Monday, September 16, 2013

Sept 16 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.


September 2013September
 2012 
Wk 1Wk 2Wk 3Wk 4
Unconditional Sales96
224


416
New Listings305598

1210
Active Listings45134556

 5025
Sales to New Listings
31%
37%

 34%
Sales Projection403470


Months of Inventory
12.1

Last year at this point we had 208 sales so we're running a bit ahead, but surprisingly not much, considering last year we were in the middle of the mortgage rule change hit.

Interesting discussion about pre-sales.   How can you evaluate whether a pre-sale is a good deal?   I find it hard to imagine that buying a condo that won't actually exist for another 2 years is anything but speculation.  How many people are buying the pre-sale because they just love the building versus thinking they are getting in at a good price and they can turn it over later?   How many people plan ahead 2 years to get into a microcondo?

122 comments:

Just Jack said...

It isn't a bad idea to buy a pre-construction condominium. Depending on the building and the timing.

But certain things have to be true before buying the condo.

You have to be in a market of steadily rising prices, low vacancy rates and low unemployment. You have to make sure the developer has not built future appreciation over the course of construction into his pricing of the units. In otherwords you are paying today's fair market value. Or less. Not what the developer thinks he's going to sell the suites for a year or two later.

And a little bit of lucky timing. Being at the begining of a condo boom is much better than being in the middle or the end of the boom. You don't want a lot of one and two year old condos comming back onto the market when your suite is just being completed.

koozdra said...

"How many people plan ahead 2 years to get into a microcondo?"

I bet if they considered the risk their all their "built up" equity being lost when they have to sell they would not buy. Blasphemy, I know.

Just Jack said...

Enough of them to create a market. But not enough to sustain it.

patriotz said...

Pre-sale buyers are very vulnerable to an increase in interest rates or change in mortgage rules going forward as well as price declines. Being unable to finance the purchase at closing is not grounds to get out of the contract and the developer will sue for non-performance.

koozdra said...

This is interesting..

Mortgage Fraud

The mortgage fraud hotline for CMHC is 1 888 GO emili (463-6454).

The irony of this will soon be realized.

Jack and Cate said...

For all you closet Garth Turner readers here's one that is not surprising - CREA fudging numbers yet again and teaching the neighbourhood realtor (mandatory attendance required) how to create and inflate bidding wars.....

I believe I can...


Change of subject for all you stuck on the condo dilemma's.

George P said...

Latest total government (federal, provincial, and municipal), business, and household debt statistics for Canada (to the end of June 2013)

http://stateofthecanadiannation.blogspot.ca/2013/09/latest-total-government-federal_13.html

Seth Perry said...

210-square-foot Toronto home sells for $165,000 – and sorry, no bathroom. That's 28 per cent off the asking price of $229,000 after three weeks on the market.

dasmo said...

Ahh yes...Next year is the crash... Maybe it's a case of the watched kettle?

Just Jack said...

My guess is that we can't experience a "crash" unless we have a lot more inventory for sale.

When prices were rising at double digit rates we had fear and greed pushing the market upwards. And in a crash we would have to have fear and greed also pushing the market lower.

The fear of being stuck with a house you can't sell or rent without taking a significant loss. And reluctant buyers waiting for lower prices.

That means more sellers and greater motivation to sell quickly.

We just aren't there. Supply has remained consistent over the last several years. And there have been bank products and services that have band-aided up the housing market with miss a payment or two plans and drawing on your home equity to cover you through a job loss or under employment.

So while this market has remained flat as a Halibut it's also wound up tighter than an elastic band on a dime store paper airplane.

koozdra said...

These depreciation reports are going to wreak havoc. I wonder if BC's indebtedness rate is about to see a jump.

koozdra said...

The camel is yet strong but it's knees are beginning to wiggle a bit.

Phil said...

For condos the crash has already started. Same-unit sale prices are off 20%. With over a thousand units of new supply in the next two years, rising interest rates, out-migration, 6-7% vacancy is softest in 20 years -- my guess is we see another 20%. Houses always follow with a lag.

Fiduciary said...

Maybe older condos, but I'm not seeing a 20% drop in newer condos. Granted my view is narrow, so I'm open to being corrected.

Phil said...

On average.
25-30% already for older skirting the core. Moves inwards with older condos getting hit first.

info said...

The big price declines haven't happened yet in Victoria.

Canada's housing market will experience big price declines when the Canadian household debt-to-income ratio begins to decrease.

The US houshold debt-to-income ratio began to head downward at the end of 2007. As this chart shows, the end of 2007 also marked the beginning of the major price declines in the US.

This isn't rocket science. The same will happen in Canada. When the Canadian household debt-to-income ratio begins to head downward it will mean that Canadians are taking on less mortgage debt - the very thing that is keeping the housing bubble inflated. Major price declines will be the result.

The feds want this ratio to decrease. They know that too much consumer debt will prevent an economic recovery. Lowering the Canadian household debt-to-income ratio is a major priority and their actions prove it. They took action last year by tightening the mortgage rules and they are considering taking more action soon. They will get their way and when they achive their goal of less consumer (mortgage) debt, house prices in Canada will fall.

CS said...

Canada's housing market will experience big price declines when the Canadian household debt-to-income ratio begins to decrease

This is a tautology since housing is heavily financed by debt. The question is not whether a reduction in debt will crash the property market but whether there will ever be a reduction in debt -- and if so, when.

The feds want this ratio to decrease.

But however hard the try it keeps increasing. LOL

They know that too much consumer debt will prevent an economic recovery.

The boom was financed by debt, deleveraging will certainly not produce a recovery, it will cause a return to recession or worse.

Lowering the Canadian household debt-to-income ratio is a major priority and their actions prove it.

The government's actions prove nothing of the kind. You have to judge their actions by the results. So far, debt to income ratio has kept rising. I suspect it will continue to do so for at least another 18 months. After the election it may be a different story.

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

"The question is not whether a reduction in debt will crash the property market but whether there will ever be a reduction in debt -- and if so, when."

The feds will not let the Canadian household debt-to-income ratio to keep increasing. You are dreaming if you think they will. If your net worth depends on it then you will lose.

