Monday, June 17, 2013

June 17 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.

June 2013June2012 
Wk 1Wk 2Wk 3Wk 4
Uncond. Sales173
341


637
New Listings418
730

1449
Active Listings4809
4848


 5189
Sales to New Listings
41%
47%


 44%
Sales Projection692
682


Months of Inventory
8.1

Trend continues.  Slightly higher sales, slightly lower listings than the same period last year.  Lots of bubble talk in the media and chatter about changes at CMHC, but so far nothing concrete has come out in the open.  Whatever happens with CMHC will be the key development in the housing market this year.

124 comments:

koozdra said...

Interesting solution. Avoid a War of the Roses situation.

Divorced Edmonton couple splits family home

Just Jack said...
This comment has been removed by the author.
Leo S said...

Prices will keep going up! - CREA

koozdra said...

Prosperity will return... next year.

Mayfair Man said...

The US starts talking of taking off QE and bond prices take a nose dive. Shows you how fast interest rates can change.

Just Jack said...

I'm re-thinking my position on a 10 year mortgage term.

There is a potential for the interest rate to jump and a secure 10 year term seems worth the peace of mind. Maybe by the end of the term you will have made a sizable reduction in the principle to offset the interest rate increase.

Maybe?

The worst case scenario - at least you got to own a home for a little while. 10 years older and bankrupt.

Tren said...

I need some financial advice... I've got 700k cash. Stable job. Average pay 45k.
Should I 1)buy 3 cheap apt/condo near dt and rent them out?
or 2) buy a house and rent out 2beds to students around uvic?

Thanks

@Just Jack:

you've got a good point.. which broken should i go for with those private mortgages corp investment?
I am in my late 20s...(and I do need a place to start a family. have kids etc in next 2 years.. ) any other options?

totoro victoria said...

If you have 700k cash you should investigate a number of options.

Rental property does not have the greatest returns in Victoria except for specific properties that you have to look a long time find. Houses with suites seem to have better returns.

A rental property near UVic might be okay but you should look for something with a suite if you are set on real estate. It might be better to finance with a mortgage because of tax deductions for rental income. You should make sure you understand the numbers and do spreadsheets.

A paid-off house will still cost you $500-$600 a month and a ground-level suite might generate $1500/month. You are looking at maybe adding $750 a month after tax, not counting principal pay-down or appreciation/depreciation. You are also looking at what you would have paid in rent yourself to add to this number.

I recommend you also look at Canadian Couch Potato for investment portfolios. There is a fee based investment service ($3000) that they offer that comes recommended - if you need this. You might not if you can figure it out yourself and are up for a bit of self-study.

I would strongly recommend against a non-flat fee financial advisor (they make money from front and end-load fees/commissions).

Just Jack said...

There must be a mortgage broker on this blog that can help you.

If you are going to be a private lender then you should lend locally and have someone independent of the broker review the property. Don't ever believe what the broker's appraiser tells you about the value of the property.

You should be able to take a dozen potential mortgages to an appraiser to review and he/she should help you to estimate the security of the capital you're investing in. Just make sure the appraiser does not have a conflict of interest if he/she does work for that broker.

koozdra said...

Nice "kitchen".

$800 / 1br - SMALL HOUSE with GARAGE + STORAGE BLDG. (East Sooke)

Nathan Stretch said...

@Tren Good advice from Totoro there. If you check out Canadian Couch Potato, start with the links in the header - About, FAQ, etc., rather than jumping straight into the blog itself.

Marko said...

So much for higher vacancy.....lost out on two rental applications in two days. No pets, non-smoking. What does it take :)

Leo S said...

Well back in the day they used to have signs like "no unmarried couples" or "no Irish". Maybe now it's "no realtors"

totoro victoria said...

If there are a couple of equally good candidates we just go in order of applications received.

Probably pays to check listings and respond asap to new ones.

koozdra said...

Maybe now it's "no realtors"

Haha, I don't we're there yet.

totoro victoria said...

@Tren if you are really interested in real estate and you have this cash you should look south of the border imo. Texas being a prime candidate right now. Go to biggerpockets.com to investigate this market and rentals in the US more.

Also, don't forget to max your TFSA investments (use Can Couch Potato) and consider using your RRSP limits to reduce taxes going forward. At $45,000/year RRSP contributions might not be the best use of your money though.

koozdra said...

I hope that Uvic never gets it in their minds to build student housing. That would have an interesting effect on the local economy.

koozdra said...

"These continual changes have made it increasingly difficult to qualify AAA clients. Applications that were approved a few months ago are now being declined or approved with more conditions."

Lenders becoming more prudent. Weren't they prudent before?

New Challenges for Borrowers and Brokers Alike

koozdra said...

"RENT TO OWN" "NOTHING DOWN#2-1020 Queens Ave. seller financing available OAC

No money, no problem. Get it quick before it loses more than 50% of it's value.

13334682

koozdra said...

How do we compare to Victoria?

koozdra said...

