likely to be exceedingly simple or are they more likely to be complex, nuanced, and highly contextual? I ask you and the readers out there.
All of this is not to say that a real estate collapse of American-style proportion isn't possible in Canada (I believe it is); however, let us (please!) dispense with the overly simplistic and downright juvenile reasoning that tends to prevail so often on this blog.
Out of 2,745 detached homes sales last year there were around 50 advertised foreclosures. Around 2 percent of all house sales. Estate sales were another 1 percent. Divorce and relocation probably added a couple of percentage points as well.
Not much really and you would not expect them to have any significant effect on the market.
Except in those areas or types of properties were the sales activity is almost non-existent.
Older condominiums are an example. There are some large two bedroom condos for sale in James Bay - no buyers for them even when they are priced lower than others that have sold in the same complex.
Being priced right is important - but that does not guarantee the home will sell. You have to wait for a buyer. And that might take more than 3 months.
a 4th fl unit @1519 hillside was sold 300k last month without using agent....( previous owner brought it at 300k)
I think the currently owner either did not tell me the truth about the price nor lost his mind....
I'd have to disagree with you on that one Introvert. I don't mind people opining and relating their thoughts to what has happened in other countries. Many, many times that has sparked some fabulous discussions on this blog.
What I don't understand is why you want to put them down and hush them up. I did not rain on your parade when you brought up the study of 900 Texas women commuters. And believe me -it was tough not to reply.
You see Introvert, - you make me want to be a better man.
It's a nearly unanimous view on this blog that a real estate market collapse in Victoria would require--among possibly several things--a spike in interest rates
Certainly didn't in Whistler or comparable markets which have already seen an outright collapse.
Nor were higher rates required up Island or in the southern Interior to see major bear markets.
Indeed the price declines in the above took place during a period of interest rate declines.
I've predicted 25% nominal decline from peak in Victoria regardless of what happens to interest rates. Use whatever label for that you like - it will not be pretty for a lot of people.
It's a thousand times too simple to say that phenomenon x happened in the U.S. and so phenomenon x has to happen in Canada because several of the variables are the same in both countries--even though there are just as many, if not more, variables that aren't the same.
So what variables do the collapses in Japan, the US and Ireland, Spain, and other European markets have in common? Would you not agree that these are the variables that brought on the collapse and the others are just noise?
Does Canada share these variables?
Just a thought about Whistler.
Could it be that Vancouverites are feeling the economic pinch and are disposing of their superfluous properties?
Something that happened quite a bit in the States too. With destination and tourist towns being hit hard during the economic downturn.
Suddenly it no longer makes sense owning that second vacation home. And you certainly don't want to buy into something that can't sustain itself with its rental income.
Depends which "experts" one listens to and puts faith in. Not all experts are created equal. Empirical studies on the accuracy of predictions by "experts" show that some are actually quite good at predictions (infallible, no, but quite good, yes).
Some are, but most aren't. One of the more accurate ones? Paul Krugman, and he's not exactly bullish on Canadian housing.
Yes, I'm sure what koozdra meant by "quite a lot of foreclosures" is that the number of foreclosures a year will go from 60 to 100. Yeah.
Maybe better for your blood pressure if you stick to what people actually said, not what you imagined they meant.
a 4th fl unit @1519 hillside was sold 300k last month without using agent....( previous owner brought it at 300k)
Know the unit #? Some friends in the building are thinking of selling, trying to get a feel for the prices.
Been watching the SFD homes in the Mt Doug area for a little while now. Marko, know anything about mls320213? Was removed recenly and I noticed a price reduction just before that. Maybe taken off the market? Found an old link.
320213 sold a few days ago.
@Marko - Cool beans! Thank you.
MLS seems limiting. Is there something else that provides stats on assest value, duration on market, price reductions and sold price? It would be been nice to see more detail. I have a few others I'm tracking and I wish I could have more detail.
@Marko - p.s. Do you know what 320213 sold for?
@Seth
I'm sure that Marko can set you up with a VREBMatrix (PCS) account. You can then track all those details (and more!).