"But however hard the(y) (the feds) try it keeps increasing. LOL"

That you think the feds are powerless in making the houshold debt-to-income ratio decrease is delusional thinking.

"The boom was financed by debt, deleveraging will certainly not produce a recovery, it will cause a return to recession or worse."

What you don't get is that an extreme level of consumer debt will prevent an economic recovery because 70% of Canada's GDP is based on consumer spending. If consumers don't have any money to spend on cars, computers, etc. then the economy will weaken substantially.

Deleveraging will produce a recession. That is true. It also shows that the feds have now created a set of circumstances in which it is virtually impossible to succeed because they repeatedly pushing the debt problem down the road. If there is no deleveraging that means that there will continue to be record consumer debt levels and no recover. If there is deleveraging then there will be a recession.

What Canada will get is a much weaker economy going forward no matter what happens. A weak economy is bad for house prices.

"The government's actions prove nothing of the kind. You have to judge their actions by the results."

You don't understand that tightening the mortgage rules was an attempt to lower the household debt-to-income ratio. Their plan of action didn't achieve the desired result, but it was still action intended to achieve that result.

info said...

The US household debt-to-income ratio peaked at 120%, it is currently 164% in Canada.

Some regulars on this site talk as though it is a desirable thing for a government to keep pushing that ratio higher. They seem to think that an extremely high ratio (that keeps increasing) is some sort of measure of success for a government.

An extremely high debt-to-income ratio is indicative of an unhealthy economy. Canada's high ratio is causing future damage to the economy.

As this ratio increases, foreign investors will continue to see red flags as Canada's housing bubble continues to inflate and become more of a risk to the Canadian economy. Foreign investment in Canadian bonds has already dropped dramatically as a result of this.

A high debt-to-income ratio is not a desirable thing for any government.

dasmo said...

Maybe they need to make debt repayment tax deductible. Now that would get you re-elected in a landslide.

koozdra said...

What we really need to do is abstract out total cost of ownership of anything and completely focus on monthly payments.

The government tells us that inflation is in check. What ever definition you want to use, shit costs too much. Salaries have stayed stagnant while prices of everything have risen dramatically.

What to do?

We can't have negative interest rates, that just wouldn't makes sense. But how close to zero can we get?

If we experience an economic slow down we just half the rates. The economy continues to hum, house prices sky rocket again.

But then we reach a point when prices get too high again and the consumer is seemingly tapped out.

We cut the rates in half again. If we purely worry about monthly payments then each time we cut the interest rate in half your payments decrease by half.

Since the progression of 1/(2^n) is asymptotic to zero we shouldn't have a problem.

We will have to worry about smaller and smaller numbers for the interest rate. People will need a refresher on scientific notation.

Phil said...

Some big price drops on the mainland this past week. Here are the top 30 along with their price history of delisting and relists.

info said...

@ StalJ

Have there been any recent SFH sales that were significantly below peak? Your information is always helpful.

@ Phil

Perhaps you could help with this. I appreciate your contributions.

koozdra said...

Bank of Canada governor says Canadians aware interest rates will rise

The only thing that Canadians are sure of is that interest rates will remain low for the foreseeable future.

CS said...

The only thing that Canadians are sure of is that interest rates will remain low for the foreseeable future.

At the risk of being considered delusional for hinting at an outcome other than that pronounced by the oracle, aka, Info, it is of interest to note that the US Fed has:

refrained from reducing the $85 billion pace of monthly bond buying, saying it needs more evidence of lasting improvement in the economy and warning that an increase in interest rates threatened to curb the expansion. (Source).

Here, in contrast, perhaps we will see the BoC drive interest rates higher, thereby inducing a severe bout of debt deleverage and deflation just in time for the next Federal election. But don't bet on it.

Marko said...

fyi HHVers.....The VREB is preparing to roll out the MLS® Home Price Index (HPI) in the coming months!

caveat emptor said...

"refrained from reducing the $85 billion pace of monthly bond buying"

It's a crazy world really. Fed officials issue a statement that basically says "Economy still kind of sucks.." and the response of the stock market is to rocket higher...

caveat emptor said...

"The only thing that Canadians are sure of is that interest rates will remain low for the foreseeable future."

It's pretty much a given that short term interest rates are going to rise eventually. So it is foreseeable THAT they will rise unless we have entered a permanent recession. It is less foreseeable WHEN they will rise. People calling for an early rise in short term rates have been consistently wrong for the last few years.

5 year rates have of course already risen, having shot up from crazy low to merely low.

CS said...

and the response of the stock market is to rocket higher...and the response of the stock market is to rocket higher...

Artificially low rates means higher corporate profits:

Bernanke Saves Companies $700 Billion as Verizon Leads Sales

CS said...

So it is foreseeable THAT they will rise unless we have entered a permanent recession

That we have entered a permanent recession may be a good hypothesis. What's to get us out of the recession we're in now? Asian Sweatshop wages remain one tenth or one twentieth of minimum wage here. Difficult to compete with that. And Technology Review predicts that robots will eliminate half of all existing jobs in North America within 20 years.

It's not different this time. It's the same as the great depression. Well, except for (a) the quantitative easing, which creates non-functional income through subsidies to otherwise non-viable businesses (green tech, etc.) and tons more bureaucracy that only lowers the productivity of the productive sectors of the economy, while generating public debt that can never be repaid; and (b) globalization which means that stimulus tends simply to suck in more cheap stuff from Asia rather than reviving local production.

dasmo said...

That's why y'all should have invested in Robotics companies when I brought it up. My picks are up 50%, 20%, 70% since then... I mean if you are going to rent, you also have to invest. Money under a mattress simply rots.

Marko said...

It's the same as the great depression.,

Other than 24% of the US workforce worked in agriculture versus 2% in 2013.

People are lining up for iPhones and Grant Theft Auto 5 instead of food.

Mayfair Man said...

Any ideas on why Victoria's realestate market has been one of the worst in the country the last 5 years? Does anyone know where I could graphs of the number of jobs in Victoria/CRD over the last 5 years(as well as population)

Chris said...