"Turns out, on average, each of us has nearly $40,000 in non-mortgage liabilities, an amount that grew in the past year by 3.2 per cent."
...
"On a net basis, reports BC Stats, the province lost 2,234 residents in the last three months of 2012 alone."


Barbara Yaffe: British Columbians flee rising housing costs

koozdra said...

"Turns out, on average, each of us has nearly $40,000 in non-mortgage liabilities, an amount that grew in the past year by 3.2 per cent."
...
"On a net basis, reports BC Stats, the province lost 2,234 residents in the last three months of 2012 alone."


Barbara Yaffe: British Columbians flee rising housing costs

caveat emptor said...

Right now ALL the provinces except Alberta and Saskatchewan are losing people to interprovincial migration

BC's population growth rate is middle of the pack for Canada

Introvert said...

That's impossible. Citizens only flee the province during BC NDP governments.

Leo S said...

That CMT article is very interesting. This bit particularly.

"To put this last guideline into perspective, take the example of Mr. & Mrs. Smith. Both have been employed full time in salaried jobs for 3 years. Each earns $60k/year. They have credit scores over 800, a car loan with a $500/month payment and a $15k unsecured credit line with $75/month interest-only payments. Add to that RSPs worth $150k. Dream clients, right?

In 2012, the Smiths easily qualified for a $640k mortgage when they purchased their $800k family home in the suburbs."


This is what goes for "dream clients"? $640,000 mortgage on $120,000 a year? Absolute and pure insanity.

info said...

Chinese news headline: Nobel Laureate (Paul Krugman): Canadian economy is extremely fragile. Housing bubble about to burst

Paul Krugman is an American economist and Professor of Economics and International Affairs at Princeton University. In 2008 he won the Nobel Memorial Prize in Economic Sciences.

There is also a sugar-coated Canadian news article that discusses Krugman's views.

Just Jack said...

Canadian house prices in different cities are no longer operating in a unified manner and are more localized today than the recent past when there was a national direction in values across all cities.

I would expect the provinces and cities will have wider swings from each other now that CMHC is less effective in controling the market.

At this point, I don't believe we generate enough volume in sales to support our current price levels.

Normally I would feel compelled to provide some evidence of my theory, but since a Princeton prof doesn't have to - neither shall I.

patriotz said...

BC's population growth rate is middle of the pack for Canada

Only if you weight all members of the pack (i.e. all 13 provinces/territories) equally.

You can see from the chart that BC is growing at the same rate as Quebec and is behind Canada as a whole, all other western provinces, and Ontario.

caveat emptor said...

BC's population growth rate is middle of the pack for Canada

I think my characterization was fair. Ignoring the territories you basically have three groups of provinces: the rapidly growing Prairie provinces, the non-growing Atlantic provinces, and the medium growing provinces of BC, Ontario and Quebec. The latter three are all growing at a rate quite close to Canada's average rate. Eyeballing the graph it appears that BC's growth rate was almost equal to the Canadian average in 2010-11 and slipped below a bit in 2011-2012.

The data is available in tabular form.

Bottom line - if BC is growing at within .1% of the national average "middle of the pack" is a fair descriptor.

koozdra said...

Google is shutting down my beloved google reader.

Is there an automatic way to tweet new posts?

Introvert said...

I love it. Every time I invoke Krugman, many on this blog piss on him. Krugman publicly worries that Canada's bubble might pop; Krugman is venerated!

Of course, it is smart to heed what Krugman says; compared to most, he's correct a lot.

caveat emptor said...

Paul Krugman is one of a relatively few high profile economists who is actually worth listening to. Dean Baker is another. The fact that both are on the record expressing concern about Canadian house prices is worth listening to for sure

Leo S said...

>> I love it. Every time I invoke Krugman, many on this blog piss on him.

Huh?

Renter said...

>> I love it. Every time I invoke Krugman, many on this blog piss on him.

I could be wrong, of course, but think that is very specifically CP.

totoro victoria said...

Marko, I just realized you are looking for a place mid-month. Can be more difficult as there are fewer places available than on the first.

Chris vanresident said...

Could the chap with the $700,000 invest look at a small apartment building? How about housing up Island? It's been dead for so long maybe it isn't overvalued. Comments?

Chris vanresident said...

Could the chap with the $700,000 invest look at a small apartment building? How about housing Up -Island? It's been dead for so long maybe it isn't overvalued. Comments?

fox said...

to koozdra:
In light of Google Reader shutting down I've switched to feedly.com. Not as nice and minimalist as the Reader, but still OK.

Sorry for offtopic.

koozdra said...

@fox Thanks

subprime11 said...

