Monday, January 27, 2014

Jan 27 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.


January 2014January
 2013
Wk 1Wk 2Wk 3Wk 4
Unconditional Sales71
167
243
294
New Listings362610854
1080
Active Listings329533463340
3870
Sales to New Listings
20%
27%28%
27%
Sales Projection---295310

Months of Inventory
13.2


Surprisingly enough sales dropped second week to third, but we'll still easily exceed last year's total.  

173 comments:

koozdra said...

$5500 / 5br - 3200ft² - SOUTH OAK BAY EXECUTIVE RENTAL

$1,450,000

Can't sell? Just rent it out.

Unknown said...
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Marko said...

Surprised that hasn't sold given the specs, but I haven't see it in person.

patriotz said...

Can't sell? Just rent it out.

That rental listing was posted 12/27, so assuming it's still available you could change that to "can't sell, can't rent".

Actually it's really "won't sell, won't rent" because you can always sell or rent at the market price.

Properties listed for sale and for rent at the same time are a bellwether of a falling market.

totoro victoria said...

I don't think that the statement that properties listed for sale or rent are the bellwether of a falling market is accurate.

This might occur in a falling market, but it is an indicator that someone has set their price high and would rather rent than sell for less for any number of reasons. Including paying a huge sum to build new that places your home at a value much higher than the neighbouring homes if you wish to recoup your costs.

As for the OB market. I would say that prices on homes on busy roads such as Foul Bay and Cadboro Bay have dropped 5% or more in their listing prices. Like this one:
http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13923161

Or this one:

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13966420

That started to happen more than six months ago. Listing prices for the average updated home do not appear to be impacted much. Like this one:

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13821255

I don't know about the high end.

subprime11 said...

Oak bay executive house is a disaster. Nobody wants to own the most hated house in oak bay. Besides it is poorly designed and workmanship is of poor quality, lacking in finishing details. One feature stood out to me. Concrete floors with high gloss urethane finish poorly applied with dust and particles in the finish. $1,495 M is the builders break even price but $1,250m might sell it. Initial listing price was $1'995m

subprime11 said...

Declining sales in the 3rd week of jan is a bellwether of a falling market...maybe not but that is surprising.

LeoM said...

Its starting to look a bit like 1982 revisited around Victoria.

- The big Hole in the ground beside 1810 Blanshard is older than my dog. The Hudson north phase might get built, or will this be a Déjà vu of the 'former' 1983 hole in the ground at the NW corner Blanshard and Bay. That $6 million hole was eventually filled-in with all the debris that truckers could haul and dump for free.

- The half started duplex reno on a prime Fairfield lot on Leonard St has been a gutted mess for 18 months.

- The prime location in Oak Bay that is for sale by owner on Musgrave and Dalhousie that the owner has been trying to sell for almost a year

- The Oliphant four-plex in Cook St Village that gets the award for the longest reno with the most price drops even before it's 'officially' on the market. The unfortunate lady owner who decided to convert to four-plex is likely regretting not just selling 4 years ago.

It's not getting any better, it's getting worse by the month.

LeoM said...

Last week was 'Speculation and Prediction Week' on this Blog.
Lets extend the predictions with the following example.

Imagine a well maintained 2700sq.ft SFH, with mostly original interior, with 3 bedrooms and 2 bathrooms and a basement with a rec-room, on a 6000 sq.ft. lot, built in about 1950 in either South Fairfield or South Oak Bay on a quiet family oriented street. The 2014 assessed value is $700,000 and these types of properties are currently selling for close to 2014 assessed value in these neighbourhoods.

I’m curious what people on this blog predict would happen to the selling price in each of the next 4 years if the 5 year mortgage rates increased one percent each year. Current 5 year mortgages are about 4.3%.

What is your predictions of how the following 5 year mortgage rates would affect price:
Spring 2014 – 5 year mortgage at 4.3% --selling price is about $700,000
Spring 2015 – 5 year mortgage at 5.3% --selling price is about $ ???
Spring 2016 – 5 year mortgage at 6.3% --selling price is about $ ???
Spring 2017 – 5 year mortgage at 7.3% --selling price is about $ ???
Spring 2018 – 5 year mortgage at 8.3% --selling price is about $ ???

totoro victoria said...

I don't know the situation with the Fairfied renos or Blanshard. Do you? I'm not sure what you are saying by pointing these out?

Are you saying that people have no money to finish because of the economy or they are giving up or something? Without more info it means nothing. There are loads of developments underway right now.

Look at the big building under construction on the corner of Foul Bay and OB Avenue. Or the house projects along Dallas. Or the new development proposed for the Clive on OB Avenue (controversial as it is and I hope they don't get the full parking exemption).

Also, how old is your dog?

koozdra said...

Where do these people come up with these prices?

$6000 / 4br - 4100ft² - Executive house for rent (Bear Mountain)

subprime11 said...

@LeoM. I doubt we will experience a gradual increase in rates as you outline but if so then I would expect by 2018 that the property would be $400,000. What do you suppose that place on Musgrave is worth? He wants $675K.

Just Jack said...

The median list price to assessment ratio for non new condominiums in the core is currently 103.3 percent.

Yet the median sale price to assessed value for the last 6 months has non new condominums selling at 95.3 percent of their 2014 assessed value.

That seems to be a fair sized discrepancy between the typical list and sale price. Maybe this is true of the winter months when the number of listings are lowest. Leaving a disproportionate amount of overpriced condos on the market.

Generally if you have a dog of a property to sell, the winter months with its low inventory may be your best market to sell in.

subprime11 said...

@totoro. Have not seen much progress at the damp plywood condo building at OB and foul bay. Only 25% sold. I'm surprised there is no concrete above the commercial ground level. If I'm spending $1.1M for a 2 br penthouse I would want a concrete structure.

Just Jack said...
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totoro victoria said...

There is a load of huge amount of concrete in the Village Walk.

The second floor is solid concrete.

The upper floors have concrete topping to mitigate sound transfer between residences and an engineered double wall system between residences with staggered studs for soundproofing.

However, I too can't believe they want more than a million for the penthouse suite - really?

I have no idea about eventual sales at this location, but I do know the building has been speedy and appears to be on schedule.

As for damp plywood, is that a problem at this point?

totoro victoria said...

should be "huge amount"

Just Jack said...

A million plus for a condo in that location! Unlike what the signage says. That isn't the heart of Oak Bay. It's more like the left armpit.

A million plus condo in Oak Bay has to have a Beach Drive address or be located 10 blocks to the east in the "right" kind of neighbourhood.

That is unless you consider second hand stores, gas stations and low rent apartment buikdings posh.

totoro victoria said...

Exactly JJ. I don't see that it is a million dollar location for a condo either.

totoro victoria said...

Actually, the Village Walk will be a good test as to the state of the market.

The other condos are high-priced too - a two bed two bath second floor starting at $649 000?

I don't know how the place is going to function. They have 26 parking spaces for 22 units and a couple of commercial zone parking spots on the side of the building. Not enough parking for the businesses.

There is no visitor parking at all it seems and the streets surrounding it are residential only or already very busy 2-hr parking down the block on OB.

They have put a fair bit of bike storage but how many people who buy at this price have only one car or no car and never have guests?

CS said...

Its starting to look a bit like 1982 revisited around Victoria.

A bit, perhaps. But so far, there's no sign of the spike in rates that killed the market in '82. Posted rates had been more or less flat (9 - 11%) between '69 and '79, then they spiked to more than 18% by '82 (see: BoC).

If rates were now to climb 80% that would take discounted rates to about 5.9%, which I would expect to devastate the market.

If discounted rates climbed to Leo M's postulated 8.3 by 2018, I would predict Armageddon.

But because of the political fallout, I don't think it likely to happen. If external factors tend to drive interest rates higher, I expect that the dollar would be made to take some of the strain to prevent Canadian rates rising too sharply. We've had a 63 cent dollar before and could again.





CS said...

Its starting to look a bit like 1982 revisited around Victoria.

A bit, perhaps. But so far, there's no sign of the spike in rates that killed the market in '82. Posted rates had been more or less flat (9 - 11%) between '69 and '79, then they spiked to more than 18% by '82 (see: BoC).

If rates were now to climb 80% that would take discounted rates to about 5.9%, which I would expect to devastate the market.

If discounted rates climbed to Leo M's postulated 8.3 by 2018, I would predict Armageddon.

But because of the political fallout, I don't think it likely to happen. If external factors tend to drive interest rates higher, I expect that the dollar would be made to take some of the strain to prevent Canadian rates rising too sharply. We've had a 63 cent dollar before and could again.





CS said...

@Info:
The Canadian housing market will peak while interest rates are at emergency low levels. The US housing market peaked at a time when rates were a lot closer to normal and that gave the US government the ability to slash rates dramatically to combat falling house prices.