Feeling down about not selling your properties near the top in 2010??
Simple fix. Tell everyone you’re a genius at investing in stocks to make yourself feel better. Tell them you know how to buy stocks at the precise bottom … right to the very penny!!!

“Facebook I still bought when I thought they were overvalued. I pegged them at 15 but bought at 17.5 ish. In the end it's what you think others will think.…” (emphasis added)

On that one I’m betting you got sucked in around their IPO price, like most everyone else I know.

Couldn’t resist. I just caught up on the last two posts and noticed you blabbing on. Just having some fun with you ;)

Chris said...

If you want me to show you how to hit triples and homeruns out of the park, let me know ;)

Leo S said...

>> The VREB is preparing to roll out the MLS® Home Price Index (HPI) in the coming months!

Hmm... as long as they don't stop publishing all the actual data I guess that's fine. But my concern is they will move towards publishing only the HPI like many boards do. VREB is one of the more open boards in the country right now as far as data goes.

dasmo said...

You guys are the only ones I can brag to about that stuff since you already don't like me :-) (and I only tell the truth here buy the way, no making stuff up from me).

koozdra said...

Look at me complaining about inflation and how everything is more expensive.

Behold savings are coming BC consumer..

Many natural gas bills to drop across B.C. this winter

"The company says the savings will amount to approximately $60, or about $5 a month, over the course of the year for homeowners in the Lower Mainland, the Interior and northern B.C."

Oh. Forget it.

info said...

"Any ideas on why Victoria's realestate market has been one of the worst in the country the last 5 years?"

You bet I do.

So far this year, total single family home sales are on pace to equal 2012’s total which was the lowest total since 1982.

Sales in 2012 were 30% less than the average from 1985 to 2009 and 43% less than the average from 1988 to 1992, when Greater Victoria’s population was much less than it is now.

Greater Victoria prices peaked in the summer of 2010. There has been significant skewing of the median, average and Teranet HPI numbers since early spring in Victoria as high end home sales have completely dominated the market. Don't rely on these numbers right now as they do not paint an accurate picture of how much prices have dropped from peak.

A recent house sale (1711 Haultain St.) shows us that prices are indeed correcting at this time. This house sold for $447.5 K in June 2010 and recently sold for about $300 K, a 33% price drop from the peak.

info said...

@ Leo

I have an idea for you.

You could graph the (population adjusted) total yearly SFH sales from the time the VREB first started publishing this data.

It would be most interesting.

info said...

"Any ideas on why Victoria's realestate market has been one of the worst in the country the last 5 years?"

I think there are several reasons.

Over the last 5 years, many young Victorians have packed up and moved away in search of greener pastures elsewhere. It's no secret that the vacancy rate has shot up dramatically since 2009. Victoria's economy hasn't been able to supply enough jobs to keep people here.

House prices have been in bubble territory since 2006. Victoria is right up there with Vancouver in terms of overvaluation, based on the fundamentals of price-to-income and price-to-rent ratios. When a housing market is overvalued as much as Victoria's is, prices naturally hit a ceiling and begin to decline. The household debt-to-income ratio is still increasing in Canada which shows that increasing mortgage debt is temporarily keeping house prices from correcting much more than they have.

The influx of boomers to Victoria has been a thing of the past for years now, and it shows. The influx of boomers lasted for many years in Victoria and boosted sales and prices. Victoria's housing market no longer has the price boosting effect of the boomers. Sales and prices have been adjusting to this and this adjustment will last for years.

Just Jack said...

Graphing the total increase in population isn't going to help you explain why prices increase and decreaase. What you would need to graph is the the number of "prospective" purchasers for a type of property and how that has been changing.

If you replaced the words real estate with any other asset or service, it's much clearer to understand. For example prostitutes. Do prostitutes command a higher price in cities with large populations or small ones? How about Faberge Eggs? Smart Cars?

Obviously not everyone in a city wants a prostitute, a Faberge Egg or a Smart Car. So why would the total population effect price. But if you don't believe me - you can just count the number of people sitting alone in Smart cars with Faberge Eggs on a Saturday night in downtown Victoria.

What is important is not the size of the city but the size of the market. You would need to know how many prospective purchasers there are for a two-bedroom condos at a price. Near impossible too measure.

Or how about this - what is the size of the market for two-bedroom condos that cost $20,000. You'd think it would be big! Almost everyone would want one! Not so if everyone already has one and there is no viable economic use you can put to it -as the rental market has been eviscerated by cheap condos.

koozdra said...

Construction Might Loom a Little Too Large in Canada’s Economy

"BMO found the share of the Canadian economy accounted for by construction activity–both residential and non-residential–is close to multi-decade highs at 13.4%, significantly above the 30-year average at 10.4%.

In the U.S., construction currently accounts for 5.8% of GDP, or less than half Canada’s level.

Even its recent high of 9.4% in 2006, just as the housing market in the U.S. peaked, construction’s share of the economy there was well below the current level in Canada."

Ugh, why are they comparing us to the US. Haven't they read this blog. Making any kind of comparison is meaningless. It's DIFFERENT here. Different in a better way.

Leo S said...

>> You could graph the (population adjusted) total yearly SFH sales from the time the VREB first started publishing this data.

Different from what I posted in June?

Leo S said...

>> You guys are the only ones I can brag to about that stuff since you already don't like me

Aww dasmo you're my favourite fish.

Seth Perry said...

Tough time renting this one..

$1,500 · 7406 EAST SAANICH ROAD (UPPER)

Spacious main floor 3 bedroom 2 bath duplex. Fireplace in the living room, large kitchen. Shared utilities and laundry. $1500.00 1 yrs lease. NO PETS NO SMOKING To view please call 250 384 9335.

then...

$1,445 · 7406 EAST SAANICH ROAD

Spacious main floor 3 bedroom 2 bath duplex. Fireplace in the living room, large kitchen. Shared utilities and laundry. $1445.00 1 yrs lease. NO PETS NO SMOKING To view please call 250 384 9335.

then...