Throughout the western world it's been an active collaboration of the governments and the banks and the real estate industry and the builders. For private parties, it's just a nice one-off windfall (if you're the boss). But if tax rates remain the same, tripling home prices are such a windfall for any level of government that it's really worth it to encourage the madness where and whenever you can. It doesn't get more predictable than that. And neither does the follow-up: with prices, but especially sales, dropping off a cliff, tax revenue falls, and since there's nothing as addicted to anything as a government to taxes, services and benefits go out with the bathwater. But only after all lenders have been made whole with the - largely future - tax revenues of the home buyers and their unborn progeny. It's a very simple story really: this is a widespread tale of western societies transforming themselves into pyramid schemes; or perhaps we should say one big global Ponzi scheme. And these Ponzi things collapse, and there's nothing anyone can do to "fix" that: the poisoned chalice must and will be emptied to the last drop. Only, the politicians - legally - have their hands in everyone's pocket, so they can throw around trillions of dollars to hide the process of the plunging system for as long as it lasts. That's where we're at right now. And it's not that all of these folks have evil minds; the intelligence level of politicians in the Netherlands approaches zero as much as it does in other western countries. The issue is that the entire system has blinders on, the blinders of ever-lasting growth economic "education", and of when you have none, do what you can, sell your grandma if you must, to return to growth ASAP. A few who understand it could be labeled evil; the rest are all blinded by the lights of power. And at best completely useless when it comes to governing a society that is not growing rapidly and happily. They can think in only one dimension, and that one-dimensional thinking can in the end lead to one end only: complete and utter disaster. It's everything on red every time and every day, and that's not how the world works. Every time black comes up is, for these people, nothing but another reason to put it all on red again next time. A surefire recipe for mayhem. But it's all they have ever learned. -

koozdra said...

Poloz - "Our recovery has been based on household spending..."

Canadians willing to go into as much debt as is required to hide our recession.

Just Jack said...

Victorian's are doing such a good job in conserving water, that the water authority has had to increase its rates to cover its operating expenses.

With that kind of logic, I will be leaving my tap flowing all week, so that my water bill will be less next month!

In my opinion, that rate hike must be rolled back and that money theft rebated to the consumer as it goes contrary to public water conservation.

We need protection from these bureaucratic bandits. They can't manage their expenses. We start by cancelling everyone of their smart phones and give them a handful of quarters for pay phones. No company vehicles for private useage. Can't use them to get from home to work and back anymore. No bonuses. And every month the books aren't balanced - the lowest perfoming manager gets fired.

koozdra said...

Woooooh

https://twitter.com/BenRabidoux/status/347418571422437377/photo/1

subprime11 said...

interesting Fw:
No matter what happens next, the chance that central banks will be able to continue to manipulate down both bond yields and interest rates is getting slimmer by the day. Nonetheless, they'll keep on doubling down on their bets: the more they lose control, the bigger the losses for the financial community will get, and the more they will clamor for more stimulus.

Yields and rates rise for the simple reason that investors fear they will rise. And that is a mechanism, especially because it happens in the middle of the biggest stimulus spending in history, that will prove extremely hard to suppress.

The finance community has increasingly come under the illusion that in reality they are the economy, and drawn a large part of the deluded public with them, but the real economy is still driven not by banks and investors, but by the 70% of GDP that depends on consumers. Whose debt rises with every bond their central bank purchases, whether they're told so or not.

Or the finance community may fool themselves into believing that at least when they are doing - relatively - well, the real economy will also be better off, but that's not true either. The opposite is true: the financial world is doing well at the cost of the consumers responsible for 70% of GDP, since everything finance would be a disaster if not for the stimulus measures paid for by today's consumers and their progeny.

Everybody in finance understands that piling more debt onto a system drowning in debt is at the very least a risky adventure. But they are not the ones bearing that risk, so why should they care? And those who do carry the risk, the population at large, continue to float somewhere between ignorance and gullibility until it's too late.

We can reach the end of this game in one of two ways. First, the people in the streets can call a halt to the illusionary circus that has become our financial system, by refusing to have more of their wealth transferred to the private sector. Since this hasn't happened to date, it's probably more likely it will end the second way: Since stimulus is not just an addiction, but one that requires ever more of the fix provided, and there is no limitless supply of it, interest rates and bond yields, which have been held at historic lows at great cost to society, will rise as the financial community will increasingly demand returns on investments.

You can restructure debt on a voluntary basis; we haven't done that, we've instead chosen to hide it as far and as deep as possible. But it will be restructured - and defaulted on - regardless: higher interest rates and sinking bond prices will inevitably and inexorably start to draw bad debt from its hiding places. Therefore, the tangible desperation of Abenomics simply hastens a process which would have happened anyway.

It's a shame for the people in the street that it must come to this, because the costs for them will be many times higher than if they had made their voices heard earlier. But perhaps, given the entanglement of governments, central banks, the financial community and the media, this was unavoidable.

What's positive for those people is that it means the entire investor model of the economy as we know it is dead (though I don't think many are ready to accept this), once it's obvious it was only held standing up through ever larger injections of taxpayer funds. At least they won't have to worry so much about vultures picking at the carcasses of their lives, even as these lives will in most cases be pretty destitute.

totoro victoria said...

