Wednesday, February 5, 2014

January Roundup

A few days late, a few graphs short, but here's some info about how the market fared in January.  The full report is as always, over at the VREB.   Their new president, Tim Ayres (a past contributor to this blog) seems to be much more reserved with his opinions.   Of course he deals out in Sooke a lot so he has looked the decline in the eyes more than most.   Sales are up, but Tim knows it's hardly cause to celebrate given the extremely low levels last January in the depths of the hit from the mortgage changes.


Another sobering discovery that the VREB has made is the MLS HPI.  In previous years they would have trumpeted gains in the median price (up a staggering 11% Jan 2013 to 2014!!!!) but now they know this is mostly nonsense because the HPI over the same period is down 1.7%.   If you're unlucky enough to live on the peninsula, SFH prices are down just shy of 5%.

Yearly medians are edging up due to sales mix changes, a reduction in the MOI, and the dropping out of last year's very low January numbers.


Looking forward, the sales to new listings ratio gives a clue as to the direction of the market.  It has recovered from it's lows lately, and is heading to the levels seen in the late 90s, which is more in line with the flat market scenario rather than the declines we've seen in the last 4 years.  Of course all this is depending on continued low rates and no more government meddling (and you know how much they like to meddle).


Looking back at the peak, things are about the same median price wise, with SFH down 8%, condos down 12%.  Only townhouses have gone insane in recent months.  Clearly the low sales in this category make this measure far too volatile for anything other than entertainment value.  Just Jack, care to explain a $100k increase in townhouse medians within a few months?


By the way how's that affordability picture looking these days?   If Victoria were governed by more traditional definitions of what constitutes affordable housing, what would the average family be paying?   Based on the average income, 20% down, and current 5 year rates, that would be about $470,000.    So only about a $100k gap to go.



Edit:   LeoM asks: "Has anyone done a Victoria graph similar to the Toronto graph?"

Here is that:


Update:  Regraphed in 2013 dollars and with a power trend line as per Koozdra's request.


Or log scale if you wish....


Although a log scale of inflation adjusted house prices sends quite the wrong message...

266 comments:

1 – 200 of 266   Newer›   Newest»
totoro victoria said...

Well, might as well post this here given the update:

Yes, I don't understand info's chart. It is not my 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.

If we look at the number of sales we can see the SFH sales in Victoria were 3,236.

If we assume ex. 300 of these sales happened in July 2010 this transforms "many since 2006" into 300 - maybe.

totoro victoria said...

300 SFHs that is.

koozdra said...

The problem with talking about affordability is the reliance on interest rates that change over time. What is affordable today might not be affordable in five years.

I would feel much safer buying if we had fixed rates for the entirety of the mortgage.

As it stands affordability is inversely proportional to the health of the economy. Poor economy = low rates, good economy = higher rates.

But how long can the economy stay in a "bad" state? A state that requires economic stimulus for it to continue. A state where housing is a very high component of it's healthiness.

[in my not so humble opinion] Not much longer.

koozdra said...

Brokers making up for drop in refi business

The evil CMHC is clamping down on refinances.

"In its third quarter results, released at the end of 2013, CMHC noted an 81 per cent drop in refinance volume."

But wait a second, surely I can still us my house as a cash machine, right?

"And while brokers may be feeling pinched by this particular drop in business, there are many who are offsetting at least some of that dearth with second mortgage business."

Oh, okay, good. I was getting worried there. The debt bubble may now continue inflating.

Your move Flaherty.

yogurt said...

A sly description of a local property:

"With appealing character from 1912, the residence was originally a live/work establishment for an entrepreneur and her delightful colleagues."

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13638749

LeoM said...

LeoS
Thanks for the graph. I'm impressed with your work, great graphs!!! Maybe I should start visiting this blog more frequently.

caveat emptor said...

Great charts!

I like the one of Victoria SFH affordability vs the actual average SFH price.It is interesting that prices have spent most of their time above the line.

If we see five years of modestly rising incomes and five years of stagnating to gently declining prices those two lines could easily be kissing again. Admittedly those are two pretty big "ifs"! Overall that graph doesn't support the narrative that we need to see a big crash.

caveat emptor said...

And as for the last graph - Well if houses go back to their 100K per decade appreciation "trend" then it's happy days again :-)

caveat emptor said...