$1,395 · 7406 EAST SAANICH ROAD (UPPER)

Spacious main floor 3 bedroom 2 bath duplex. Fireplace in the living room, large kitchen. Shared utilities and laundry. $1395.00 1 yrs lease. NO PETS NO SMOKING To view please call 250 384 9335.

and now...

$1,200 · 7406 EAST SAANICH ROAD

Lovely 3-bed/2.5 bath upper suite for rent. Offering a big living room with fireplace, dining room with balcony and pleasant valley views. The kitchen is large, bright and has a family/eating area that opens to a sunny deck. This home is set back from the road on a quiet boulevard. Fenced yard, valley views to Mt Baker. pets considered!

At first I was like, "oh wow, great deal", but then I was like, "ew, I wonder what's wrong with it?"

Seth Perry said...

Construction slow-down at Colwood’s Capital City Centre

Judging from the blog comments, it looks like nothing is happening on site as of today.

Then there is this article from the TC published on Aug 23.

Work set to begin next month on $1-billion Capital City Centre project in Colwood

“I would say by the end of September, we’ll start seeing some of the sub-trades coming in doing some foundation work and staging. There will be a slow ramp up, but I would like to see us making some announcements by the end of September,” - Adam Gant

Gant said he expects the final documents to be reviewed and signed for construction financing by mid-September.

I love this part....

Gant said there is some frustration because the company has to deal with rumours swirling about the future of the project and some of what he calls misinformation being spread online.

Some of that has escalated to the point where the company is taking one blogger to court.

League is seeking an injunction against Rachelle Berube, who writes the blog Landlord Rescue (landlordrescue.ca) for comments the company believes are defamatory. Gant said the case will be heard next week.

Still, Gant says he embraces social media for the feedback that can help shape the company.

lol, we LOVE social media, just don't say anything bad about our company or our investments or we will SUE YOUR ASS.

“We like honest feedback, analysis of results and criticism of strategy and approach. What we don’t like are people irrationally or in an unsupported way making accusations that have no basis in reality,” he said, noting that kind of rhetoric tends to have an effect on people who don’t have time to dig for the truth themselves. “We are not going to stand by any unbiased accusations.”

Seriously though, any news on this one? If the project tanks, what happens to pre-sales?

patriotz said...

Hmm... as long as they don't stop publishing all the actual data I guess that's fine.

Since when has VREB been publishing all the actual data, i.e. sale prices, listing prices, and listing history?

koozdra said...

Nice find Seth.

I've seen a few landlords drop their prices by five dollars after not finding a tenant for months. If nobody wanted to rent your shitty ass 800 sqft condo for 1200 dollars plus utilities, they will not be lining up to pay $1195.

Who cares though, interest rates are low. Miss a few months rent, no biggy. Just dip into your heloc some more. It doesn't really increase monthly payments by that much. Monthly payments are king.

koozdra said...

We're so close..

Inflation slows to 1.1% in August

"Canada's annual inflation rate slowed to 1.1 per cent in August, with the main driver for consumer price increases coming from housing and transportation costs, Statistics Canada said Friday."

All we need is just a little more slowdown from housing and we'll begin deflation.

koozdra said...

But surely we can trust the realtors..

MLS Phantom Listings Distorting House Prices: Consultant

The gate keepers of the information wouldn't deceive us. It's not like the health of their industry depends on it.

Independent auditing? no, that's not for us, thank you. Our team of trained/professional economists know what they're doing. Take our word for it. We promise.

caveat emptor said...

Seems like the effect of phantom listings would be primarily on volume with a relatively minor effect on prices.

Highlights the advantage of a repeat sales index though.

caveat emptor said...

"Any ideas on why Victoria's real estate market has been one of the worst in the country the last 5 years?"

Maybe it isn't. It's just that the local realtors are behind the curve on phantom listings :-)

caveat emptor said...

You guys are the only ones I can brag to about that stuff since you already don't like me :-)

If you are a truly skilful stock picker (and I don't discount that possibility) why would you want to tie up money in real estate? The returns in RE are modest compared to what you can get with a few good calls in stocks.

Alexandrahere said...

re: 7406 E. Saanich Rd.

From experience, I would say their biggest advertising mistake was the "share utilities" portion. Also, when its a house, chances are the renter's have a pet. So you say "no smoking, pet considered.

If you have an up and down rental situation, usually the bottom suite is much smaller. When you rent that out...rent it out as all inclusive and of course charge accordingly. When the people come to look at the upper suite, you can tell them to keep the hydro bill (if the entire home is heated by electricity), and to deduct a percentage off each months rent. For example, they pay 2/3 of the bill and you pay 1/3. You don't mention over the phone about dividing up utilities. It is too complicated and you might lose them. Wait til they see the suite and you know that they like it. With some luck, that pet will be a budgie or canary.

Chris said...

re: 7406 E. Saanich Rd.

David Burr ltd has managed property for aeons. They and the owner probably only underestimated how sucky the rental market has gotten on the fringe. It’s bad enough in the cores. I’m sure there are many areas outside of the cores way over 10% vacancy. An example of a smaller core Duncan recorded 8.9% this April, up from 7.2% year earlier. Truth be told it’s much > 10%, same as Victoria is higher than the official survey.

Chris said...

Nanaimo official vacancy 8.3%.
That is OUCH for a bigger city landlord!

info said...

"MLS Phantom Listings Distorting House Prices: Consultant

The gate keepers of the information wouldn't deceive us. It's not like the health of their industry depends on it."

Garth wrote about this recently on his blog.

Realtors and real estate boards play dirty, that's for sure.

In general I don't trust data published by the housing industry or the banking industry. They've been known to fudge the numbers and will continue to do so as long as there are no consequences. They both have a vested interest in keeping house prices high in this country. This must be kept in mind when reading their reports that are published by the (also biased) media.

Therefore, I don't attach much importance to the monthly results of the Teranet HPI or the MLS HPI (coming soon to Victoria).

The monthly VREB report is almost always a complete joke. They insist that they are professionals, yet they continually go out of their way to spin the data in an attempt to persuade the public that it is a good time to buy. They often omit the most important (big picture) data that potential buyers should know about and, instead, take one small bit of (not negative) data and spin it as though it represents the big picture.