The US Fed Funds rate fell from 6% to 1% between 2001 and 2003, which corresponded with an exponential increase in the Case Shiller index.

The US Fed Funds rate then rose to over 5% in 2005, which increase corresponded with a slowing in the rate of increase in RE prices followed by the crash.

In Canada the pattern has been different. The BoC rate dropped from 4 to 2% between 2001 and 2002, then rose gradually to 4% in 2008, when the Teranet HPI began to slide. At that point the rate was dropped to under 1%, and the Teranet HPI turned round and climbed another 40 points.

It seems pretty certain, therefore, that if rates are jacked up sharply in the next year or two, the market will collapse. Hence, I think rates will be held down so far as possible, although if rates are raised slowly, as in the period 2002 to 2008, there could be a soft(ish) landing.

Just Jack said...

The interest rate climbing in the early 1980's certainly had an affect on buyers and on those re-financing. But it wasn't the only cause of the "crash".

Unemployment and high vacancy rates caused a lot of people to go into foreclosure. Money problems from a weak economy also increased divorces. And the grandparents of the Baby Boomers were dying off at this time. Those grandparents were the first big wave of immigrants to settle in Vancouver and Victoria after WWI. We have had many baby booms - its just the one after WWII was the largest.

CS said...

The concept of "normal rates" is probably unhelpful.

If you look at the BoC rate since 1980, you see that there is no evidence of a "normal" rate. The rate has fluctuated around a continual downward trend.

We are currently in a deeply deflationary era as measured by the CPI or by wage increases. Therefore, low interest rates are what would be expected, which in turn, means that asset prices will be relatively high.

If wage rates in collapsible Bangladeshi garment factories begin to match those of Montreal garment industry workers, then look out for much higher wages and interest rates, and paradoxically, lower house prices.

If

CS said...

Money problems from a weak economy also increased divorces.

In not a few cases divorce-causing money problems arose because rising interest rates crashed house prices, thus wiping out many new home owners' down payments.

Just Jack said...

158 out of 577 condos in the core districts are vacant. That's about one in every four.

For houses in the core its about one out of every six.

Where have all the people gone?

subprime11 said...

Thanks for the Village walk specs totoro...you must work for Abstract. Cement floors and staggered studs....well maybe 1.1M is a good deal after all. Agreed that village walk has a parking problem to generate sufficient traffic for the commercial space. If you go a couple of blocks north you see an example of vacant commercial space (used to be a furniture store) below newish condo's, too far from core OB I suppose.

totoro victoria said...

No, I just know how to google their website and I walk by the site almost every day.

As far as that other development goes, it is a wasteland there! They are def asking too much money as it has been sitting vacant for what - a year now? If I did work for Abstract that would make me worry a bit.

The City of Victoria needs to up the appeal of the Foul Bay to Richmond stretch of OB much like OB has done. Some flowers on the street lamps and more crosswalks would help.

Just Jack said...

To give you some perspective. The core distrcts have more vacant homes listed than the Western Communities.

About one out of every ten homes are empty including all the new construction.

For condos there are about one listing out of every three vacant.

My humble opinion is that people are selling their investment houses as the tenant leaves.

Has the big Baby Boomer sell off begun? The timing is certainly right as the first of the Baby Boomers turns 69 this year.

info said...
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info said...

"The concept of "normal rates" is probably unhelpful.

If you look at the BoC rate since 1980, you see that there is no evidence of a "normal" rate. The rate has fluctuated around a continual downward trend."

The BoC has kept its benchmark rate at emergency levels for almost 5 years. Emergency level rates are not normal. There doesn't need to be a perfectly defined normal BoC rate level. Emergency does not equal normal.

The 30-35 year decline in the BoC rate is over. That downtrend will become an uptrend.

All we know for sure about the BoC rate is that it will rise substantially. Rising rates will contribute to Victoria's (already significant) housing market correction for years to come (along with many other factors that generally kick in as housing bubbles deflate).

Again, many regulars on this blog don't understand the big picture when it comes to emergency level rates.

The BoC has kept its benchmark interest rate at emergency levels since the GFC (08-09) because the Canadian economy has been weak and fragile since that time. The Canadian economy has also required unprecedented stimulus spending since the GFC.

The Canadian economy has become dependent on emergency level rates and increased levels of activity from (bubble) housing market related industries. This is not sustainable.

Canada's bubble level house prices are not sustainable. Canada's chronically weak economy will eventually take care of that along with many other factors.

Canadians should be concerned that the BoC has kept its benchmark rate at emergency levels for almost 5 years as this is an admission by the government that the troubled Canadian economy has required unprecedented levels of intervention since the GFC.

Those of you who cheer on emergency level rates should note that Japan's housing bubble burst 24 years ago and its housing market crashed for over two decades in an environoment of emergenchy level rates. Japan's housing market may experience more price declines.

Leo S said...

>> All we know for sure about the BoC rate is that it will rise substantially.

Or they could stay low. I agree that if they stay low the economy is crappy but it is anything but a sure thing they will increase at all, never mind substantially in the near future

Just Jack said...

Doesn't the B of C use interest rates to keep the inflation rate within target parameters?

I wouldn't call the interest rates at "emergency levels" as long as the inflation rate lays within these parameters.

The interest rate does seem to be consistent with a lot of other countries too.

Besides, it isn't necesaary for the banks to charge the BofC rate. The banks make their own business decisions in a competitve marketplace. In fact some banks have just lowered their rates.

In contrast, there are private or individual lenders that charge 9 to 12% for mortgage money. Their clients tend to be high risk. Perhaps, if we didn't have CMHC socializing our housing industry we would have morgages at 3% for the first 80 percent and 9 to 12% on the balance.

As it is right now anyone buying a home for under a million competes equally with someone with 5% down or 50% down. The winning bid goes to the one with the most tolerance of taking on debt. With each additional dollar spent adding little to the overall enjoyment or utility of the home.

Only after a million dollars do the forces of the free market once again regulate demand. Where savers are rewarded with every additional dollar spent adding more enjoyment value and utility to the home owner.

Today we have 127 properties in the core listed for over one million dollars. That's about 10 percent of all properties listed in the core districts. Your property has to be pretty special, one might even say unique, to sell for over a million these days.

koozdra said...

The BOC uses their key overnight rate to target inflation to be in the range of 1% to 3%. Right now inflation is sitting in the low one percent.

CANADA INFLATION RATE

If they see inflation rising they will raise rates. However the opposite looks to be what is happening; disinflation.

If it drops below the 1 percent mark they will lower rates to spur the economy.

However low rates cause asset bubbles. For instance the Canadian housing market.

Just Jack said...

Which is worse, inflation or a housing bubble?

The housing market is just collateral dammage. The economy is massively more important than home owners losing some equity.

I thought the low volume of sales over the last several years should have had an impact by now. It seems that real estate today has just become a "rich" man's game. This kind of crap usually causes revolutions when the masses are seemingly excluded from the basic necessities.

Interestingly the other day I was speaking with a retired member of the Canadian Intelligence community. 37 years in the Middle East. His view is Canada is heading for a revolution. Too few people have too much with a government that is not listening to its people. The MPs are suppose to be working for us not gagged and tied up in a corner of a basement on Parliament Hill. That's not a democracy.

Of course we're too polite for that.

So Praise the Lord and pass the bullitts.

CS said...

Reverting to Leo M's question about the effect of rate increases, it is misleading to make a direct comparison of percentage increases from today's level with the same percent increases from the late 70's when the base rate was much higher than today.

For example, from the 4.3% starting point of Leo M's example, to 8.6%, i.e., a 100% increase, monthly mortgage payments on a 25-year term increase by 48%. But a doubling of rates from 9% in the late 70's to 18% in 1982 increased payments by 77%.

So all other things being equal, the market now will withstand any given proportional increase in rates better than in the 80's, although that may not be saying a whole lot.

But for now, rates are lower than the lowest point in 2009, the peak year, so if rates are the only factor, the market will withstand some increase in rates without much stress.

caveat emptor said...

"All we know for sure about the BoC rate is that it will rise substantially."

I agree that it is likely to rise at some point - perhaps substantially. But the case for certainty - you say "for sure" is undermined by citing the Japanese example where rates have been <1% for 19 years and counting.

It won't be a particularly good news story for housing prices or the economy if that happens here - but one has to consider that possibility.

CS said...

Comparison of the Canadian housing market with that of Japan does not seem very useful.

Here are some differences.