Some study in the states found long term 1% per year real home price appreciation. If we apply that to the Victoria 1994 peak we get 2014 prices of 415K (2010 dollars) or 433k (2013 dollars). Of course the 1% in the US study was quality adjusted I believe (controlling for better and bigger houses in more recent times). So using non-quality adjusted data it would be reasonable to expect a higher long term average rate of home price appreciation

Leo S said...

I like the one of Victoria SFH affordability vs the actual average SFH price.It is interesting that prices have spent most of their time above the line.

Yes, It's really just a rough stab at the problem in the face of a lack of data. To do it correctly I would need the median income of SFH buyers in that year. All I have now is average family income which obviously does not reflect the average income of SFH buyers.

If we see five years of modestly rising incomes and five years of stagnating to gently declining prices those two lines could easily be kissing again.

Yes, although a lot of the rise in the affordable house price has been because of lowered rates. 2013 had the lowest average 5 year rate again. 2014 might be going in the other direction.

Leo S said...

Some study in the states found long term 1% per year real home price appreciation. If we apply that to the Victoria 1994 peak we get 2014 prices of 415K (2010 dollars) or 433k (2013 dollars). Of course the 1% in the US study was quality adjusted I believe (controlling for better and bigger houses in more recent times). So using non-quality adjusted data it would be reasonable to expect a higher long term average rate of home price appreciation

I have yet to really form a good theory about the huge disparity between long term real national appreciation (which is about 1% in the US as you say) and the real appreciation in Victoria over the last 50 years (which is about 4%).

I suspect that the national numbers are 1% because overperforming cities that are densifying with higher rates of appreciation are mostly cancelled out by smaller cities that are losing population, have high unemployment, or have no restrictions on expansion.

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

I agree, Leo's graphs are great.

info said...

.Percentage Price Increase / Decrease Since May 2010 . .
. . . . . . . . . . . . Single Family Homes . . . . . . . . . . . . . . .
. . . . . . . . . . .(MLS Home Price Index). . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 15 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . + 14 %. . Canada
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 13 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 12 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 11 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 10 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 9 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 8 %
. . . . . . . . . . . . . . . . . .* . . . . . . . . . . . . . . . . . . . + 7 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 6 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 5 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 4 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 3 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 2 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 1 %
*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 %
. . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . - 6 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 10 %
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .*. . . . - 11 %. . Greater Victoria
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 %
-----------------------------------------------------------------------------
May 2010. . . . . . . . . . . . . . . . . . . . . . . . January 2014

info said...

Since May 2010, single family home prices across Greater Victoria have declined 11% from peak (see above chart). During this same period of time, single family home prices across Canada have increased 14%.

This is based on MLS Home Price Index data.

Victoria's housing market has been extremely weak since 2010.

info said...

. . . . . . . . . . . . . . . Percentage Price Decline From Peak . . . . . . . . . . .
. . . . . . . . . . . . . .Greater Victoria - Single Family Homes. . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .(MLS Home Price Index). . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 0.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 2.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 2.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 3.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 3.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5.0%. . .*. .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5.5%. . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 6.0%. . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 6.5%. . . . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 7.0%. . . . . . . . . . . . ..*. .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 7.5%. . . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 8.0%. . . . . . . . . . . . . . . . . . . . *. . . . . . . . *. . . . . . . . . . . . . . . . . . . . .
- 8.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .*. .*. . . . . . . . . . . . . . . .
- 9.0%. . . . . . . . . . . . . . . . . . . . . . .*. .*. .*. . . . . . . .*. . . . . . . . . . . . . . .
- 9.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . . . . . . . . .
-10.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .*. .*. . . . . . . .
-10.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. .* .
-11.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-12.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
--------------------------------------------------------------------------------------------
. . . . . . . .A. M. J. J. A. S. O. N. D. J. F. M. A. M. J. J. A. S. O. N. D. J .
. . . . . . . . . . . . . . . . .2012. . . . . . / . . . . . . . . . . 2013. . . . . . . . . . . ./2014


info said...

The last chart I posted gives us a closer look at the most recent part of the price decline of Victoria single family homes.

The chart is based on MLS Home Price Index data.

How is the -11% price decline calculated using this data?

Here's how:

The MLS HPI data is available to download in Excel format.

Once you do that, look at the second column of data (single family homes) and find the biggest number in that column (the peak was in May 2010).