For example, the total number of SFH sales so far this year in Victoria is almost exactly on pace to equal 2012's total, which was the lowest total since 1982. Population adjustment would make this picture even worse.

How many Victorians are aware of this? I doubt that many are considering that most Victorians get their housing market information from the VREB, in one way or another.

info said...

More from the article that koozdra referenced in an earlier post:

MLS Phantom Listings Distorting House Prices: Consultant:

"A real estate consultant’s warning that housing market data in Canada is being artificially inflated has some economists and market observers wondering whether the recent upswing in house sales and prices might be partly an illusion.

Real estate consultant Ross Kay alleges that realtors... are artificially inflating home sales by listing the same property twice, or sometimes even three times.

Kay says when a double- or triple-listed house like this sells, the additional listings are counted as a sale by every one of the real estate boards to which the house is assigned. That turns one sold house into two or three sales in the housing data."

You know that realtors are worried about a housing market crash when they start to act in a desperate manner.

It's getting ugly.

This won't end well.

info said...

"Hmm... as long as they don't stop publishing all the actual data I guess that's fine."

"Since when has VREB been publishing all the actual data, i.e. sale prices, listing prices, and listing history?"

True patriotz.

Leo has posted more than once that the VREB has done some interesting things with the sales totals at the end of the month.

We don't know that they aren't also doing interesting things at the end of the month that might affect the median and average data.

I'd love to get my hands on the raw sales data for Victoria.

One of the first things I would do is to prove that high end sales have completely dominated the market since early spring. I think it would be obvious that a much higher than normal percentage of recently renovated/well maintained homes have sold in the most expensive areas, pushing the average and median higher than they should be since spring.

I'm certain that I'd be able to show that the average and median have been dropping virtually every month since last summer if I had the ability to compare similar samples of houses within the same area of Greater Victoria.

I think that all sales data should be available to the public.

info said...

If I had the raw sales data to work with, I suspect that I'd also be able to demonstrate that similar houses (in similar condition) from the same area have actually dropped (on average) more from peak than the (ridiculous) 5.7% that the Teranet HPI shows.

koozdra said...

Dasmo, you're not holding blackberry anymore are you?

caveat emptor said...

I'm certain that I'd be able to show that the average and median have been dropping virtually every month since last summer if I had the ability to compare similar samples of houses within the same area of Greater Victoria.

Well if you are already certain then the data is unnecessary

Just Jack said...

Sunriver Estates is located a leisurely 40 minute drive from one of the most beautiful cities in the world. A peaceful morning commute along a meandering country road that weaves itself between mountain and water vistas.

If you were one of the lucky ones to purchase a home in Sunriver Estates back in September 2005 for $367,000. Today you would have been able to re-sell the same home for $359,900.

Or how about building equity in a concrete hi-rise in James Bay. You could have bought a 15th floor micro suite with unobstructed view in 2003 for $190,000. And watched your equity grow over the last decade and you would have sold it this week for $250,000. Allowing you to invest in stocks like Blackberry.

Meanwhile homes in Cobblehill that sold for $600,000 in 2009 - now sell for $500,000.

Or how about a basement entry home in sunny Sidney by the sea that the agent said wouldn't last long on the market when it was listed by $368,888 (obviously fishing for that rich asian tycoon with all them 8's) selling 65 days later at $320,000.

And how about trendy Transit road in Oak Bay. Buy a home in January 2006 for $670,000. Drop another $100,000 into improvemnents and sell it this week for $700,000.

http://www.youtube.com/watch?feature=player_detailpage&v=iQNdi-fRExc

dasmo said...

@Koozdra
bought at 7ish Sold half at 16ish. Held the other half to see what happens. Was going to sell the rest today actually but saw that it wasn't reacting much. Got busy with that work thing. Just looked again. Oops. Good thing I didn't sell my house and put it all in BBRY!

Seth Perry said...
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Seth Perry said...

Vancouver website breaks down real estate info

A Vancouver website is aiming to consolidate the burdens of purchasing a home into a digestible format to help people scouring the market know where they’re buying, not just what they’re buying.

Estateblock.com, which launched in June, has spent two years compiling data on crime, schools, health and other information relevant to neighbourhoods being considered by potential homebuyers.

The site features such data as performance of students at area schools, rents and nationalities of the neighbourhood.

Seth Perry said...

Vancouver’s Record $39 Million Sale to Royal Signals Peak

Lots of great points about the recent increase in sales, household debt, recent quotes from Jim Flaherty, property demand and home prices across Canada.

Marko said...

same as Victoria is higher than the official survey.

Sure vacancy is high on paper for apartment blocks but when I rented out my condo downtown earlier in the year it was gone in 2 days. When I went to rent a condo downtown this summer there wasn't a lot of quality out there. I remember there was a 1 bed+den at the falls for $1,400 (maybe $50 below market) and 10 people showed up on the first day of viewings.

I also have had a number of clients buy properties in the vicinity of UVIC and the rents for basements suites are quite high.

If you have something clean, in a decent location, I don't think there is too much to worry about.

Marko said...

Garth wrote about this recently on his blog.

Realtors and real estate boards play dirty, that's for sure.


What Garth has been writing has been wrong for a decade, but I am sure he is right about this. In a previous thread I already summarized how stupid his argument in terms of sales numbers being report was....it was really stupid.

Leo has posted more than once that the VREB has done some interesting things with the sales totals at the end of the month.

Actually it had nothing to do with sales....you might want to read what Leo wrote again.

We don't know that they aren't also doing interesting things at the end of the month that might affect the median and average data.

The aren't. I have the raw data and for every single sale there is a listing agent and buying agent reported. Also, the individual realtors report the sales. If I have 10 sales this month I enter them into the database.

The board is certainly reporting everything to the best of their ability in my opinion.

However, I agree, the rosie interpretation of the numbers month after month is a little annoying.

As Leo has pointed out, over the last 6 years Victoria Real Estate is down 1% while almost every single other city in Canada is up double digits or more.

Would indicate to me that most likely the numbers being reported are up to snuff.

totoro victoria said...