"Real-estate prices across Japan rose by as much as six to seven times during the 1980s asset bubble. Confidence was strong as the Japanese economic model, often referred to as “Japan Inc.” seemed to be invincible. Japanese corporations awash with cash made speculative purchases of real-estate and corporate assets all over the world. At home in Japan, low interest rates and loose monetary policy fueled a strong economy and high stock prices. Following the Plaza Accord in 1985, the yen appreciated from around 240 yen to the USD to about 120 yen in less than a year. In response, the Bank of Japan lowered interest rates from 5.5% down to 2.5% in 1987. This dramatic easing of monetary policy at a time of economic strength sparked an explosion of real-estate transactions and high stock prices. Adding fuel to the fire, the government under Prime Minister Nakasone, reduced corporate tax rates from 42% to 30% and slashed top marginal income tax rates from 70% to 40%. It was said at the time that the value of the Imperial Palace in Tokyo exceeded the value of all the real-estate in California. Land in Ginza 4 Chome was reported to have traded at JPY 90,000,000 ($750,000 at the time) per square meter." Source.

Does that sound like Canada in the oughts? I don't think so.

Also, just before the crash the BoJ spiked interest rates from 2.5 to 6% and imposed borrowing restrictions.

koozdra said...

"Of course we're too polite for that."

Haha, well put. Things have to get a lot worse before that happens. Maybe if the dollar drops into the sixties and we have to start buying overpriced Canadian goods again.

LeoM said...

The ongoing discussion here about the 1980's is interesting, but the rapidly increasing interest rates of the 1980's had many factors, not the least of which was the 'Debt Crisis' in the early 1980's.

Interestingly, many experts are now saying again the the U.S., Canada, and many European countries have entered that 'Debt Crisis' realm again.

The U.S. and Canada can't pay their bills without borrowed money, or freshly printed new dollars. The debt crisis in the U.S. and Canada will never be paid-off with taxes from citizens and corporations, and resource royalties, so the only other way is through high inflation; just like in the 1980's.

Déjà vu?

Leo S said...

If it drops below the 1 percent mark they will lower rates to spur the economy.

I actually think flat rates or a slight raise will support prices more than a rate cut. If rates are cut Flaherty will almost certainly move in parallel to restrict credit availability.

CS said...

the rapidly increasing interest rates of the 1980's had many factors, not the least of which was the 'Debt Crisis' in the early 1980's.

I thought the debt crisis of the 80's referred to the Latin America debt crisis.

True, the 80's was an era of profligate Federal deficit spending in both the US and Canada causing public debt to GDP ratios to rise. Thus when the US Fed funds rate went to 18% in 1981, the BoC was forced to follow or let the $C crash.

Interestingly, many experts are now saying again the the U.S., Canada, and many European countries have entered that 'Debt Crisis' realm again.

Canada's national debt to GDP is much lower (and falling) today than in the 80's (38% now versus 64% then), and the dollar is stronger (though weakening) relative to the US$ (80 cents US and falling in the early 80's).

So Federal debt is more manageable now than in the 80's. Moreover, if rising rates elsewhere force a choice, the BofC may allow the loonie to fall another ten or 20 cents rather than hike rates substantially, as a cheap dollar would promote resource exports, boost corporate profits, encourage investment and increase employment.

LeoM said...

CS -- Saying the 1980's Debt Crisis was limited to Latin America is like saying the current Debt Crisis is limited to Greece. It’s a bit more complex than that. I’ll try to explain.

“ CS - Thus when the US Fed funds rate went to 18% in 1981, the BoC was forced to follow or let the $C crash.”
Not exactly right; when the government is in debt they need money, either from higher taxes or from borrowing by selling government bonds/treasuries. Bonds are sold at Treasury auctions to the lowest bidder (interest rate bidder).

Canada was in debt, needed money, and had to sell bonds, but of course no one would buy Canadian bonds at 10% when they could buy U.S. bonds for 18%. No one would buy U.S. bonds at 15% when they could buy Latin American bonds at 19%.

All countries that need money must sell bonds at competitive rates and countries with risky socialist governments, like Latin America, must sell bonds at premium rates.

In other words, the BoC, then and now, has very limited options in setting interest rates because rates are set by the free international market. Bond buyers are countries like China, and OPEC countries who have cash.

So although a Debt Crisis might start in a distant country, it affects all countries that are in debt because all countries vie for the same buyers of government debt (bills/bonds/treasuries), whether it’s Latin America, Greece, the USA, or Canada.

A simple example is China with their surplus trillions of dollars; they need to invest it somewhere, so they go to all the treasury auctions in the USA, Canada, UK, Greece, etc and they bid only for the highest interest rate they can get and of course the government sells to the lowest bidder, but there aren’t many bidders with trillions of dollars to invest, so China waits for a higher interest rate. The USA tried to sell bonds/treasuries for ridiculously low rates, but all the buyers refused to bid, so the U.S. Fed created new credit out of thin air, the US Treasury printed new dollars to cover the new credit, and the US used the new freshly printed dollars to buy their own U.S. bonds/treasuries at low rates. This is the only way governments can keep rates low. It’s just a big ponzi scheme.

Letting the dollar fall is a short term gamble by Poloz to postpone the inevitable. The low Canadian dollar causes foreign made goods to be more expensive in Canada. That’s called ‘Inflation’ and it causes interest rates to rise.

caveat emptor said...

"countries with risky socialist governments"

You realize that in the 1980's much of latin america was ruled by military dictatorships, mostly with little sympathy for socialists

CS said...

It’s a bit more complex than that.

And perhaps a bit more complex than you realize!

Canada was in debt, needed money, and had to sell bonds

Canada does not need to sell bonds to service debt. It that were the case, then debt would spiral out of control.

Governments sell bonds when they intend to run a budget deficit. Otherwise, they pay interest on debt out of current revenue.

The Government of Canada does not sell bonds in the market, they sell to the BofC. The BofC can then either retain the bonds or sell them on.

If the Bank retains the bonds for its own portfolio, the result is monetization of debt, i.e., an increase in the money supply without any reduction in government spending.

This has no direct effect on the bond rates, although it is inflationary and thus has indirect effects on interest rates. For example, inflationary finance will lower confidence in the C$, thus driving down foreign demand for Canadian bonds, which in turn will drive up interest rates.

Alternatively, the Bank sells the bonds in the market, which drives down prices and raises yields, i.e., interest rates.

Another possibility is to for the Bank to buy bonds in the market for its own portfolio, the money being created out of thin air, i.e., a mere bookkeeping entry or ink money. This is quantitative easing. It reduces the supply of bonds in the market thus raising prices and lowering interest rates.

But, currently, Canada is supposed to be on track for a balanced budget with a debt to GDP lower than the high of the 1980's. This implies low inflation, low interest rates and a stable dollar.

patriotz said...

But, currently, Canada is supposed to be on track for a balanced budget with a debt to GDP lower than the high of the 1980's. This implies low inflation, low interest rates and a stable dollar.

Doesn't imply any of these. In the past we have seen balanced budgets federally (and a smaller debt/GDP) with higher inflation, higher interest rates, and/or large variations in CAD/USD.

The foreign exchange markets are currently telling us how much they care whether the GoC has a balanced budget.

Marko said...

2584 Thompson sold for $855,000 today, not bad.

totoro victoria said...

Yes, not too shabby.

http://sharonhoffman.ca/officelistings.html/details-36003698

CS said...

The foreign exchange markets are currently telling us how much they care whether the GoC has a balanced budget

We don't have a balanced budget. I said we were on track:

"The March budget estimated the 2013-14 deficit at $18.7-billion, to be followed by a deficit of $6.6-billion in 2014-15 and a small surplus of $800-million in 2015-16."

With the rate of QE in the US cut once again, some traders evidently prefer the greenback to the loonie — for now.

CS said...

Actually, I didn't say we were on track. I said we are supposed to be on track. My skepticism is reflected in the value of the $C.

subprime11 said...

Dow and CDN dollar sinking just in time for the launch of the spring RE market.

LeoM said...

CS – regarding your ‘clarification’ of my points, I was not trying to write a dissertation on international economics, rather I was writing a brief schematic overview in a couple paragraphs of what happens in a debt crisis. Of course, we all realize that each federal government borrows in ways specific to each country. But your ‘clarification’ completely misses my points. If anyone here wants very detailed specific micro economic fine points, I suggest reading ‘International Economics’ by Paul R. Krugman, Nobel Prize winning economist.

I’ll stick to my schematic overview at the macro level. A debt crisis causes bills/bonds/treasury interest rates to rise, which cause mortgage rates to rise, and a lower Canadian dollar causes inflation of imported goods, and inflation causes interest rates to rise.

In summary, we have two upward pressures on interest rates and there is very little Poloz can do to mitigate these pressures.

CS said...

A debt crisis causes bills/bonds/treasury interest rates to rise, which cause mortgage rates to rise, and a lower Canadian dollar causes inflation of imported goods, and inflation causes interest rates to rise.

But we don't have a Canadian debt crisis. We have a manageable Federal debt and a deficit headed for zero, supposedly, in 2016.

The fall of the dollar has been a pre-election manipulation to boost employment and combat disinflation, a major concern of the BofC.

It did not even require intervention by the BoC in the currency market, though they can do that at any time.