The last number in the second column is the index level for January 2014.

May 2010 = 152.4
January 2014 = 135.7

The difference is 16.7, and that represents the amount of decline.

To convert the amount of decline into percent, simply take 16.7 and divide it by 152.4.

16.7/152.4 = 10.96% = 11%

No tricks.

However, we must keep in mind that the total decline from peak is at least 11% so far, as some Canadian real estate boards have recently manipulated the data that they release to the public to make the numbers look stronger. The MLS HPI data is gathered by real estate boards (realtors), so we know that they certainly would not release data that would make Victoria's price decline look worse than it actually is. If anything, they would make the data look stronger.

info said...

. . . . . . . . . . Percentage Price Decline From Peak . . . . . . . .
. . . . . . . . . . . . . . MLS Home Price Index. . . . . . . . . . . . . . .
. . . . . . . . .Greater Victoria - Single Family Homes. . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .0%. . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 0.5%. . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 2.0%. . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 2.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 3.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 3.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4.5%. . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5.5%. . . . . . . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . . . . .
- 6.0%. . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . .
- 6.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 7.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 7.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 8.0%. . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . .
- 8.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . .
- 9.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 9.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . . *. .
-----------------------------------------------------------------------------------
. . . . . . . . .10. . . . . . . 11. . . . . . . . 12. . . . . . . . 13. . . . . . . 14. .

info said...

The last chart I posted is a 6-month price chart for Victoria single family homes. June and December price levels are plotted for each year. The last dot is the price level for January 2014. The peak price level (May 2010) has also been plotted.

The chart was put together using MLS Home Price Index Data. I've explained how to calculate the percentage price decline for any month.

If anyone has any questions, feel free to ask me.

None said...

@info: I have a question. Why do you use a graphic display method that is so terrible? WHY???

None said...
This comment has been removed by the author.
Unknown said...
This comment has been removed by the author.
Marko said...

This blog would be a lot better with more Leo S and less Info....just my opinion.

Marko said...

Overall that graph doesn't support the narrative that we need to see a big crash.

I am of the same opinion. Average/median prices are lower than 6 years ago. Even with the lower prices you buy more house, perhaps including a but more rental income. Interest rates are lower and incomes are a bit higher than 6 years ago. And on top of that prices haven't tanked in the last 6 years so not sure why we would see a crash all of a sudden now.

info said...

@ Marko

"This blog would be a lot better with more Leo S and less Info....just my opinion."

Are you having difficulty accepting the facts?

Ricky Bobby said...

It seems to me that Just Jack has touched on how different each of the price-ranges behave, as well as how different areas track differently.

In the S. OB / Gonzales area that I've been watching since 2004, I can tell you that the lower end of the market has not decreased at all. I can log into the MLS site, zoom into the area I watch, set the max price bracket to 500K and all the dots disappear. It's been that way for years and I have yet to see any decline in this area.

Conversely, the top end of the market has been hammered. People were still getting big money up until about 1 or 1.5 years ago. This segment appears (to me) to have corrected by 30+%. In some cases I've seen some of the ridiculous prices cut in half. I would wager that there is a gradient in the price drops, with the low end showing no decline and the top end showing a ~30% decline. Just my 2c.

info said...

Total yearly SFH sales across Greater Victoria have been in the tank since 2010.

Let's compare:

1989 SFH sales total = 5920

2013 SFH sales total = 3068

The population of Greater Victoria has grown (approximately) 20% since 1989. Therefore we must adjust for population to make a fair comparison. It will make 1989's total higher.

Let's add 20% to 1989's sales total.

5920 + (0.20 x 5920) = 7104 (this is the population adjusted SFH sales total for 1989)

2013 SFH sales total = 3068
1989 SFH sales total = 7104

Compared to 1989, SFH sales in 2013 were 56.8 % lower.

As I've said, SFH sales across Greater Victoria have been in the tank since 2010.

2010 SFH sales total = 3236
(54.4 % lower than 1989's total)

2011 SFH sales total = 3069
(56.8 % lower than 1989's total)

2012 SFH sales total = 2907
(59.1 % lower than 1989's total)

2013 SFH sales total = 3068
(56.8 % lower than 1989's total)

It is possible to calculate a 25 year (population adjusted SFH sales total average). It could be compared to the SFH sales totals of 2010, 2011, 2012 and 2013. The results would be shocking to some, I'm sure.