Bureaucratic bandits are stealing your money and deserve to be fired. Greedy landlords are getting rich off you and don't deserve to be paid rent.

It's tough when everyone is being so unfair.

koozdra said...

It is unpatriotic to question our leaders. If they say higher taxes are necessary, we should accept that. They know what they are talking about. They are the experts at leadership.

a simple man said...

My landlords are not getting rich by any stretch. In fact, they are absorbing the losses of the market while I remain unscathed.

Just Jack said...

Landlord's are getting market rent. There's nothing unfair about that at all.

What is unfair is when a government body raises rates to encourage conservation and then turns around and raises rates again because people are conserving too much water and they are losing revenue. Do you think for one moment that if water consumption went up - that same body would reduce the water rate!?

They all seem to follow what BC Ferries started. If ridership or usage is down - then raise the fees! That's what a monopoly can do. So who is protecting the public from this form of Usury?

As one Chief Warrant Officer said to me "This is what society deserves when they have their thumb up their arses and their minds in neutral"

And this will affect landlords too. Your tenant may be paying the freight on this but it takes away from their disposable income. And while your tenant can't fight city hall - they sure can refuse any rent increases or chose to rent elsewhere.

kabloona said...

koozdra:

Ben's tweet sure looks scary, but I prefer to see the ordinate extending all the way down to the abscissa...

;-)

CS said...

The CRD for some reason considers water a precious resource that must be conserved, yet Canada, with less than one half percent of the world's population, has 7 percent of the world's fresh water.

So instead of trying to shove their religion of the environment and the politics of socialism down everyone's throat, the CRD should adjust the price of water to maximize return on investment to the taxpayers who fund the CRD's water supply system.

If they have spare capacity, they should lower the price to encourage greater use. Only an idealogue or an imbecile would raise the price in the face of falling demand.

koozdra said...

Reminds me of Manitoba Hydro. A couple of years back they ran a heavy campaign called Power Smart so people would use less energy. All that excess capacity was then sold to the states. Then, instead of lowering prices, they raised them.

Sorry consumers, you're going to have take one for the team. We don't want to disturb our job creators.

StalJ said...

Time for BC's capital to make a move

Renter said...

@CS: Except that, historically, Victoria experiences the driest summers in Canada (outside of the extreme north). There is a reason we can go to Stage 3 water restrictions and there have actually been concerns that Victoria could run out of water over the summer. It's not unheard of; happened to Tofino in 2006.

We're encouraged to conserve water for a reason.

Just Jack said...

Except that we are not being encouraged to save water when the CRD raises the rates because we are using too little water.

Damned if you do - Damned if you don't

And it isn't because we have a water shortage - its because we have a water delivery problem. With half of the water not making it to the homes because of leaking water lines.

As for Victoria having the driest summers in Canada - that's only in Oak Bay. The rest of Greater Victoria has between 150 to 160 days of rain each year. Many a time I will cross Foul Bay Road just to get out of the rain. Other times I'll just have someone from Oak Bay bend over so that I can see the sun shine.

CS said...

We're encouraged to conserve water for a reason.

The reason being that:

(a) As a matter of principle the CRD sees no reason to adjust supply according to demand — "people just better get used to what we deem to be sufficient;"

(b) Here on the wet West Coast of Canada the water supply cannot be increased and, year by year, as Victoria grows we will have to use less and less water.

or

(c) Water conservation as a pseudo-environmental conservation issue is a smart ruse to justify monopoly pricing of water, which supports the CRD bureaucrats in the manner to which they are accustomed.

CS said...

Oops, I see JJ has the answer. The Wellington boots who run the water supply system lose half the water to leaks. LOL.

CS said...

No matter what happens next, the chance that central banks will be able to continue to manipulate down both bond yields and interest rates is getting slimmer by the day.

Interest rates may move up a bit, but the Fed and other central banks in the West may be able to hold rates low for a lot longer than many expect.

If the Fed and others keep printing money, declines in real wages, necessary to achieve wage convergence between the West and the Rest, can be achieved without too many people noticing what is happening.

In fact we are now well on the way. In 1994, when the WTO was inaugurated, Chinese wages were 2.5% of US wages. Today they are about 20%. Given another few years and we may be as poor -- or as prosperous, depending on the point of convergence -- as workers in the Third World. Then we might once again get to make shoes and shirts, computers and car parts for one another rather than importing them from the sweatshops of Asia.

Present circumstances, particularly cheap Chinese stuff at Walmart, etc., allow money printing on a massive scale without measurable effect on the inflation rate (as long as you ignore the cost of property and other real assets when measuring inflation, as is the case with the CPI).

And cheap money suits the money power very well. It allows the accumulation of inflation-proof assets cheaply, while stimulating the construction industry, one source of employment that cannot be outsourced. Thus it eases the difficulty of West-Rest wage convergence, or at least it kicks the can down the road.

caveat emptor said...

"The rest of Greater Victoria has between 150 to 160 days of rain each year."