It was sufficient that Goldman Sachs predicted an 88 cent dollar in the fall and for Flaherty to say a 90 cent dollar would be a good thing — the market did the rest.

I hope you took advantage of the opportunity to make 12 cents on your dollars, or much more if you used leverage.

caveat emptor said...

I suggest reading ‘International Economics’ by Paul R. Krugman, Nobel Prize winning economist.

Hasn't Krugman been pounding the table insisting that "printing" money under current circumstances (recession levels of unemployment, low aggregate demand) is not inflationary?

Just Jack said...

460 houses for sale in the core with 72 selling in the last 30 days or 6.4 Months of Inventory

During the same time 180 listings have been added for a Sales to New Listings Ratio of 40 percent.

The average exposure is 60 days on the market or two-thirds of the way into a standard real estate listing contract.

The median Sales to Assessment Ratio ranged from a low of 70% to a high of 139% with the median or typical home selling at 99.7% of its 2014 assessed value.

The general market analysis would put the housing market in the core districts on the cusp of a balanced and bear market. This would imply stable prices for the next 90 days.

Important information for those intending to buy or sell real estate in the next 3 months. Prospective buyers have an opportunity to look at many properties before making an informed decision while home owners have very little to fear about falling prices during the typical 90 day list contract.

This is for the general market in the core districts. Your type, style, size and location may differ from the general market. For example prices for starter homes may not perform as well as the style of home popular in the Gordon Head hood.

Just Jack said...
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Just Jack said...

The condo market in the core districts is a little more difficult to determine because of the new and proposed units. So, I chose not to include them and only review the "re-sale" or used condo market.

There are 478 pre-owned condos for sale in the core and 56 sold in the last 30 days. That's 8.5 Months of Inventory. During the same time period 150 were listed which calculates to SNL% of 37%

Average exposure is 106 days on the market.

Sales to Assessment ration ranged from 70% to 129% with the median at 98.1%.

The condo market is tipped into a bearish market that favours buyers. If you were hoping for a comeback in condo prices it isn't going to happen within the foreseeable future.

Again, same thing with your specific condo some will vary more than others.

Thinking about doing a youtube thingy like Ian Watt the realtor did. But mine will be called the Naked Appraiser you can't get anymore bear than that. I'll give my commetary while biking through Beacon Hill park starkers.

Of course I'll wear a helmut.

koozdra said...

"Naked Appraiser"

I'd watch that.

Just Jack said...

5 more votes and I'll set up an appointment to get waxed.

DavidL said...

@Just Jack

Ditto. I would watch too! Four more votes to go ...

CS said...

Hasn't Krugman been pounding the table insisting that "printing" money under current circumstances (recession levels of unemployment, low aggregate demand) is not inflationary?

About which he is probably correct. (Though, oddly, he never talks about the reason, which is the offshoring of jobs from the West to the Rest).

The danger of deflation appears greater than that of inflation and it may have as much impact on RE as substantial inflation — who wants to borrow a pile of money if it has to be paid back in dollars of rising value?

Leo S said...

>> he never talks about the reason, which is the offshoring of jobs from the West to the Rest

I think this is yesterday's story again. Tomorrow's story is the transfer of jobs from masses of low-paid third world workers to advanced robots.

Already we can see manufacturing returning to first world countries. That doesn't mean the rust belt will return to work, but when 95% of the production can be done with robots it doesn't much matter where the factory stands.

What will be interesting is if or where the next wave of professions to be automated find work (for example, the expiry date of driving as a job is likely with two decades)

caveat emptor said...

What it would take for Canada's housing market to crash.

These folks see a decline rather than a crash

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

What will be interesting is if or where the next wave of professions to be automated find work

People, it seems, are becoming largely obsolete. Which could be a long-term negative for RE.

info said...

. . . . . . . . . . . . . . .Percentage Price Decline From Peak . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .Greater Victoria - Condominiums. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . (MLS Home Price Index). . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .0%. . . . . . . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 0.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 2.0%. . . . . . . . . . . . . . . . . . . . . . . .(10). . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 2.5%. . . . . . . . . . . . . . . . . . . (09). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 3.0%. . . . . . . . . . (08). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 3.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11). . . . . . . . . . . . . . . . . . . .
- 4.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5.0%. . . . . (07). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 6.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 6.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . (10). . . . . . . . . . . . . . . . . . . . . . . . .
- 7.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11). . . . . . . . . . . . . . . . . .
- 7.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(12). . . . . . . . . . . . .
- 8.0%. . . . . . . . . . . . . . . . . (09). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 8.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 9.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 9.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.0%. . . . . . . . . . . . . (08). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.5%. . (07). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(13). . . . .
-12.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(12). . . . . . . . . .
-12.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-13.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(13). .
-13.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-14.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
----------------------------------------------------------------------------------------------------
. . . . . . . . . . 07. . . . . 08. . . . . 09. . . . . 10. . . . . 11. . . . . 12. . . . . 13. . . . . . .

S-J said...


2571 Dunlevy Street listed at $890,000.

Sorry, but this seems way overpriced to me. It’s really nothing special, except maybe a decent sized backyard and a paint job. I especially love the bars at the window in the last picture– pretty fitting if you pay just under $900,000. You can look through the window one day when prices fall and wonder if you’ll ever be able to escape the place.

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=14021218




info said...

I've posted a 6-month price chart for Greater Victoria condos. June and December price levels are plotted on the graph along with the peak (*) which was established in March 2010.

As of December 2013, condo prices across Greater Victoria have declined 13%.

Over the same period of time, condo prices across Canada, in general, have increased 6%.

This is more proof of the obvious. Victoria's housing market has been weak since 2010. This market weakness is apparent across all property types and all areas of Greater Victoria.

As of December 2013, condo prices were lower than at any time from 2007 through 2012.

Many high-risk, high-ratio, (minimum down payment) mortgage holders have underwater mortgages and have, effectively, been eliminated as potential move-up buyers. Many townhouse and SFH mortgage holders are in the same boat. This will contribute to lower sales and lower prices of all property types across Greater Victoria in years to come.

Most of this 13% price decline took place while 5-year fixed mortgage rates were declining and while condo prices across the rest of Canada increased. This makes Victoria's condo price decline even more remarkable.

I've said many times that Victoria's housing market will not require rising interest rates to correct completely and fully. Condo and SFH prices have fallen below 2007 through 2012 price levels even as 5-year fixed rates were falling and variable rates were at emergency levels. Variable rates will rise in years to come and 5-year fixed rates hit bottom last year. Rising rates (whenever that happens) will contribute to falling house prices in a big way. However, as I've said, Victoria's housing market correction hasn't required rising rates to correct so far and will not require rising rates to continue correcting.

I will argue that the first part of Victoria's housing market price correction was the most difficult to get through for two main reasons:

1. There were more potential move-up buyers through the first part of the correction than there will be going forward.

2. 5-year fixed rates were falling for the vast majority of the price decline but hit bottom last year. The general direction for 5-year fixed rates will be upward in years to come.

Victoria's rate of price decline could easily increase now that prices are below 2007 through 2012 levels.

House prices in Victoria are still far above the level where fundamentals (incomes and rents) might be able to provide price support. It certainly doesn't help that incomes in Victoria have stagnated since 2008.



caveat emptor said...

Info

What is the current price to rent ratio for Victoria?

What is the fundamental price to rent ratio that you think we should return to?

Thanks

Just Jack said...

Dunlevy does look expensive.

However, I would think that if the current owners had only maintained the home from when they purchased it in 2004 they would likely still get an offer in the low $800,000.

They're going to get very little pay back from the significant renovations they had done over the last decade. What they've done is increase the saleability of the home with the renovations but not necessarily the value.

There are tons of choices in this price range, the competition is beating down the price of this property.

Personally, I'd never buy this property because of the style of the home. I would rather have the square footage not including the basement. Such as a two storey home with an upper level versus a Gordon Head or Glandford style home where the exact same house is closer to $500,000.

And I think that's a big problem with this property as the competition are much more stylish homes. For this kind of coin, I'd want something different from everyone else.

Marko said...

Dunlevy was already a $525,000 in 2004 and definitely upgrades since then.

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

Victoria's price to rent ratio is much higher than its long term average.

The Economist says Canada's price to rent ratio is 78% above its long term average (the highest in the world). Vancouver would probably be the most overvalued Canadian city based on rents and Victoria would probably be second most overvalued. Both cities would be considered to be extremely overvalued.

This article talks about the price to rent ratios of Canada's largest cities (as of 2010).

I don't have exact numbers for Victoria at this time, but it is obvious that Victoria's overvaluation (based on rents) is extreme.

totoro victoria said...

The price to rent ratio was 39 in 2012. Rents have increased 2% and prices have decrease 3.5% or so based on the benchmark HPI the ratio would have to be adjusted downward a bit.

There is a table here:
http://www.scribd.com/doc/93354349/Calculating-B-C-s-price-to-rent-ratio

Jack and Cate said...