Looking at the big picture, 2013's SFH sales total was a slight improvement over 2012's, but hardly worth mentioning.

2013 was the first year that real estate boards across Canada were allowed to include private sales in their totals. As a result, 2013's SFH sales total may need to be adjusted lower.

Russ Dale said...

I don't think info's target audience is meant to be the regulars. More likely to catch the eyes of those dropping by...

info?

info said...

@ Leo

Where did you find the January 2014 monthly median data for each area of Greater Victoria?

DavidL said...

@Marko
And on top of that prices haven't tanked in the last 6 years so not sure why we would see a crash all of a sudden now.

Back in 2010, I was predicted a steady decline with a bottoming out in 2014 with stagnation (prices not matching inflation) through 2018.

I was wrong ... the 5% to 15% decline is not a "steady decline", but it will certainly make things difficult for those who bought at the peak and will soon be renewing mortgages. However, there are quite a few economic pressures that could now hasten the decline in prices:
* Retiring baby boomers who are house-rich and cash-poor.
* Falling CDN $ increases inflation (cost of energy, food, imported goods, etc.).
* Increasing unemployment, particularly in manufacturing and natural resources (nobody want our stuff).
* Federal government cutbacks as they try to balance budgets for the 2015 election.
* Provincial government cutbacks due to reduced taxes and natural resources revenue.
* Local tax and fee increases to fund infrastructure renewal.

Basically, the cost of staying alive is going to go up. Does this mean a crash like in the early 1980's? No, but I wouldn't be surprised if within 5 years, the resale prices have dropped by another 20%.

caveat emptor said...

Moving Goalposts:

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

was info's original (and wrong) claim. When challenged she switched to:

"SFH sales across Greater Victoria have been in the tank since 2010."

Using 1989 as the benchmark as info does we can clearly say that

"SFH sales across Greater Victoria have been in the tank since 1992."


Since 1992 only one year has been (barely) within 75% of 1989 SFH sales.

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

"Overall that graph doesn't support the narrative that we need to see a big crash."

Teranet's data appears to be upward biased when compared to the MLS Home Price Index data (realtor generated) and the results of several other methods of calculating the total price decline from peak of properties across Greater Victoria.

For example, as of the end of December 2013, prices at the upper end of Victoria's SFH market had declined 11.5 % below peak and prices at the lower end of the SFH market had declined 14 % below peak (using 3-month median data). Calculating the 3-month medians of the upper and lower ends of the SFH market separately eliminates much of the skewing that has distorted the overall median and average price numbers since the spring of 2013.

Prices across Greater Victoria may drop an average of 5% per year for 8 to 10 years in total which would add up to a total decline of 40 to 50%.

If Victoria's housing market experiences a total price decline of 40 to 50% in 8 to 10 years, most people will look back at it and say that Victoria's housing market crashed.

The rate of price decline will increase at some point.

Housing markets that experience bubble price run-ups (approx. 2.5 times in Victoria's case) generally do not correct 10 - 15% and then flatten out for 10 years. House prices in Victoria shot into bubble territory as a result of federal policies that created an environment of excess credit as a result of lax lending standards - the same general set of circumstances that pushed house prices in Los Angeles, Las Vegas, Phoenix, Miami,... into bubble territory.

Victoria's price correction will be much deeper than 10 - 15%. 5-year fixed mortgage rates hit bottom last year and (in general) will follow an upward path in years to come. As well, house prices in Victoria are still far above the level where fundamentals might be able to provide price support. In general, house prices in the bubbliest US markets corrected back to the level where fundamentals supported prices. The same will happen in Victoria.

There are many (minimum down payment) first - time buyers who have underwater mortgages in Victoria. These mortgage holders have effectively been eliminated as potential move-up buyers. This will contribute to low sales and lower prices. The same mechanism contributed to lower prices in Phoenix, Miami, Las Vegas... as house prices corrected in the US.

info said...

As I've said, SFH sales across Greater Victoria have been in the tank since 2010.

Let's compare 2013's SFH sales total to several more yearly totals.

Compared to 1992, 2013's SFH sales total was 49.9% lower.

53.4% lower than 1991's total
36.3% lower than 1990
56.8% lower than 1989
48.2% lower than 1988
45.5% lower than 1987
35.7% lower than 1986
34.1% lower than 1985

Population adjustment allows us to make fair comparisons.