Who wants to do the JJ meteorological smackdown?

dasmo said...

http://www.olympicrainshadow.com/olympicrainshadowmap.html

dasmo said...

I get the impression that JJ lives outside the rain shadow....

n.y.k. said...

"The rest of Greater Victoria has between 150 to 160 days of rain each year"

This is correct. Most of Greater Victoria has around 150 days of precipitation per year.

Just Jack said...

Or we can put money into repairing our aging water infrastructure system and reduce the loss of water.

I see that the Yanks already have a bridge across the I-5. How's that new Blue Bridge comming? I guess the Chinese haven't finished fabricating it for us.

caveat emptor said...

"The rest of Greater Victoria has between 150 to 160 days of rain each year"

Even if you call a day with 0.01 inches of rain a "day of rain" much of Greater Victoria misses 150 days. But that definition is kind of like saying Victoria has 300+ "sunny days" a year based on the fact that most places have 300 days of the year with at least some bright sun.

A more reasonable definition of "day of rain" might be days with at least 5 mm (0.2 inches)of rain. By that definition Greater Victoria has 35-70 days of rain (based on downtown and Sooke respectively)

caveat emptor said...

JJ needs to move to Fairfield. The sun always shines on the residents here as we shop for organic radishes and $5 popsicles at the Moss Street market.

Plus it only rains at night after our gifted children have quickly fallen into a deep uninterrupted sleep.

dasmo said...

Chuckle...

yogurt said...

I was always curious about this house along my bike route, which has now dropped pretty far. Assessed at $630K, originally listed at $565K, now $499K.
http://www.realtor.ca/PropertyDetails.aspx?PropertyId=13110079

55 days on market.

dasmo said...

Correct me if I'm wrong but isn't the Gonzales station the only one in the rain shadow? I didn't realize that the coastal zone of Colwood and Metchosin was in there! I believe the main weather station used for "Victoria" is the airport isn't it? Also outside the shadow.

koozdra said...

Canadians obsessed with real estate, poll suggests

koozdra said...

Looks like ours went down a bit.

Canada’s Rental Vacancy Rate Increases

Fiduciary said...

Wow Yogurt, that seems like a nice house in a nice area, anyone have insights as to why it hasn't sold, and has needed so many price drops? I would think that compared to a standard Gordon Head box/bungalow that property would compare quite favourably.

subprime11 said...

sales in Oak Bay seem to be slowing this past week. Spring Fever is over and the remaining buying pool are in no hurry. More downward pressure on prices. Bernanke speech shocks people back to reality. Downward pressure on markets and the end of the world as we know it but on the bright side we should have nice weather this weekend.

Introvert said...

How's that new Blue Bridge comming?

How's that learning-how-to-spell coming?

Renter said...

I just checked out a website called World Weather Online and honestly it's pretty nifty.

It indicates that average annual rainfall in Victoria compared to Oak Bay is not significantly different (but different enough to show that they're not using the same weather station). So I'm guessing that Oak Bay is not the only one in the rain shadow. You can see the annual percentages rise as you travel west and north.

According to this site, the average annual rainfall is:

Oak Bay - 18.8 inches
Victoria - 19.3 inches
North Saanich - 36.8 inches
Langford - 19.3 inches
Sooke - 32.9 inches


For the record, Tucson, Arizona, gets 11 inches per year.

Leo S said...

>> and a good number of them are obsessed with it

Guilty.

Introvert said...

Imagine JJ as a weatherman, snickering while asking people to bend over all the time.

StalJ said...

Meanwhile as we discuss the weather...

Rates up 30% since May.
Gold down another 6% today.
Oil down 3%.
Canadian banks making 2013 lows...

Maybe the Yankees knew what they were doing betting against Canadebtians.

CS said...

annual rainfall in Victoria compared to Oak Bay is not significantly different

A fact that has no bearing whatever on the availability of water throughout the GRVD, which depends on water from the Sooke Hills, where it rains nearly every day of the year.

Just Jack said...

The 3.4% vacancy rate is for the entire Greater Victoria area. Yet the city has most of the stock of purpose built rental units. Out of the stock of some 23,000 rental units about 800 were empty. A quick search on Craigslist showed another 500 condos also for rent. Add in basement suites, town homes and entire houses to rent and most of us can see that this is a serious concern for those that depend on rental income to pay their bills.

This isn't good news for landlords either. A high vacancy rate also means a high turn-over rate and that means higher costs of painting and cleaning the suites between tenants.

It also signals that there isn't any significant pent-up demand to cause home sales to increase. That's not good for builders of condos and houses. And that's not good news for our employment rate or net immigration.

argumentum ad hominem

Just Jack said...

Anyone who bought their home in the last five years is going to have a tough time selling today. Unless they're prepared financially and psychologically to take a loss.

Most of today's sales are of homes that were bought a decade or more ago. If I were a prospective purchasers I would concentrate my search on those properties bought a decade or more ago and not waste too much time in negotiating with home owners who have owned their properties less than five years.