Dunlevy... ah it is good to see there are still dreamers. Be great to see as this place languishes well over assessed and putting lawnchairs and a table in the middle of the yard is their idea of staging the outdoors?

Bets on how long before the 1st, 2nd and 3rd price reductions??

koozdra said...

Here we go again.

2.99% is Baaaaaack!

dasmo said...

Back in time for spring shopping season..,

CS said...

2.99% is baaaack!

We're in a deflationary death spiral. No need now for the US Fed to buy assets to drive down interest rates. Rates are collapsing of their own accord.

For what shall it profit the bankers, if they shall gain all the money in the whole world, if there's no one able to pay interest on it?

S-J said...

Dunlevy again. Just say someone couldn’t resist the realtor’s message on her Open House remarks “You owe it to yourself to visit this jewel in Oak Bay – Estevan!” and missed their appointment at the opticians just to get to the Open House.

Just say they actually went ahead and offered $880,000. I am wondering what number an appraiser (naked or otherwise) would put on it for the bank, or would they just use the assessed value of the house, which seems very high at $792,000.

When you look around at Dunlevy, it’s a nice street, but with the exception of the next door neighbour, the other houses aren’t grand. So, yes, I am expecting several price drops and a long wait.

To be honest, I would have a hard time offering over $600K for it. I’m probably not in touch with reality here, but my eyesight appears just fine!

It would be interesting to hear how many people visited this gem over weekend.



CS said...

Compared with 2564 Dunlevy (1100 square feet finished on a 50 foot lot), which sold on Nov 25 last year for 650K, the asking for 2571 Dunlevy does not appear out of line.

2564 sold at 95.6% of the list price. So adjust the price of 2571 by a similar amount brings the possible sale price to 851K.

Now adjust for the difference in lot size, 70K according to BC Assessment, that narrows the difference between the two to 131K.

But 2571 has at least 20% more space on the main, worth about 21K according to the BC Assessment formula, which brings the difference to 110K.

2571 has another 1358 square feet, the basement, finished (quite nicely), which at $80 per foot closes the gap between the two in potential or actual sale price.

I believe that the price achieved for 2564 Dunlevy was as high as ever achieved for such a house. So if 2571 achieves $850K, we can say that in the Estevan area, prices are still at or very near an all time high.

Houses in that area are among the poorest in Oak Bay, but the location is, for some, ideal, and it is location, people are paying for.

CS said...

I’m probably not in touch with reality her

Here's what you're not taking into account:

Willows beach within 200 m.

Seven restaurants on the Avenue if you include two on Cadboro bay at the junction with Estevan.

Ten minutes walk to the OB rec. center.

Fifteen minutes walk to OB village.

A bike ride to the Uni.

Uplands Park where you can let your dog rip up the priceless vegetation of an extremely rare remnant of a natural temperate savanna parkland, while pursuing the wildlife, such as remains (the quail seem to have gone now).

Just Jack said...

There's an 80 percent chance that the property will not be appraised by a human. Rather a computer program will be used.

There have been three sales along that street in the $850,000 to $875,000 range. Those sales would be given a lot of weight in any computer analysis.

In the days of old, banks used to care what the appraiser thought about the market. I would assess this as having a higher than normal risk for the bank and suggest a lower loan to value ratio for mortgage financing or have the property insured.

But that was back when our banks and lending policies were considered prudent.

S-J said...


I forgot - Willows Galley Fish and chips and a stroll down to the beach to eat them! The best (as long as you don't have to fight over them with the crows).

You've made a couple of good points, and it's an area I would enjoy living in, but I still think it is too high for that house.

One day...


CS said...

but I still think it is too high for that house

Relatively, the price seems to me only a little on the high side.

But in absolute terms, yeah, all prices seems crazy.

If deflation takes hold as now seems likely, RE will surely deflate too. But not before the election!

CS said...
This comment has been removed by the author.
S-J said...


@ JJ

Considering all the uncertainty about the housing market these days, wouldn't it be smart to have a professional individual assess a house by actually going through it?

In a hot and rising market, I could (maybe) understand using a computer, but there is real risk these days.

We have bought several properties over the years and have always had an appraiser walk through the house.

So much for being prudent!

Just Jack said...

It's more important that the lending institution get the new mortgage than the property is worth what the people are paying for it.

The bank is willing to accept a risk that some people overpay for properties. If that risk gets too great, then the bank shareholders will demand a higher level of due diligence. But for the last decade, appraisals have been percieved as getting in the way of bank profits, by slowing down the process and possibly having the deal fall through. These are the reasons the banks have gone to computer valuation system developed by themselves and by CMHC. That's the fox guarding the hen house. And what some in the USA have said lead to the overvaluation of real estate. As a bank or CMHC if you get too many deals collapsing, just turn the knob a little and then they become approved.

The borrower, broker and other various middle parties don't want an appraisal either they want a loan. They want something slapped together with the number they need. Unfortuneately that's what most "mortgage" appraisal have become.

As for the agents. Try to add a clause in buying a home subject to an appraisal. Not going to happen.

While it may be in your best interest to have an appraisal done, it would not be in any of the other player's interest. And those are the ones advising you.

From time to time, I get requests from out of town buyers that want an appraisal done before they make an offer. It can save them a lot of money and it assures them that they are not being taken advantage of.

However, the normal Joe on the street consider themselves experts and go it alone.

I think a first time buyer should have help - but they usually look at $300 for an appraisal as something they can save. And I think anyone in the market for a home over $800,000 should have an appraisal done as well.

The MLS information that you rely on, is an advertisment to get your attention. There is no guarantee that the information is correct and it is up to YOU to satisfy yourself as to its correctness - that would likely be an appraisal.


The difference from all of the above is when YOU order an appraisal before making an offer. Then the level of service in an appraisal jumps to higher level because you want to know what the MLS says is correct in age, size, renovations, lot size, etc. And you want to know where you should be bidding. What's low and what is too high.

Appraisals are cheap - but you have to know what to ask for when ordering them. And you have to know what the appraiser is going to be doing for his pay. Get them to explain what they are going to do - before you order it.

Say you read this on HHV and heck I'll explain the report and my findings at your kitchen table over a beer with you.

Root Beer that is.

Brendon Wayne said...

Things are looking up with that data.
expatriate tax services

Jack and Cate said...

Just Jack said...
It's more important that the lending institution get the new mortgage than the property is worth what the people are paying for it.
______________________

Sorry Just Jack but banks DO care about values and getting their money. TD is the leader in getting their blood from a stone with the Trigger clauses that are now in place should your home value, "according to them" fall below 20%. Then it is up to you to pony up with a cheque or CMHC funds to bring it up to their satisfaction. This is how they are "protecting" their shareholders.

Ordering an appraisal beforehand is good just business practice.

TD mortgage changes

S-J said...


When buying property we look at the appraiser as being an important part of the buying process. We’ve had appraisers look at properties in various ways over the years - appraising a piece of land to build a house, to buying a house, or buying a house in need of renovation. Two of the big banks we have dealt with have paid for some of our appraisals. We have hired our own as well.

When we built from new, the appraiser came in at the beginning of the project to appraise the land we were looking at buying and also gave us an appraisal of the finished project, based on the plans. He also came in half way through, and at the end to do a final.

For our renovation project, we had the appraiser come in to value the house before we bought it. Then, based on the renovations we planned to do, we were given a value of what the property could be worth after the renovations were complete. The last thing we wanted to do is put too much money into the renovations and have our house worth less than the total we had in it.

In the scheme of things, paying $300 for an appraiser to come in to give you their professional opinion about the value of a house you are looking at buying is peanuts. I don’t think just relying on your realtor saying “Yes, it’s a good buy!”, or have some computer tell you “Yay, it’s worth this much” is the smart thing to do.

Just Jack said...

Those are recent changes by TD-Canada Trust within the last 30 days. BMO also has tightened up on HELOC's that cap the amount at 65% of the home's market value.

Yes, some of the banks have recently begun to look at their exposure to a market downturn.

And I don't want to sound too smug about mortgage appraising - but it typically is low level appraising as banks like the TD want very low fees and fast turn arounds.

I do work for TD, but not in mortgages, strictly court work for the TD lawyers. However, last month TD asked me to do a mortgage appraisal for them. I said XXX does your mortgage appraisals, I'm not interested. The loans officer said that this was a high profile client and they wanted a more in depth report. I said fine - its twice the fee you're paying now - they said no problem.

Maybe TD is changing?

koozdra said...

Rethinking the home ownership dream

"Some Canadians are spending as much as 50 per cent of their income on mortgage payments, and as consumers we've never been more indebted. Mortgage debt is a big part of that."

At least we all know that it's different in [insert city in which you live].

Marko said...