Even without population adjustment, 2013's sales total was the second lowest since 1984. Similarly, 2012's total was the lowest since 1984 and 2011's total was the third lowest since 1984.

Just Jack said...

There's no need to make a population adjustment as the entire population of Greater Victoria is not in the market to buy property. Only a small fraction of the population and the stock of housing forms the marketplace.

There may be say 200,000 homes in Greater Victoria, but only a fraction of the properties are ever listed for sale at any time. The same with prospective purchasers. Our population may be 350,000 but only a small fraction are actually seeking property to buy. The marketplace for real estate may only be 3 to 4 percent of the total stock of housing and about the same for prospective purchasers.

Replace the words real estate with a truck and everyone understands. Say real estate and people are baffled.

What's the size of the marketplace for Ford trucks? Does everyone in Victoria want to own a Ford Truck? Does everyone that has a Ford truck want to sell it? If sales are slow for Ford trucks is that any worse in a big city or a small town?

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

Adjusting for population is necessary to make fair comparisons.

In 1985, for example, there were fewer people living in Greater Victoria and fewer properties compared to 2014. More sales are expected as the population grows.

Take an extreme example.

Let's say the population of city Y was 10,000 people in xxxx and that there were 500 SFH sales that year.

Skip ahead to 2014. City Y now has a population of 10,000,000 people. It would be unreasonabale to think that total sales would remain at 500 for the year. It would be logical to think that total sales would increase by a factor of about 1,000, which is how much the population grew. Yearly sales would probably be somewhere around 500,000.

It is absolutely necessary to adjust for population in order to compare total yearly SFH sales in a fair manner.

info said...

@ totoro

"It is times like this that I really enjoy reflecting on info's statements"

Try read the factual information that I post on this site and you might actually learn something.

You are deep in denial.

totoro victoria said...

Ahh, the good ol' infomercials continue. I see she took my suggestion and used 1989 as the comparison - totally reasonable cause it's retro day.

It is times like this that I really enjoy reflecting on info's statements like:

""Being a math major, I can tell you that there are a thousand ways that... calculations can be manipulated"

As far as OB/Gonzales goes, I've been following it for the same period of time or a bit longer.
House prices have been pretty stable up to the $800 000 mark imo EXCEPT if the house is on a main street or in really undesirable condition. Those ones are down up to 5% as far as I can tell.

I have no idea what is happening above this price point.

Just Jack said...

Sure it's possible. A city like Detroit for example. Millions of people but very low sales volumes.

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

@ Just Jack

The extreme example I provided explains population adjustment quite well. Please read it again.

Since the 80s, Greater Victoria's population has increased by about 20% (it may be more than that).

Yearly SFH totals from that time period must be multiplied by about 1.2 to be properly adjusted for a fair comparison to recent yearly SFH totals.

info said...

"As far as OB/Gonzales goes, I've been following it for the same period of time or a bit longer.
House prices have been pretty stable up to the $800 000 mark imo EXCEPT if the house is on a main street or in really undesirable condition. Those ones are down up to 5% as far as I can tell."

Again, Just Jack's numbers on Oak Bay indicated that the SFH median for the first 6 months of 2013 was 8 - 9% lower than the median for the first 6 months of 2010.

Oak Bay has been part of the price decline parade that has been in effect across Greater Victoria since 2010.

The party is over.

caveat emptor said...

"Prices across Greater Victoria may drop an average of 5% per year for 8 to 10 years in total which would add up to a total decline of 40 to 50%."

Info just fyi if you want to get to 50% off at a rate of 5% per year you have to wait 13 years. Try it (0.95)^13 = 0.51

caveat emptor said...

"Compared to 1992, 2013's SFH sales total was 49.9% lower."

There's something funny with your figures Info - 3068/5103 = 0.6, so 40% lower.

Your subsequent figures are also wrong.

2013 is 48% below the all time high in annual SFH sales in 1989

(5920-3068) / 5920 = 0.48

totoro victoria said...

That makes me wonder what kind of math info majored in. How can she possibly be incorrect. Doomsday must be nigh.

Marko said...

Back in 2010, I was predicted a steady decline with a bottoming out in 2014 with stagnation (prices not matching inflation) through 2018.