I can't believe how many times the harbingers of imminent doom can be wrong. I mean if you have been wrong for years now, you might want to reconsider key assumptions.

I would like to see past predictive post data collated and graphed - on this site and Garth's :)

Marko said...

No, the doomers are correct, but every single board in Canada is now manipulating the numbers....give me a break.

subprime11 said...

Read www.rosskay.com He must be one wacky lyin realtor claiming that real estate boards cannot be trusted...rule of thumb is anyone with a vested interest in the outcome should not be relied upon to give you all the information you need before signing your life away. The realtor will always tell you "now is a good time to buy" because their income depends on it. Nothing personal but like any sales job that is the nature of the beast. As Regan said about the Russians, "trust but verify".

CS said...

I can't believe how many times the harbingers of imminent doom can be wrong. I mean if you have been wrong for years now, you might want to reconsider key assumptions.

If those losers decide that, after all, the market ain't gonna crash, I'd take that as a sure signal of imminent doom.

CS said...

I can't believe how many times the harbingers of imminent doom can be wrong. I mean if you have been wrong for years now, you might want to reconsider key assumptions.

If those losers decide that, after all, the market ain't gonna crash, I'd take that as a sure signal of imminent doom.

koozdra said...

"I can't believe how many times the harbingers of imminent doom can be wrong."

We are wrong until we are right. Then we are right and you are wrong.

Jack and Cate said...

Marko said...
"....give me a break."
______________

...states the realtor whose career depends on all this.

Gotta take the good with the bad.

Just Jack said...

To what purpose would you put past predictive post data collated and graphed - on this site and Garth's ????


One reason to compile such information would be to discredit the person. And that would lead to fewer people expressing their opinions. Which could be an agenda in itself. It's one of the lowest levels of rebuttal that of attacking the person -not the opinion.

Or worse than discrediting the person you would raise them to a cult status if their predictions occur. People like Warren Buffet, Donald Trump, Cameron Muir and Brad Lamb come to mind. Some people give these individuals God like predictive qualities.

I give more credit to those that express their opinions and predictions. And I have disdain for those that hide in obscurity, never expressing an opinion or prediction but are quick to take pot shots at those with the courage to lead.

Somehow the attacker has confused construction criticism with sniping. They're not the same.

Attack the argument - not the person.


dasmo said...

"Attack the argument - not the person." Good point...

Anyway, all doomers will eventually be right. I mean the end will eventually be near. Nothing lasts forever....

totoro victoria said...

"One reason to compile such information would be to discredit the person."

Or simply to point out that the opinion is based on faulty logic so the analysis can be improved. Doesn't make the person bad, just might be a time to re-examine the interpretation of the underlying data.

Of course, when the person claims they know the future absolutely, and they have been consistently wrong, there might be other issues.

And dasmo is right, nothing lasts forever. Cycles go up and they go down, timing and predicting is difficult. Talk; however, is cheap as they say.

Just Jack said...

It isn't all doom. Lower prices are good for the economy if the lower prices increase sales.

No one has ever lost their home to foreclosure for the sole reason that their house has decreased in value. They've gone into foreclosure mostly because they haven't made their payments.

Granted there is an adjustment period after a substantial re-valuation of the marketplace. But that's part of the cure - it isn't the cancer.

A young engineer making 6 figures a year and paying just a hundred thousand for a good quality home is going to be spending a lot of his/her money in the local economy.

In my case it was cigarettes and whisky and wild wild women.

http://www.youtube.com/watch?feature=player_detailpage&v=yVw96wzmZC8

dasmo said...

"paying just a hundred thousand for a good quality home" Price that out it's not possible. What you are saying is that making good quality windows should be inexpensive, quality labour should be inexpensive, design should be inexpensive, good quality materials should be inexpensive, land should be inexpensive, legal should be inexpensive. However, that engineer job, well... that's expensive. becasue they aren't engineering a home, they are engineering an app? It doesn't work that way.

What would be good for the economy is higher wages with flat house prices.

caveat emptor said...

"What would be good for the economy is higher wages with flat house prices."

Amen (plus add more jobs for young people)

patriotz said...

What would be good for the economy is higher wages with flat house prices.

Problem is, when an economy is disproportionately based on RE you need rising house prices just to keep wages flat.

Marko said...

Read www.rosskay.com

Did you read the disclaimer on the numbers on his website? I guess no one read my post from last week on this topic...mere postings, aka flat fee listings, would not have previously sold as "private sales," to any great extent. People are cross shopping mere postings with full service listings.

Love how Ross is a "Real Estate Coach," that is awesome.

Nothing personal but like any sales job that is the nature of the beast.

Only a sales job if you make it one, you can be extremely successful in real estate without a "sales job" approach.

Marko said...

...states the realtor whose career depends on all this.

Gotta take the good with the bad.


I run a discount model and it actually does better in tight markets when sellers are losing equity.

Just Jack said...

Luckily most of that doesn't count when your buying a re-sale home.

The point being made was high prices suck money out of the economy that would be used for jobs and businesses.

What's good for an economy is a high volume of sales not high prices.

Marko said...

Attack the argument - not the person.

Problem is some, not all; Garth followers are so delusional that they ignore the attack on the argument.

Marko said...

A young engineer making 6 figures a year and paying just a hundred thousand for a good quality home is going to be spending a lot of his/her money in the local economy.

Who would buy a home well below their means? Most young engineers making 6 figures would go for the $500,000 quality waterfront mansion in this hypothetical scenario. Senior engineers would have the waterfront mansion already and they would be spending their cash on private jets.

Marko said...

The point being made was high prices suck money out of the economy that would be used for jobs and businesses.

Businesses and jobs booming in BC 1993-2001?

CS said...

The point being made was high prices suck money out of the economy

where's this money sucked to?

Into the pockets of vendors, which means it's still in the economy after all!

Trouble is, the people whose money is being sucked are mostly young people who are raising a family on a limited income, whereas those who are doing the sucking are mostly older folks downsizing to a condo or townhouse who in many cases are enjoying the most prosperous years of their lives. Not the most desirable consequence of artificially low interest rates engineered by the BoC.