Monday February 3, 2014 7:00am:

Jan Jan
2014 2013
Net Unconditional Sales: 342 294
New Listings: 1,090 1,080
Active Listings: 3,489 3,870

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

Jack and Cate said...

Just Jack said...

Maybe TD is changing? February 2, 2014 at 1:25 PM

__________________

Not changing just being the first to "start" telling what is really about to happen and also leading the way in protecting their ass-ets


TD states housing market overvalued, others follow- Feb 3, 2014


koozdra said...

is a 10% "cooling" a soft landing?

Just Jack said...

New regulations for ScotiaMortgage today.

Seems like the Ivory Tower bank MBA's have been trying to monkey with the appraisal process once more in an attempt to increase the quality of a mortgage appraisal. They basically want more recent sales as they don't want to be caught in a market downturn. What they'll get is more recent sales but not of comparable properties to what is being appraised.

Is Scotia getting worried too?

Just Jack said...

It's implausible that TD could ever come up with an accurate calculation of how much the market is over inflated nationally.

We've tried many ways on this blogg to cme up with something locally and failed.
And I think that some people on this blogg have a better understanding of real estate market forces than most TD Economists.

All the 10 percent means is that TD acknowledges that the market is inflated but they don't think it is unreasonably inflated. But they don't know.

I think anyone who has an oustanding mortgage that is more than three times thier gross income is a risky client, especially if their mortgage is more than 80 percent of their assesed value.

I also think that your home's assessed value should be private information that the bank's cannot access without your permission.

caveat emptor said...

"I also think that your home's assessed value should be private information that the bank's cannot access without your permission."

Wouldn't that make life difficult for a whole lot of people.. potential purchasers, people looking to appeal their assessment based on comparables..

Just Jack said...

If your selling your home you just give permission for the agent to publish your assessments or not. And if your buying why would you trust an assessment that is usually a year out of date, calculated by an overworked government employee that has not seen the inside of the home for 20 years.

If your appealing your assessments why do you need to know what another property is assessed for? You argue your value based on sales not on what other properties are assessed at.

There is very little reason for other people to know your assessments. And now it seems that banks, such as the TD, will use them as a test at mortgage renewal.

koozdra said...

CREA should consider taking drastic measures to prevent sellers and agents using photoshop to dress up property images, according to industry players.

Is the problem that it creates a false sense of the property?

"Real estate agents are calling on CREA to ban the use of photoshop on marketing materials as they argue that the creative process is adding to their workload."

It's a tough gig.

LeoM said...

The nice young banker who was happy to grant a mortgage for 95% of the assessed value has been fired. The new banker is a tough old bugger who will only renew your mortgage for 80% of the bank’s assessed value. Our market is deflating and the banks will protect their assets, and they won’t care about your family.

Homeowners with underwater mortgages should start saving the equivalent of the deflation amount of their house, each month. That’s about $1,500 per month, on average.

JustJack is right in suggesting that the banks are changing to protect their assets. The banks will demand a pay-down on submerged mortgages at mortgage renewal time, just as they did in the mid-1970’s, and the early 1980’s and the1990’s. If anyone is in doubt about it happening in the 70’s, 80’s and 90’s just go to the public library and spend a day reading the old Times Colonist newspapers microfilms from 1974 onward. Usually the Saturday or Sunday papers had the horror stories about the mean old bankers who refused to renew mortgages for the full amount owing; instead the banks would only agree to renew for 80% of their assessed value. Homeowners had to pay-down the difference with cash.

There will be no sympathy from the banks at renewal time if your mortgage is underwater; just two options are available; 1. Pay the bank the cash difference, or 2. Sell your house.

Simple Scenario at Mortgage Renewal Time:
- Current mortgage outstanding value: $400,000
- Current bank assessed value: $410,000
- 80% of $410,000 = $328,000 is the maximum mortgage at renewal
- Difference between outstanding and 80% of current = $72,000
- In summary, you pay the bank $72,000 and they will renew for $328,000
This scenario is for a 5 year renewal. In the 80’s the banks would go to 90% for a one year mortgage renewal, so you would only have to pay $31,000 in cash to the bank.

Jack and Cate said...

LeoM - Just to update you the trigger clauses now being introduced (TD started Oct 2013) and rest are following suit, can be activated at "ANY" time by the bank, not just at renewal.

They can ask you -(nay, tell or demand) that you prove within 30 days that your house is worth what you say (or think it is), the current market value, by means of a "mortgage holder pays for" assessment that the bank accepts. If not you get a CMHC approval paying the cost or you cough up the difference that "the bank" considers enough to bring the value up to min 20% equity. Otherwise they intend to take "immediate action" to address "their" concerns.

The bank can and will decide what the valuation is based on several factors including local sales, government assessment and what mood your banker is in.

You, the mortgage holder having signed on the line have agreed to this, you have no power to argue, dictate or negotiate. Period.

PS - They have the right to do this as many times as the mortgage is valid for. So if the market dips again, ......

dasmo said...

" just two options are available; 1. Pay the bank the cash difference, or 2. Sell your house." Not true... 3. Talk to a lawyer.

LeoM said...

Dasmo – the lawyer option was tried many times in the 1980’s but never worked out for the home-owner. The bank is not obligated to enter into a new contract for a mortgage renewal and the home-owner is not obligated to remain with the original bank at mortgage renewal time.

A 5 year mortgage is a 5 year contract between the home-owner and the bank. The contract ends precisely at the 5 year mark (earlier if house is sold or foreclosed).

A 5 year mortgage renewal is a new 5 year contract that will only be entered into by both parties, if both parties agree to the terms and conditions.

The 25 year amortization period is NOT an obligation on the bank to renew at the end of the 5 year term.

A mortgage renewal is a new loan that is used to pay-off the original mortgage, and is subject to new terms and conditions such as a different term and different interest rate.

If the original bank refuses to renew a mortgage then the home-owner can go shopping at other banks for a new mortgage. If a new bank grants a new mortgage then the new bank will pay-off the old bank mortgage with your new mortgage funds.

If you have any doubts about your legal rights and legal obligations respecting your mortgage and mortgage renewal then I suggest you book a one hour appointment with a good real estate law firm such as Mullin DeMeo. This is an excellent firm and they know everything about real estate law. Disclaimer: I have no association with them other than I have hired them exclusively for my real estate transactions.

Just Jack said...

You can always hire a lawyer.

But you knew this when you signed the mortgage contract. If you didn't agree with this clause you should have negotiated it out of the contract.

What the TD is doing is turning a mortgage loan into a demand loan. There are protections when it comes to mortgages versus loans. Even the interest rates for the two are calculated differently. The payments on a mortgage at 4% is not the same as a demand loan at 4%. The effective interest rate is lower for a mortgage than the simple interest rate charged on a demand loan.

Worse, is that TD may not have to get court approval to sell the home. That's a lot cheaper for them than to go through the court.

Joe and Jane Consumer made an offer on a house and want to get financing. They go to TD, who offer them a Mortgage at 4% or a Demand Loan at 3.9% with the same term and amortization.

Since their high school teachers spent a year teaching usefull things like pythagoras theorem and Fibonacci rabbit problems rather than mortgages, loans, RRSP's and TSFA's - they take the Demand Loan.

Marko said...

What are the odds of one being significantly underwater with these interest rates? I think some are overlooking significant principal repayment.

If you buy a $500,000 home and take out a $400,000 mortgage at 3.5% by the end of 5 years the principal is down to $345k.

If you go variable 2.5% you are down to $338k.

We've been in a crap market for 6 years now. What are the odds in 5 years from now the home drops the downpayment plus principal re-payment? Pretty small I would say.

koozdra said...

"We've been in a crap market for 6 years now."

We have, yes, while the rest of the country is booming. Real estate isn't local in the presence of massive economic stimulus. The fact that our market is crap should send serious warning signals of what it will look like when the whole country's real estate starts sliding.

In other news more grade schools are closing because of decreased enrollment. I wonder if the two are related.

What will happen next to encourage families to move back here? Who will sustain these ridiculous prices?

caveat emptor said...

"Real estate isn't local in the presence of massive economic stimulus."

Isn't your argument self-refuting? The very fact that Victoria is moving differently from the rest of the country means that local factors ARE important.

I would buy some pretty strong linkage between Vancouver prices and Victoria prices - if they plummet then we are going down too, but I'd doubt whether Etobicoke prices exert much influence on Victoria prices

koozdra said...

My contention is that the Victoria market should have crashed and burned by now. Low rates have kept it afloat and will continue to do so.

Let's all hope that the economy never recovers. Deleveraging is a bitch.

Marko said...

it will look like when the whole country's real estate starts sliding.

Maybe I live in a bubble but Victoria has looked pretty good for the last 6 years despite the real estate market being soft.

koozdra said...

"Maybe I live in a bubble but Victoria has looked pretty good for the last 6 years despite the real estate market being soft."

The real estate market has not been soft except for places that are doing terribly economically. Places like Windsor and Victoria.