Just Jack said...

Older condominiums in the City are certainly leading the way to lower prices.

A mid 1970's built two-bedroom condominium in a choice city location like Fairfield start at $170,000 with a median price of $241,000 or about $235 a square foot. And that's for a renovated condominium in Rockland, Fairfield and James Bay. You have to go way back to 2006 to find these older condos selling for less than they are today.

But with over 6 months of inventory and two new listings added for every sale that happens, there is no hurry to buy.

caveat emptor said...

"Most of today's sales are of homes that were bought a decade or more ago."

Is that much different from normal (pre-boom) times? I have read that the average Canadian moves five times in their life. If that's true then houses appearing on the market about every ten years on average doesn't sound unreasonable.

I agree with your point though that people who bought in the last 5 years in Victoria) are much more likely to face a financial barrier to moving as they will be very likely to lose money, certainly if transaction costs are accounted for.

Just Jack said...

Back in 2007, the turn-over rate for housing was higher as people were moving up the property ladder. A lot of the homes selling back then were bought less than 3 years before.

So it depends a lot on the economy. And while I have plotted re-sales, I have yet to find a clear pattern as to what the average length of time is that people own their homes.

My grand-parents owned their home for 40 years. Yet you'll find a builder owning his/her home for under 2 years.

Just Jack said...

Back in 2007, the turn-over rate for housing was higher as people were moving up the property ladder. A lot of the homes selling back then were bought less than 3 years before.

So it depends a lot on the economy. And while I have plotted re-sales, I have yet to find a clear pattern as to what the average length of time is that people own their homes.

My grand-parents owned their home for 40 years. Yet you'll find a builder owning his/her home for under 2 years.

Just Jack said...

And now for Barrie Mountain.

Development on the mountain started about a decade ago. Which means you won't find a home over 10 years old. In fact half of the homes for sale today are less than 5 years old. Just old enough to start replacing their stainless steel kitchen appliances.

Over a years worth of inventory for sale and 3 homes being listed for everyone that is lucky enough to sell.

And what about home prices? Well because the development is so new - most home prices have never been cheaper than they are today. That's right - most of those that live on Bear Mountain have taken a paper loss on their homes.

Times are not good in construction and the Albertans are moving back to the oil patch. Jed, Granny, Jethro and Elly May are once again loading up the truck.

Homes selling between 90 to 105 percent of their assessed values.

http://www.youtube.com/watch?v=0_XAPku7SgE

subprime11 said...

humans are genetically wired to act as a herd which likely stems from our tree swinging days when safety in numbers increased your odds of survival. My herd mentality kicks in from time to time and it tells me to buy gold just when it's reached it's peak. Then I lose a bunch of money. I almost did it again at $1900. Observe the herd closely and resist your own urge to join them. We've never crossed the river at this particular point. The water runs deep and fast and the crocs are just below the surface.

http://www.youtube.com/watch?v=LU8DDYz68kM

koozdra said...

Move over Krugman, make room for Lefebvre.

Our housing prices are high not because of unprecedented economic government stimulus. They are not high because a national agency is insuring our big six banks against loss. They are high because of immigrants. Rich, rich, immigrants.


"Mr. Lefebvre sees a relationship between markets with a higher share of foreign-born population and higher ratio of average house prices-to-average disposable income."

Canadian Housing Overvalued? Maybe Not

Just Jack said...

I would have to disagree with Mr. Lefebrve analysis because it isn't complete.

Temporarily the market may become inflated over the level of the local economy. Since only 3 percent of the stock of housing is trading at any time, a big influx of immigrants from wealthly countries can have an effect on prices - but only temporarily. As immigration crests and then falls, sales activity would drop off rapidly and prices would revert to the level of what the local economy can support. What has actually been created is the "mother" of all bubbles.

The market place will always correct to the level of the local economy.

Seth Perry said...

Canmore Flooding 2013 - VERY close to homes

Those poor people. I hope they have insurance

a simple man said...

Never buy a house next to a mountain stream.

a simple man said...

This week seems to be a price drop free-for-all in Oak Bay.

Just Jack said...

There have been six quick sales (listed and sold in under 30 days) in Oak Bay so far.

One on Eastdowne that orginially sold in September 1994 for $226,900. And 19 years later for $532,500. No updating - looks like an Estate Sale.

A South Oak Bay rancher bought in April 2008 for $710,000. Updated and resold for $715,000.

Another home that also sold back in 1994 for $253,000. Resold for $649,000 after being tarted up inside.

Another South Oak Bay home bought in 1976 for $71,000 or about 2 to 3 times one person's income. Updated and re-sold for $846,500 or about 10 to 15 times one persons income.

One more South Oak Bay home bought in February 2010 for $820,000. Updated and re-sold for $872,500

An Uplands home bought in 1982 for $242,000 and re-sold for $972,000. A four fold increase over 30 years starting around the beginning of the Baby Boomer buying cycle up to the end of the cycle. Or from 12% mortgages to 3% mortgages.