Hey guys. I'm interested in possibly buying one of the new houses in the Hazelwood development near Happy Valley Rd. I'm fairly new to the city and don't have a realtor (yet). It seems like the realtor at the development could write up an offer for me, but I suspect she is also the realtor for the builder. I'm not sure if this is standard procedure, or if I should get my own realtor to represent me in the transaction. Any advice would be greatly appreciated.
MLS seems limiting. Is there something else that provides stats on assest value, duration on market, price reductions and sold price? It would be been nice to see more detail. I have a few others I'm tracking and I wish I could have more detail.
Email me at markojuras@shaw.ca and I'll set you up on a better system no obligations.
Sold for $875,000
Hey guys. I'm interested in possibly buying one of the new houses in the Hazelwood development near Happy Valley Rd. I'm fairly new to the city and don't have a realtor (yet). It seems like the realtor at the development could write up an offer for me, but I suspect she is also the realtor for the builder. I'm not sure if this is standard procedure, or if I should get my own realtor to represent me in the transaction. Any advice would be greatly appreciated.
Hi Carly, unless you are a very experienced buyer and or know a lot about new home construction probably best to have your own represenation who can give you an honest opinion of what you are buying. Whether the roof sheeting is 3/8'' OSB, 1/2'' OSB, or plywood is just one of many important factors to assess when looking at the quality of a new home.
I am a local REALTOR® and I know quite a bit about new home construction. I also run a promotion where I give you, the buyer, a portion of the commission back on completion - it amounts to cheque in the $1000s for you. You can find more info on my website at www.markojuras.com under the "Buyers" section "70% Cash Back Program" tab.
When you are a buyer not familiar with the market in a development such as this it makes senses to use a realtor if you can find a good one. In this case it would cost you nothing and Marko and you might both gain.
If you are an experienced buyer looking at a home that is not moving you can sometimes have a listing realtor reduce the price by the commission they would have paid a buyer's realtor if you don't have one. I've done this.
Carly - definitely get a different realtor to represent your interests only.
But, better yet, rent a while in the area to find out if you really like it and in a year it will be no more expensive and likely cheaper.
Carly, you might find the following link useful.
B.C. couple 'tricked' into buying unlivable house
Yes, as the article sums up, don't be an imbecile and spend half a million dollars on something without even looking at it.... Sheesh. Everyone in that article should go to jail. The seller, estate agent and home inspector for fraud and the buyers for extreme stupidity....
"it makes senses"... oops. Can we get an edit button please?
If you want an opinion on Hazel Wood, I say they look cheaply built. You also have no yard at all. I think there is better value out there in older places Like this place. You can see how they have weathered. Note how the "features" for Hazel Wood are things like "BBQ hookup!" Who cares, it should be about the envelope build, the roof, the windows... Anyway, get a realtor, Marko seems like an honest one to me, and put them to work for you. The selling agent isn't going to give any of their commission away even if you negotiate a lower price. You might as well have someone on your side... Also, NEGOTIATE!
Plane tickets are relatively cheap these days (I guess it would be a bit more from the Yukon). Buying sight unseen is not wise....at the very least I would fly out for the inspection so you know what you are getting yourself into before you remove the final condition.
I recently had a situation where a buyer from outside of BC wanted to make an offer on a property sight unseen and after discussing it with the seller we said we wouldn't entertain offers if the home wasn't viewed in person. Had multiple parties interested and didn't want to tie it up with someone who hasn't seen it. Buyer ended up flying out to view and made an offer but it went to someone else in a competing situation....
re: "nearly unanimous view".
to record my view, no it will not take an increase in rates, just a slight change in perception.
Going from one of rising expectations to that of falling
values.
"re: "nearly unanimous view"." huh?
I wonder if Carly was real. Seems unlikely that someone who would be reading this blog and the comments section would make a comment like that. At least it triggered a multi paragraph Marko commercial. Coincidence... maybe.
What happened to all those gold bugs on there? Just curious.