LeoM said...

Marko's point about the balance at the end of five years is right, but perhaps irrelevant if the original mortgage was for 95% and the renewal is a maximum of only 80% or 90% of the bank’s current assessed value.

For example:
Purchaser bought a $632,000 house with 5% down and a $600,000 mortgage.

After 5 years the mortgage balance remaining is about $520,000

On mortgage renewal day the bank’s assessed value is $550,000 (13% drop)

If the bank is willing to renew at 90% then they will loan $495,000

If the bank is only willing to renew at 80%, they will loan $440,000

At 90% renewal the home-owners needs to pay-down $25,000

At 85% renewal the home-owner needs to pay down $52,500

At 80% renewal the home-owners needs to pay-down $80,000

That's a bundle of cash for most home-owners.

If the bank's assessed value is lower, then the cash payment will be higher.

Just Jack said...

I don't know of anywhere in Canada that the market has gone down the crapper in the last few years.

That includes towns that have lost population to the big cities.

That's strange because Canada is huge. Somewhere, someplace prices should be coming down.

That they are not -is what's interesting.

The low sales activity that we've been experiencing for the last few years have cratered markets in the past. For some reason, people are not being forced to make a decision to sell. They have been able to defer selling.

When house prices have doubled in towns like Victoira that gives people a lot of equity to live on for years and years.

The retirees seem to be doing fine. But families are getting beat up. A family that bought their house a dozen years ago for $165,000 now have a $300,000 mortgage.

That's why our market hasn't cratered, we have been able to defer. That's why are peak has been flat over the last few years.

caveat emptor said...

Maybe I live in a bubble but Victoria has looked pretty good for the last 6 years despite the real estate market being soft.

I don't think Victoria is doing great, but considering soft RE, lousy tourism numbers and government retrenchment Victoria is doing pretty OK.

Falling loonie should help a bit with #2 on my list.

DavidL said...

@Marco
If you buy a $500,000 home and take out a $400,000 mortgage at 3.5% by the end of 5 years the principal is down to $345k. If you go variable 2.5% you are down to $338k.

We've been in a crap market for 6 years now. What are the odds in 5 years from now the home drops the downpayment plus principal re-payment? Pretty small I would say.


I suspect that a 20% down payment by a first-time buyer is surprisingly rare! Much more common would be the following situation (which applies to a number of young couples I know) ...

Bought the house in 2010 for $540K with 5% down. After CHMC, fees, etc, the mortgage was for $520, 5-year fixed rate of 4.5% with 30-year amortization. After five years of paying $2875 per month, the remaining mortgage is $456K. Problem is, the assessed value is now $464K. If the bank is willing to only mortgage 80%, then a $85K cash payment will be required a year from now.

More likely is that they owner has no option to transfer the mortgage to a different institution while the bank charges their "less preferential" rate of 6.0% in a years time - adding another $450 to each monthly payment.

(Note that even after paying $540K for the house, the assessed value was never higher than $525K, indicating that the owner overpaid.)

DavidL said...

@Just Jack
A family that bought their house a dozen years ago for $165,000 now have a $300,000 mortgage.

Am I missing something? Are referring to rampant misuse of a HELOC?

I bought my SFH a dozen years ago and have ~$25K left on my mortgage ...

Just Jack said...

That's what I'm talking about.

The HELOC is a defining difference from past market cycles. They have been a stabilising force in order to defer a market contraction.

However, the HELOC is now being scaled back by most banks. And isn't just the starter homes. The HELOC was used by all income groups to suppliment their income.

In 2009, if you didn't sell your home you still could buy another home and just rent out the first. That's not likely to happen today.

Marko said...

Bought the house in 2010 for $540K with 5% down. After CHMC, fees, etc, the mortgage was for $520, 5-year fixed rate of 4.5% with 30-year amortization. After five years of paying $2875 per month, the remaining mortgage is $456K. Problem is, the assessed value is now $464K. If the bank is willing to only mortgage 80%, then a $85K cash payment will be required a year from now.

2010 was the peak of the market but even from that peak the average home has not dropped from 540k to 464k. The average mortgage rate in 2010 was a lot less than 4.5% as I remember quite a few of my clients getting BMO's 3.49% at the time. Less than 1/4 of buyers buy with less than 20% down, where does that put 5% down?

"If the bank".....big assumption.

Reality is market would have to correct a lot harder than it has to put semi-financial prudent owners into trouble.

A family that bought their house a dozen years ago for $165,000 now have a $300,000 mortgage.

Can't blame the market for this scenario.

Just Jack said...

Not balming the market. What you consider evidence that the Victoria market may be over the worst, in my view has only allowed many more people to extract large mortgage equity.

What I'm exploring is that a market contraction this time could be the most severe that Victoria has ever experienced.

I believe our market prices will stabilze when a single parent with a well paying government job can once again purchase a starter home in the city.


"The bigger they are - the harder they fall"

koozdra said...

Why renting a home instead of buying may boost your bottom line

No one ever expects a crash.

caveat emptor said...

I believe our market prices will stabilze when a single parent with a well paying government job can once again purchase a starter home in the city.

So what would that equate to?

A single parent pulling in 65 K per year and buying an OK but not great bungalow in Esquimalt or West Saanich for ????$ at a more normal interest rate of 5%? What would you guess that price would be in your scenario?

Just Jack said...

I stated it the way I did, so that I didn't have to get into a specific number.

But let's say a single nurse with one child buying a two-bedroom home in Esquimalt. She has 20 percent down and will amortize the loan over 25 years.

In this way I am measuring the buyer and not the price.

Given your scenario it would be around $300,000 today for a starter in Esquimalt. The single parent would need a down payment of $60,000 from the sale of a condo or divorce. The mortgage payment would be $1400 a month and monthly property expenses of $500 a month.

Right now, that starter home is around $350,000. A 15% correction?

The only difficulty would be once again coming up with the large downpayment of $60,000. That could take 10 years to save. Which is likely how long this market would have to bottom.

Our market would just begin to come out of its long price bottom when the Baby Boomers hit 80. At which time you would expect to see a substantial increase in estate sales.

info said...

. . . . . . . . . . . . . . .Percentage Price Decline From Peak . . . . . . . . . . . . . . .
. . . . . . . . . . . . .Greater Victoria - Single Family Homes. . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . (MLS Home Price Index). . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .0%. . . . . . . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 0.5%. . . . . . . . . . . . . . . . . . . . . . . (10). . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 2.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11). . . . . . . . . . . . . . . . . . . .
- 2.5%. . . . . . . . . . (08). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 3.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 3.5%. . . . . . . . . . . . . . . . . . . (09). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4.5%. . . . . . . . . . . . . . . . . . . . . . . . . . .(10). . . . . . . . . . . . . . . . . . . . . . . . .
- 5.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(12). . . . . . . . . . . . .
- 6.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11). . . . . . . . . . . . . . . . .
- 6.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 7.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 7.5%. . . . . (07). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 8.0%. . . . . . . . . . . . . . . . . (09). . . . . . . . . . . . . . . . . . . . . (12). . . . . . . . . .
- 8.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13) . . . . .
- 9.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 9.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.0%. . . . . . . . . . . . . (08). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.5%. . (07). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(13) . .
-11.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-12.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
----------------------------------------------------------------------------------------------------
. . . . . . . . . . 07. . . . . 08. . . . . 09. . . . . 10. . . . . 11. . . . . 12. . . . . 13. . . . . .

info said...

Victoria's housing market has been extremely weak since 2010. As of December 2013, SFH prices were lower than at any point from 2007 through 2012 (see chart). The same can be said about condos.

Many high-risk, high-ratio (minimum down payment) first-time buyers (who bought after 2006) in Victoria have underwater mortgages (see chart).

This effectively eliminates them as potential move-up buyers. This will contribute to lower sales and lower prices in Victoria. What is unfolding in Victoria is much the same as what unfolded in Phoenix, Los Angeles, Las Vegas, Miami, etc. as house prices declined in the US. Underwater mortgage holders contribute to further market weakness.

Almost all of Victoria's RE price decline (since 2010) took place while 5-year fixed mortgage rates were falling. 5-year fixed mortgage rates hit bottom last year. The general path that 5-year fixed rates will travel over the next number of years will be upward. This will contribute to lower house prices in Victoria.

info said...

.Percentage Price Increase / Decrease Since April 2010 .
. . . . . . . . . . . . . All Property Types. . . . . . . . . . . . . . . . .
. . . . . . . . . . .MLS Home Price Index. . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 12 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . + 11 %. . Canada (+ 11.4 %)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +10 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 9 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 8 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 7 %
. . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . + 6 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 5 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 4 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 3 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 2 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 1 %
*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 %
. . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . - 6 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 10 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . - 11 %. . Victoria (- 11.4 %)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 %
-----------------------------------------------------------------------------
April 2010. . . . . . . . . . . . . . . . . . . . . . . . January 2014



None said...