Homes that haven't been updated sold from a low of 92% to a high of 103% of their assessed value.

Introvert said...

How about those floods in Alberta! Wowzers.

They're currently planning for a controlled evacuation of downtown Calgary...

I was quite struck by an article written just three weeks ago in the Calgary Herald, "Alberta urged to prepare for increasingly severe weather as insurance losses mount."

A few snippets:

Canada’s insurance lobby says Albertans are less likely to be worried about weather trends linked to climate change than others in the country, despite a recent six-fold increase in insured damages from severe storms, fires and flooding.

But as property and casualty carriers respond by hiking premiums up to 25 per cent this year, the Insurance Bureau of Canada says the province and its municipalities need to get serious about mitigating losses in Alberta that have mounted to an average of $670 million annually in the past four years compared to an average of $100 million annually in the previous 15 years.

Polling done this month for IBC found 91 per cent of Canadians have noticed a change in weather patterns over the past decade, but only 80 per cent of Albertans had spotted a trend.

... residents were also more likely than other Canadians to make the mistake of naming Ontario instead of their home province as the largest producer of greenhouse gas emissions that have been linked to climate change.

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

In the coming days and weeks, it will be taboo in Alberta to mention climate change as possibly relating to these unprecedented floods--cognitive dissonance at its finest.

koozdra said...

Alberta flood victims mostly out of luck with insurance

caveat emptor said...

I hope government assistance is available to those in need.

But I hope it won't be to the extent of rebuilding creekside mansions on floodplains

patriotz said...

Those poor people. I hope they have insurance

Just heard a spokesperson from the Insurance Bureau say that there is no insurance against overland flooding in Canada (Global National).

kabloona said...

No insurance, and Alberta Disaster Relief fund capped at $200 million...

Damage estimate in the billions. Nice...

Mayfair Man said...

I tried to run some numbers for what the difference in mortgage payments would be if from the recent increase. From the low of 2.75% for a 5 year to 3.29 %(RBC newly increased rate). That would be a 20% increase in interest payments. This seems significant to me.

Leo S said...

You can still get 2.99% for a reasonably featured mortgage

dasmo said...

When I got 2.99 the advertised rate was 3.5....

Leo S said...

Interesting times coming though. What with the situation in China, I think this "economy is recovering, stimulus is over" messaging might be quite temporary.

kabloona said...

Introvert:

Thanks for the link to the Calgary Herald article from May 29th.... this excerpt is creepily prophetic:

"John Pomeroy, the Canada research chair in Water Resources and Climate Change at the University of Saskatchewan, has studied rainfall records on the Prairies for the past century and found a marked increase in the number of multi-day rain events during the summer that can overwhelm streams and rivers.

“Those big frontal systems are increasing in their intensity and frequency,” said Pomeroy, “and we’re fast learning that our roads, our bridges and even some of our towns aren’t any match for the rainfall and the overflow that results.”

While Alberta’s infrastructure is better able to withstand the threat of increased flooding than that in other Western provinces, he said there are areas like the Cougar Creek subdivision in Canmore that are especially vulnerable.

“Cities need to be much more rigorous about where they’re letting people build,” Forgeron said.

“That home along the river is beautiful until the water starts running through your living room.”

Residential development in older neighbourhoods along the Elbow River and Bow River in Calgary occurred long before the risk was known and the city has had to build embankments or develop plans for the placement of temporary barriers to prevent flooding..."

And ironically, perhaps, Calgary and the University of Calgary are pretty much ground zero for Climate Change Denial in Canada...think of Barry Cooper, David Bercuson, Tom Flanagan - and Harper himself. I saw Harper on the news last night saying he never imagined that Calgary could flood like that.

Duhhhhhhhhhh.....

subprime11 said...

A few days ago, in the shadows of its revelations concerning Edward Snowden, The Guardian - in its Sunday sister The Observer - ran another piece that warrants scrutiny. The core line in it is this: Trying to solve a debt problem with more debt has created a bigger bubble, (and it's hard to see what the central banks can do). (The core term in it of course is "stonking crashes", I love that.) And then Wednesday Jill Treanor, also for the Guardian, quoted Bank of England director Andy Haldane: "Let's be clear. We've intentionally blown the biggest government bond bubble in history ... " Combine the two, and you get a peek into the reality of what moves our economies these days, and it's not a pretty peek once you think it through. It shows you that all the talk of recovery is just empty air, whether you're in Europe, Japan or the US. That is, again, if we can agree that a recovery cannot be purchased. i.e. that you cannot solve a debt problem with more debt.

Marko said...

Monday, June 24, 2013 7:50am

MTD June
2013 2012
Net Unconditional Sales: 506 637
New Listings: 1002 1,449
Active Listings: 4,863 5,189

Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year

a simple man said...

thanks, Marko!

Leo S said...