Monday, April 15, 2013 8:00am
MTD April
2013 2012
Net Unconditional Sales:
258 586
New Listings:
662 1,470
Active Listings:
4,417 4,638
Please Note
•Left Column: stats so far this month
•Right Column: stats for the entire month from last year
SFH Median MTD = 535k
SFH Average MTD = 598k
I'm a little suspect myself Koozdra...not towards Marko but perhaps a marketing co...
The Gold bugs are getting squashed that's what happened! Ouch!
If I wanted to take the time to setup a fake google account and make a fictitious character to my benefit I think I would not run the scheme on a Sunday night before I announce the numbers the following morning and a new thread gets started.
Sales? Where we're going we don't need sales.
Home prices tick higher despite sales slump
The Gold bugs are getting squashed that's what happened! Ouch!
I sold a house two years ago for an old guy who kept trying to convince me to buy gold..."Marko, I am telling you, in two years gold will be $3000 an ounce." He ended up taking 300k (about half what he walked away with) from the sale of the home and buying gold, yikes.
Just had to accept the "terms of service" on mls.
"All links to any CREA website must be accompanied by a prominent notice which makes it clear to a browser that the link leads to a website of The Canadian Real Estate Association.
This notice may make reference to the domain name itself (e.g. REALTOR.ca or ICX.CA) or may refer to CREA.
No materials, names or marks may be used with the link to give the erroneous impression to a user that the individual, entity or website is somehow affiliated with CREA or any of CREA’s web sites;
Unless CREA expressly agrees otherwise, all links to any CREA website must connect to the home page of the website;
All links must be displayed in text or by using the graphic buttons used by CREA;The link must result in a new, fully functional, full screen browser window occupied solely by the pages created by the CREA® website."
No more linking to listings directly. You have all been warned. ®®®CREA®®® and the ®®®REALTORS®®® are going to come after you.
Home prices tick higher despite sales slump
But for Victoria, in that article, prices have dropped month-over-month ($477K to $459K).
OK here is a test to see if Carly Walker is a sock puppet... Carly Walker is a stinky sock puppet!
@koozdra
No more linking to listings directly. You have all been warned.
Time to link to Zoocasa ... they have no such restrictions (section 9).
"we reserve the right to revoke our consent to the link at any time in our sole discretion"
Haha, welcome to the internet. I do not need your consent to link to your content.
Wow, great test Dasmo. Fool-proof :).
@Marko
[Larry David suspicious stare down]... ok... ok
The homes in Hazelwood tend to be a new basement entry style with some 2,200 square feet of living space including a suite of about 1,000 square feet. All of which is squeezed onto a small 4,000 square foot lot.
In the last year there have been 121 sales in Langford for homes having between 1,700 to 2,700 finished square feet situated on 2,000 to 6,000 square foot lots.
The median price for homes with these characteristics is $465,000 or $228 per finished square foot.
On average, over the last 6 months there have been 10 sales of homes described above. And there are currently 64 listed for sale. That is a little over 6 months of inventory. Generally 5 to 7 months of inventory is considered to be a balanced market with stable price.
But, this market is heavily weighted with new housing where one developer has control over the pricing of many homes. And that buyers may add features that are not shown in the original listings. Also, many of these prices are contract prices that may not reflect actual market value.
Time for a new thread, Leo? Knowing him, he's probably at "work," being "productive" and "responsible." Priorities, Leo...
Knowing him, he's probably at "work," being "productive" and "responsible." Priorities, Leo...
Lunch break now. Working on it. :)
Here are my stats for 8-14 April 2013.
SFH in Vic,OB,Esq,SE&SW, min 2 beds and 2 baths, priced between $375K & $775K:
Sold: 31
Avg Price: $566K
Med Price: $567K
Thirteen of the 31 sold had secondary suites and 10 of the properties went for below BC assessment.
Five homes sold in the SE areas of Mt Doug, Gordon Head and Lambrick Park for an average price of $602K.
For comparison, having identical criteria, here are the stats for the same week (9-15 April) in 2012:
Sold: 24
Avg Price: $552K
Med Price: $544K
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