So I think a past tenant of mine just reported me for operating an illegal suite. What's going to happen? Yes, the suite is illegal, it's nice and newly renovated but the ceilings are about 6'5 and it doensn't have full house smoke detectors.

Any advice?

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

Single family home sales across Greater Victoria have been extremely weak since 2010.

Total SFH sales in 2012 were the lowest since 1984.

Total SFH sales in 2013 were the second lowest since 1984.

Total SFH sales in 2011 were the third lowest since 1984.

Greater Victoria has grown considerably since 1984.

There are a lot more people living in Greater Victoria than there were in 1984.

There are a lot more houses, townhouses and condos in Greater Victoria than there were in 1984.

In order to have kept up with population growth across Greater Victoria, total yearly SFH sales in 2013 would have had to have been much higher than total yearly SFH sales in 1985, 1986, 1987... However, total SFH sales in 2013 were lower than in any year from 1985 through 2011.

SFH sales have simply crumbled across Greater Victoria since 2010.

koozdra said...

Another month goes by and the executive smaller family that is wanting to rent in Ease Sooke remains very elusive.

An update on the wording. They have now capitalized "Executive" in the middle of the sentence. I'm guess they really want to emphasize the point that a person must be in the upper echelon of a company to rent this property.

Ideal for Executive smaller family.

koozdra said...

Another Cornerstone special.

They started at 2600 per month a bunch of months back.

"LAST MONTH FREE RENT WITH ONE YEAR TERM!!!!"

Price reduced. A free month's rent. How low do rents have to go before someone will come and live here?

The answer is a lot lower. You have to sharpen your pencils land lords. You have to sharpen them right down to the eraser.

$2000 / 5br - 968 Wendy Drive V9C 3V2

None said...

I want to rent this place. They sound like awesome and low hassle landlords:


http://victoria.en.craigslist.ca/apa/4320679042.html

koozdra said...

"use reasonable amount of TP"

This is a deal breaker for me. I eat a lot of spicy food.

None said...

THIS: http://www.amazon.com/Luxe-MB110-Non-Electric-Mechanical-Attachment/dp/B001KKRCFA/ref=zg_bs_686953011_1

Just Jack said...

As for the illegal suite, it depends on what municipality you live in and how long the suite has been there.

You can look up the bylaws for suites in your township on the internet.

There are two issues dealing with your property. First the improvements. Is there a permit for the suite. Yes - then the suite is legal. No - then the suite is illegal for non family rental purposes.

Then there is the land. Is the land zoned for two family. Yes - then it is a conforming use. No - then the suite is a non-conforming use under the CURRENT zoning bylaws.

So you can have an illegal suite that is conforming to the zoning bylaws. Like most of Fernwood and Oaklands. Then the illegal suite is OK.

Or you can have a legal non-conforming suite. The improvements are on file as having a suite, but the land is zoned only for one residence. The suite is OK until you have to rebuild and you won't be able to build a suite into the new home.

In some of the older character homes, those illegal non-conforming suites could be grandfathered if they were inplace prior to a certain year.

Then there is Esquimalt.

patriotz said...

I want to rent this place. They sound like awesome and low hassle landlords:

Hey, they raised the ceiling from 5 1/2 feet to 7 1/2 feet!

There appear to be HRA and RTA violations in the ad (e.g. you can't start charging for utilities because you think the tenant is using too much).

Ditto the "Executive" house in Sooke. Seems to be a trend.

totoro victoria said...

I particularly enjoyed the offensively patronizing tone of the moralizing. It was set off nicely with happy faces and helpful side comments.

I wonder if they will have anyone wasting their time for 550 square feet of "as good as it gets in Fernwood" for $1025 (provided of course that you don't go crazy on the toilet paper or get all fancy with fragrance) :)

LeoM said...

patriotz said...
There appear to be HRA and RTA violations in the ad (e.g. you can't start charging for utilities because you think the tenant is using too much).

It is not a violation if the tenant and landlord agree to these terms in the rental contract.

It is only a violation if the landlord decides arbitrarily, at some future date, to begin charging for something that was included in the rental contract.

CS said...

America's WARPED, DISTORTED, MANIPULATED, FLIPPED HOUSING MARKET

"The rentier class is chasing yields in every nook and cranny of the economy."

totoro victoria said...

I cannot believe you are still drafting those jibber jabber charts.

Luckily, your chart reference link goes to the Victoria HPI which has a tool that shows what housing prices have done for the last five years. Yep, -.80% since 2008 for the benchmark SFH.

I don't know about 2006 because the tool doesn't go back further than 60 months, but house prices were lower then anyway so we would show a gain I would presume.

"SFH sales have simply crumbled across Greater Victoria since 2010"

Oh, the drama. Scary stuff. Then you actually look at the chart:

2010 sales 3,236
2011 sales 3,069
2012 sales 2,907
2013 sales 3,068

If you wanted to be dramatic you should have picked 1989 as the date sales crumbled from.

By this logic, sales have been rising like a meteor over the last 12 months.

Marko said...

I believe our market prices will stabilze when a single parent with a well paying government job can once again purchase a starter home in the city.

Why is a SFH the benchmark? I still don't understand why a single parent can't live in a two bedroom condo close to a park, a townhome, or a duplex?

caveat emptor said...


"SFH sales have simply crumbled across Greater Victoria since 2010"

"Crumbled" = 5% decline. Info occasionally uses some interesting word choices like her September prediction of sales "tanking". Some of us might have though that "tanking" meant "to suffer rapid decline, failure, or collapse" as Merriam Webster puts it. However after sales actually increased info redefined tanking to mean a modest decrease at some future date.

Leo S said...

I cannot believe you are still drafting those jibber jabber charts.

Jibber jabber is apparently code for "totoro does not understand". You've been using this a lot lately.

Luckily, your chart reference link goes to the Victoria HPI which has a tool that shows what housing prices have done for the last five years. Yep, -.80% since 2008 for the benchmark SFH.

In other words, exactly what the chart shows for that period (end of 2008). What you are missing is that was a very brief period of time. The chart shows the decline from various other time periods.

I don't know about 2006 because the tool doesn't go back further than 60 months, but house prices were lower then anyway so we would show a gain I would presume.

Less presuming more looking. MLS HPI Tool. There is data back to 2005.

LeoM said...

Has anyone done a Victoria graph similar to the Toronto graph on this webpage?

http://www.torontohomes-for-sale.com/4a_custpage_2578.html

totoro victoria said...

Yes, I don't understand. It is not code: jibber jabber is defined as "incomprehensible".

Info stated:

"Many high-risk, high-ratio (minimum down payment) first-time buyers (who bought after 2006) in Victoria have underwater mortgages (see chart)."

I looked at the chart. The benchmark price for SFH in Victoria in 2006 at its highest was $442 000. The most recent stat for the HPI Nov 2013 was $482,000.

A "high risk buyer" who purchased in June of 2010 at the highest HPI of $538,000 with a minimum 5% and paid the insurance fee, got a 2.99 fixed five-year rate with a term of 30 years would owe $484 995 today.

It appears from the chart that this is the only time that your home might be worth less than your remaining mortgage, and then only by $3000.

If you bought in September 2010, for example, the HPI was $24,000 less, leaving you $21,000 to the positive.

patriotz said...

It is only a violation if the landlord decides arbitrarily, at some future date, to begin charging for something that was included in the rental contract.

Isn't that exactly what the landlord is saying in the ad:

"So long as there is not wastefulness going on, your electricity and water is included in the rent. "

Any determination of "wastefulness" is going to be arbitrary. The only objective way to determine utility usage is by separate metering and if the property had this the tenant would be paying them in the first place.

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LeoM said...

patriotz
Like I said, if it's written into the rental contract that both parties agree to, then it's legal. The landlord could quite legally put his statement into the contract, although the tenant would be wise to not sign unless the term 'wasteful' was defined as a specific kw number.
But I agree it's a dumb idea. The only solution for a suite is a separate electrical meter for the suite.

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Deryk Houston said...

I find it hard to understand what is happening to real estate here in Victoria. On the one hand I keep hearing that it is flat, but then I also hear from an agent friend of mine that she had two homes on the weekend get multiple offers. So which is it? I assume that she priced them at what should have been a fair market price.
I have also witnessed a house just listed for one hundred thousand dollars more than anyone else on the block would have guessed. It seems way over priced by anyone's standard. Is the agent out to lunch? The owner has told me that it is being listed at two hundred thousand more than she expected.
I realize that the listing price is only the listing price but are Victoria agents that far off in their understanding of prices? Maybe not because I just saw another neighbours house "sell" for over one million dollars which is three or four hundred thousand dollars more than what everyone on the block expected as well.
This is why I find it confusing. We keep hearing that prices are flat but then witness these much higher than expected sales.