Jack and Cate said...

Marko said...

Attack the argument - not the person.

Problem is some, not all; Garth followers are so delusional that they ignore the attack on the argument.
_____________________________

Again Marko you are surmising that all these people are "Garth followers". Maybe they actually do research and have an independent thought or opinion.

No matter what model you use to sell the product, it's the approaches like the realtors being taught at workshops to create bidding wars or the Real Estate Boards that are fudging numbers by reporting sales of the same property 2-3 times.

Don't blame the messenger.... or is that don't hate the player??

patriotz said...

"The point being made was high prices suck money out of the economy that would be used for jobs and businesses"

Businesses and jobs booming in BC 1993-2001?


How about the WAC Bennett years when we had both low house prices - much lower in real terms than the period you cite - and sustained economic growth?

And I think you'll find that the real economy pre 2001 was doing just as well as today. All of the economic "growth" since then has been based on debt expansion - i.e. it's a bubble economy.

totoro victoria said...

"Again Marko you are surmising that all these people are "Garth followers". Maybe they actually do research and have an independent thought or opinion."

Maybe, but it certainly doesn't seem like it if you read the comments on his blog. The discourse is at echo chamber level with a liberal dash of name-calling.

vawr said...
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vawr said...

I read GT's blog every day. Does that make me a follower? If so, according to Marko, I am delusional.

Your animosity towards Garth Turner
is well known Marko, and that comment only serves to discredit you.

Not surprisingly,following up on Marko's comment, Totoro couldn't resist another shot at Turner's blog.

Marko said...

Last week in the previous thread on HHV someone brought up Garth's post on "manipulation." I put forth an argument towards his ridiculously poor and incorrect analysis. No one commented or replied.

Here is the reality of the situation. Garth has been wrong for a decade. He encourages people to sell their home and invest, and ideally you call him to do that.

After a decade of being wrong, he is now pulling out the "numbers are being manipulated."

Jack and Cate said...

Marko -
After a decade of being wrong, he is now pulling out the "numbers are being manipulated."
________________________

I believe Marko that Mr. Turner stated that these numbers have "long" been manipulated, not just recently and like Wall Street it comes to light when the public and the "sheeple" are made aware of what is happening. Nothing more nothing less.

He also carries a much more experienced and varied career in his and your field. In time your opinions will matter, but are you showing malice because he has banned you from his blog.

There are posters on his blog that make much more left of center or right of center comments that do not get banned.

I take it you had a discussion with him that didn't go your way??

Chris said...

The difference is Marko has cost people lots of money in the past few years encouraging them to buy condos here. I know of several condos that are down 6 figures already. Whether this Garth guy has been wrong or not, hasn’t cost people anything by continuing to rent. In fact he’s saved them money since not only have rents been declining, but it’s cheaper to rent to begin with.

Marko said...

I believe Marko that Mr. Turner stated that these numbers have "long" been manipulated.

And I've stated why I think his manipulated argument is bunk. No one has yet to reply my statement.

The difference is Marko has cost people lots of money in the past few years encouraging them to buy condos here.

Yes....that is why I come on HHV and document that I rent my principal residence condo.

Whether this Garth guy has been wrong or not, hasn’t cost people anything by continuing to rent. In fact he’s saved them money since not only have rents been declining, but it’s cheaper to rent to begin with.

Ok.

Jack and Cate said...

Okay Marko you win...
but if you have time to read. Sorry I didn't have the time to fiddle with the html -

http://www.canadianbusiness.com/companies-and-industries/real-estates-little-white-lies/

http://www.brokersinsider.com/pdf/competitionstudy0311.pdf

http://metrovanwatch.wordpress.com/2013/02/15/real-estate-media-manipulation-trend-emerges-public-must-use-tools-to-demand-truth-and-integrity/

http://www.huffingtonpost.ca/2013/09/20/mls-phantom-listings-house-prices_n_3957237.html

lolatengo said...

Mario, I believe you challenged Turner's contention that the sudden inclusion of mere postings in MLS total sales counts is somehow misleading. To be honest, your argument was confusing. You might have been saying that these old FSBO houses wouldn't have sold unless they got MLS exposure anyway, which might be correct. I think you also argued that the mere postings have been included in sales data for more than a year, which may also be correct.

However, you completely ignored the second argument that several boards, particularly in the GTA region, are permitting 2 or 3 listings for a single house. A quick search of realtor.ca shows this to be true. There is nothing wrong with this in and of itself unless they double or triple count the sale as well, which Ross Kay contends they are doing. So, a house that sells in Hamilton is allegedly counted as a sale in Toronto, Hamilton, and Burlington. If this is a new development, it would indeed affect year-over-year comparisons. Others have also found MLS posts for condo presales, which would further inflate resale data. This is also easily verified with a close look at realtor.ca.

No one has argued that the Victoria board has been engaged in these practices. But given that the Hamilton board is the 7th largest in the country, national stats would be affected, however slightly. Mr. Kay seems like he has an ax to grind, but it would be nice to see raw sales data for resales in Canada.

lolatengo said...

That should be Marko, of course, not Mario!

totoro victoria said...

This site used to be more interesting before Leo bought a house. At least there was someone with an ardent interest in data and a talent for analyzing it rationally to keep things ticking along.

Just ridiculous to say that Marko has cost anyone anything. If we look at it as people are all zombies prey to the whim of what someone posts on their blog you should look to how much garth has cost those who haven't bought in the past ten years because of what he says.

http://www.canadiancapitalist.com/garth-turners-dodgy-advice/

Marko said...

To be honest, your argument was confusing. You might have been saying that these old FSBO houses wouldn't have sold unless they got MLS exposure anyway, which might be correct. I think you also argued that the mere postings have been included in sales data for more than a year, which may also be correct.

Summary: For the most part the consumer is substituting full service MLS® with mere posting MLS®, not yard stick FSBO sign with mere posting MLS®.