Krugman on why this retraction of stimulus is a bad idea. http://www.financialpost.com/m/wp/news/economy/blog.html?b=business.financialpost.com/2013/06/24/paul-krugman-the-fed-has-lost-sight-of-whats-really-important

My bet is that the fed reverses course within a month

Leo S said...

Traveling...

info said...
This comment has been removed by the author.
a simple man said...

So...some rambling here. Calgary just suffered an almost unimaginable loss of property. There is going to be A LOT of work for contractors there for years to come. Not so much here.

Will there be a mass exodus of contractors to the new promise land and what will this do to our housing market?

info said...

"My bet is that the fed reverses course within a month"

So you are saying that the economy in North America, Canada included, will continue to struggle enough that it requires extreme stimulus through emergency interest rates and other sources of stimulus.

An economy that requires extreme stimulus is an economy that also puts much downward pressure on the housing market.

House prices in Victoria have been on a clear downward trend even as 5-year fixed mortgage rates were dropping for most of the past year. This downward price trend will continue.

info said...

The average 5-year fixed mortgage rate from 1973 until today, according to RateHub, is 9.25%.

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

BMO senior economist, Michael Gregory, weighs in on the future of 5-year fixed mortgage rates:

"There’s a general sense that the era of low yields is over(which means higher interest rates).

The Fed knew that the moment they started to talk more openly and clearly about stopping their purchases, the market was going to puke… Keep in mind that when you refinance a loan, whether it’s a car loan or a mortgage, you may be paying higher interest rates than you are now. Be prepared for normal."

dasmo said...

Rates still look low to me

info said...

"Will there be a mass exodus of contractors to the new promise land and what will this do to our housing market?"

They will be following everyone else who has been leaving Victoria for greener pastures elsewhere. This has been going on for at least 2 years now.

House prices in Victoria have been declining for almost 3 years now and the exodus of out-of-work construction workers has definitely contributed to this decline. Look for this to continue.

The economies in Victoria and the rest of Canada will have to find new roots in order to stabilize and no longer require extreme stimulus. The over reliance on the housing market is becoming a thing of the past for Canada's economy as it is simply not sustainable.

Victoria lacks industry (and the potential for new jobs), compared to many other Canadian cities. Victoria needs a source of new (higher than minimum wage) jobs in order to fill the void left by the rapidly deteriorating housing market economy, otherwise housing prices will sink much further than anyone could possibly imagine.

I don't see where these new jobs could possibly come from.

info said...

The 5-year, fixed mortgage rate at Canada's major banks is at 3.39%, up from 2.89% 10 weeks ago.

That equates to a 17.3% increase in 10 weeks.

If you are quoting a lower 5-year rate, then you should also quote the lowest rate (in recent weeks) for that source as well. Note that lower rates offered by sources other than Canada's major banks also bring in the element of more risk. You really need to understand all of the extra conditions that generally come with obtaining a mortgage from one of these sources.

The 5-year, fixed rate is moving higher and this has added even more downward pressure on (already declining) housing prices in Victoria.

a simple man said...

info - where do you fit in in all of this? Are you looking to buy in the distant future? What is your angle?

Just Jack said...

Can Krugman be wrong?

What's missing in Victoria for a burst bubble scenario is not just more listings but an urgency among sellers to sell now.

That's what happened in the 1980's bust. Those that bought 1,3 or 5 years earlier were faced with a 30, 40, 50 percent and more increase in their mortgage payments at renewal time. The writing was on the wall, sell now because you won't be able to make a payment come renewal time.

Interest rates increased from 13 to 20 percent or roughly 50 percent back then to cause that supply-driven downturn.

If you buy today, you'll need other funds that can be tapped into to buy down the mortgage payment at renewal time. That is the evil part of leveraging property. You have to pay down the mortgage by a hundred grand to reduce your monthly payment by $500. If your mortgage went from $2,000 to $3,000 a month you would need at least $200,000 of readily accessible cash. And I would suspect that is not possible for most people.

It's just too damn risky to buy a home today.

dasmo said...

ScotiaBank's rates:
Special Offers:
2 Year Closed Term Fixed Mortgage
2.79%
4 Year Closed Term Fixed Mortgage
3.09%
7 Year Closed Term Fixed Mortgage
3.59%
10 Year Closed Term Fixed Mortgage
3.79%

dasmo said...

That's an increase of just over 3% in the same product I got a year and a half ago.... Hardly a spike...

Leo S said...

>> So you are saying that the economy in North America, Canada included, will continue to struggle enough that it requires extreme stimulus through emergency interest rates and other sources of stimulus.

Yes

koozdra said...

"If you're like me, you hate throwing your monthly rent out the window."

I do hate throwing money away, please go on.

"For only $984.50, you can own your very own 1 bed, 1 bath condo close to downtown."

Oh.... you're just offering me an alternative way to throw money away.

Not interested.

$985 1 Bed/1 Bath Near Cook Street (930 North Park)

koozdra said...

"Don't throw away your money and rent." -US

Is This The Recovery In Housing They Wanted?