I was wrong ... the 5% to 15% decline is not a "steady decline", but it will certainly make things difficult for those who bought at the peak and will soon be renewing mortgages. However, there are quite a few economic pressures that could now hasten the decline in prices:
* Retiring baby boomers who are house-rich and cash-poor.
* Falling CDN $ increases inflation (cost of energy, food, imported goods, etc.).
* Increasing unemployment, particularly in manufacturing and natural resources (nobody want our stuff).
* Federal government cutbacks as they try to balance budgets for the 2015 election.
* Provincial government cutbacks due to reduced taxes and natural resources revenue.
* Local tax and fee increases to fund infrastructure renewal.

Basically, the cost of staying alive is going to go up. Does this mean a crash like in the early 1980's? No, but I wouldn't be surprised if within 5 years, the resale prices have dropped by another 20%.


That would put 2019 prices at 2006 levels or 2019 prices at less than double 1992 prices even thought the average home is much bigger and a much greater proportion have suites compared to 1992. I pointed out a few weeks that the average home in Fairfield these days has 40% more finished square footage than 20 years ago (individuals have put in suites, etc.).

The employment situation pretty much always sucks, baby-boomers have been in the discussion for a decade now, government is always trying to balance a budget, etc.

Just Jack said...

Fairfield home sales last year show the average square footage at 2,179 compared to 20 years ago at 1,633 square feet.

That's a really good observation that you made Marko about suites being built and adding to the finished floor area. It certainly shows the difficulty in the Case-Schiller or re-sale method of comparing today's prices with anything over 10 years ago.

The homes being sold in Fairfield today have likely been remodelled and updated with suites as compared to 20 years ago when they were mostly original in condition.

Just Jack said...

The problem with limiting your data to Oak Bay is that the sample size is so small. Trying to estimate a drop from the peak in 2010 in relation to today just for Oak Bay is difficult.

A cross check would be to look at how the Sales to Assessment Ratio has changed. In the first 6 months of 2010, the median Sales to Assessment Ratio was 110.5%. Relative to today's 2014 assessments, properties in Oak Bay were selling at a median of 110.5 percent of their assesed value. That has dropped to 99.7% in the last six months. That's close to 10 percent.

Compare that to the first 500 sales in the surrounding areas in the core that had a median price of $595,900 in 2010 to todays median of 500 sales at $550,000. The difference is about 8%.

The difference between 8 and 10 percent is slight and could be explained by a small sample size. So, I'm going out on a limb (a very thick limb) to say that price declines in Oak Bay are not significantly different from the rest of the core districts.

Ricky Bobby said...

@info:

Yes, on average, OB SF house prices have declined. Is the party over? If you were hoping to sell your 1990-built King George Terrace waterfront for 2.4 million, then yes it is (although it will still have doubled since then). If you're going to sell your cottage in a decent location for 500-800K, then no. The properties near the bottom of the range still appear to be selling.

I wish they were dropping as I'm always looking for a good deal. Haven't seen any deals for quite a while.

DavidL said...

@info

If you want some accurate historical population data, try this link: http://www.bcstats.gov.bc.ca/StatisticsBySubject/Demography/PopulationEstimates.aspx

In 1986, the CRD population was 275,003 whereas in 2012 it was 376,423. This is an increase of 37%.

reasonfirst said...

The employment situation pretty much always sucks...

- 6000 fewer people working in Victoria than one year ago. You need to go back to 2006 to see any employment growth. It was looking pretty good until then.

baby-boomers have been in the discussion for a decade now...

- and the retirements are only just starting - you didn't expect them to retire all at once did you?

government is always trying to
balance a budget...


- not exactly...the 4 years starting 04/05, BC was in a surplus...always????

The sarcasm ain't working Marko.

reasonfirst said...

So, I'm going out on a limb (a very thick limb)...

Thicker than toto's anecdata!

DavidL said...

@Marko
... even thought the average home is much bigger and a much greater proportion have suites compared to 1992. I pointed out a few weeks that the average home in Fairfield these days has 40% more finished square footage than 20 years ago (individuals have put in suites, etc.).

I agree about many more "mortgage helper" suites that 20 years ago. The increase in suites reflects the reality of how expensive real estate has become.

Although the average new SFH is bigger and a finished basement (with 6 ft. ceilings!) in a 70 to 100 year-old "Fairfield" house can add more floor area - you'll find that most houses built after the 1960's that had a full basement have not substantially changed in size.