However, you completely ignored the second argument that several boards, particularly in the GTA region, are permitting 2 or 3 listings for a single house. A quick search of realtor.ca shows this to be true. There is nothing wrong with this in and of itself unless they double or triple count the sale as well, which Ross Kay contends they are doing. So, a house that sells in Hamilton is allegedly counted as a sale in Toronto, Hamilton, and Burlington.

I can't comment on Mr. Kays "audits" as he doesn't have 20 years of "audited numbers," and I don't have access to the Hamilton Board. What I want to see is 20 years of "audited numbers," not one year of audited numbers versus a long history of "unaudited numbers."

I have access to all the boards in BC and yes when I have a listing north of the Malahat and south of Duncan I always put it up on both boards (VREB & VIREB). It has nothing to do with double dipping....it has to do with getting my seller's property sold. There are systems in place to avoid double counting. Placing a property on multiple boards, in a scenario as outlined above, has been common practice for decades.

Others have also found MLS posts for condo presales, which would further inflate resale data. This is also easily verified with a close look at realtor.ca

This has been going on for decades (I have access to all MLS® listings in Victoria back to 1989). It isn't anything new. In fact, developers are reporting less pre-sales than they use to. For example, the Promontory has 120 units sold and only 25 are MLS® reported. Many developments report even less. There are hundreds of unreported pre-sale or completed construction new condo sales in Victoria that go un-reported as they are purchased directly from the show room. These are substitutes for re-sale condos that would be reported. A lot of new single family home sales in Langford also go unreported.

I've talked to a few developers about why they don't report more and some don't like the price history of the building exposed on MLS® while others are just trying save every single dollar possible (there are VREB and brokerage fees associated with uploading a listing).

Marko said...

That should be Marko, of course, not Mario!

I'll take Mario over Marco :)

lolatengo said...

Marko, thank you for your polite answer. I agree that we would need to see 20 years of audited data to have a good sense of what was going on. However, Mr. Kay appears to be saying that he has evidence that some of the big boards are not removing double or triple sales from their stats. You say this isn't going on in Victoria, and he appears to agree with you.

I don't think it is a trivial matter to fudge sales data, even if it has been going on for some time.

StalJ said...

"...how much garth has cost those who haven't bought in the past ten years because of what he says."

The sellers on Transit Road (Oak Bay) who just realised a $70,000 loss over the last 8 years might have wished they listened to Garth.
See JustJack Sep20@4:46pm.

Leo S said...

It is well documented that the toronto real estate board always compares current month numbers (which include deals which will later fall through) to last year's numbers that have already had collapsed deals subtracted. That distorts everything to appear positive and is pretty clear manipulation.
I believe the VREB does this a bit differently, by subtracting collapsed sales from the next month, rather than updating data once it is released.

Either way though, I don't really see it as a massive deal. Yes this is somewhat cheating, but how much effect do real estate board proclamations have on the market? I'd say pretty damn minimal.

dasmo said...

"The sellers on Transit Road (Oak Bay) who just realised a $70,000 loss over the last 8 years might have wished they listened to Garth." Presumed 70k loss... Plus renting the same place over that period would have cost them 140k.... Plus if they listened to Garth back then they might have put it all in Nortel ;-)

vawr said...

@totoro

"Just ridiculous to say that Marko has cost anyone anything. If we look at it as people are all zombies prey to the whim of what someone posts on their blog you should look to how much garth has cost those who haven't bought in the past ten years because of what he says."

Not to be too picky, Totoro, but
Garth's Greaterfool blog began in 2008, if I'm not mistaken.

Quite a different scenario for many who bought since 2008 as opposed to those buying 10 years ago.

LeoM said...

totoro victoria said...

I can't believe how many times the harbingers of imminent doom can be wrong. I mean if you have been wrong for years now, you might want to reconsider key assumptions.

--------------

I only visit this blog occasionally, but I think the "harbingers of imminent doom" are often speaking in relation to the effect interest rate increases will have on real estate prices in Greater Victoria.

When it is the western governments manipulating interest rates lower with massive stimulus programs, you must know that these people are likely correct in their opinion that there is an inverse relationship between interest rates and real estate prices.

If interest rates increase then real estate prices will decrease, just as the inverse happened when interest rates decreased.

totoro victoria said...

LeoM, not really. I agree higher interest rates would result in lower prices.

Many people here have been promoting theories that are unrelated to interest rates, similar to the US example.

As for garth - he published "The Little Book of Real Estate Wisdom" and "The Strategy: A Homeowner's Guide to Wealth Creation" in 2002. Both of these books were full of predictions that have not occurred in the past 11 years.

For example, he predicted plunging real estate values. Turner also promoted the idea that baby boomers had no choice but to borrow against their home equity (which is earning them nothing), and buy stocks and mutual funds which will provide annual returns of 12%-15%. Good luck to those banking on those type of returns in their retirement now.

Marko said...

Quite a different scenario for many who bought since 2008 as opposed to those buying 10 years ago.

Garth's predictions have been around a lot longer via his books.

And since 2008, maybe for Victoria but as Leo_S pointed out....Winnipeg up 43%, Toronto up 33%....Vancouver up 17%, etc.

Marko said...

It is well documented that the toronto real estate board always compares current month numbers (which include deals which will later fall through) to last year's numbers that have already had collapsed deals subtracted. That distorts everything to appear positive and is pretty clear manipulation.

You have a link to any articles on this topic? When a deal is recorded as pending (unconditional) the odds of it collapsing at that point must be around 1/500? I've seen it only on the rare occasion.

I don't see this factor manipulating numbers to a great extent.

Maybe it has something to do between sold (completion has occurred) and pending (unconditional, but completion has not occurred)?

Shannon Baker said...

It sounds like an interesting series. I will check it out

non fiction marketing

Leo S said...

Marko: TREB taking a page from the NAR?

Marko said...

Monday, September 23, 2013 8:00am

MTD

September 2013 2012

Net Unconditional Sales: 354 419

New Listings: 874 1,210

Active Listings: 4,579 5,025

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

Marko said...

With a Monday left at the end of the month I think we might get to 500.

Amy Collier said...
This comment has been removed by the author.
Amy Collier said...

Here is a new Canadian real estate portal movety.com. They have MLS listings for Metro Vancouver.