As I'm sure you know, it's typically cheaper to move instead of paying for the cost of permits and construction when considering an expansion. Only owners who really love their house or neighbourhood will pay the extra premium to increase the footprint of the house.

bubbles said...

The employment situation pretty much always sucks…
---
Not in Victoria. Today’s paper says Vic has the lowest unemployment rate in BC!

“Kelowna’s rate climbed to 7.3 per cent from 7.0 per cent, while Victoria remained the major city with the lowest unemployment rate of 4.9 per cent.”

http://www.vancouversun.com/business/unemployment+rate+drops+Abbotsford+Kelowna+cities+with+most/9481065/story.html

DavidL said...

From: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/lfss03l-eng.htm

Between January 2013 and January 2014, the unemployment rate dropped by 0.6%, but the employment rate also dropped - by 2.6%. That's a lot more people not working and not eligible for EI. Compare this to Vancouver where the employment rate has dropped by only 0.1% in the past year.

koozdra said...

What could cause a crash in these low interest times?

Deflation:
"In a deflation, inflation expectations become unanchored on the downside, and people begin delaying purchases because they expect the things they buy will be less expensive in the future. This depresses demand. And as prices and wages fall, the real burden of mortgages and other nominal debt commitments increases, further depressing demand."

Flexible Inflation Targeting and “Good” and “Bad” Disinflation

We are an excellent candidate among other developed countries to slip into deflation first. Low rates have create debt pigs of most of us. As we stop building houses above the rate of household formation the rate will drop below to wait till demand picks up again. Since so much of our economy is based on housing and related industries unemployment will swell.

Sorry if this is too technical for the people who watch a neighborhood within a tiny city within the country to tell what is going to happen next.

info said...

caveat emptor said...

"There's something funny with your figures Info - 3068/5103 = 0.6, so 40% lower.

Your subsequent figures are also wrong.

2013 is 48% below the all time high in annual SFH sales in 1989

(5920-3068) / 5920 = 0.48"


You are wrong.

I am right.

You were not following along with my posts on population adjustment.

I assumed an approximate population increase of 20% for Greater Victoria (from the 80s). I intentionally low-balled that figure and rounded it off to 20% to keep it simple. I then applied it across the board in my calculations.

Let's go over this once again.

Total SFH sales in 1989 = 5920

Adjusting for population growth, we will add 20% (low-balled number) to 1989's SFH sales total.

Total sales = 5920 x .20 = 1184

Explanation: There are more people living in Greater Victoria now than there were in 1989. I used a 20% increase in population. A 20% increase in 1989's SFH sales total would add another 1184 SFH sales.

Adding: 5920 + 1184 = 7104

What does the number 7104 represent?

7104 is the total number of sales that we would have expected in 1989 if the population of Greater Victoria in 1989 had been 20% higher.

If anyone has any questions, please ask.

Let's compare 2013's SFH sales total to the (adjusted) sales total of 1989.

1989 SFH sales total = 7104

2013 SFH sales total = 3068

How much of a drop in sales is 3068 from 7104?

7104 - 3068 = 4036

There were 4036 fewer SFH sales in 2013 compared to 1989 (assuming a 20% population increase since 1989).

Let's convert this to percent.

4036/7104 = 56.8%

In other words, 2013's SFH sales total was 56.8% lower than 1989's SFH sales total. Again, that was assuming that Greater Victoria had experienced a 20% increase in population since 1989. We know that the population growth since 1989 has been more than 20%.

I will update this data and throw it on a chart for the viewing pleasure of all who read this blog.

You were wrong again caveat.

You spend hours sifting through past posts of mine to find something (anything) that might prove that I was incorrect in some way (any way) about something (however small that might be) in an attempt to discredit me. Clearly you are obsessed.

However, that has not worked out for you at all.

Based on your own thinking about what it takes to discredit someone, it appears that this latest blunder of yours again calls into question your credibility, or what's left of it.

I, personally, don't obsess over the mistakes of others. If you were scheduled for heart surgery and found out that your heart surgeon had a 98% success rate, would you call off the surgery? I doubt that you would. That he has a 2% failure rate doesn't make him completely incompetent and unable to be successful again with future surgeries.

Your logic is whacked. I'm quite sure that many other readers of this blog would appreciate it if you and totoro would drop this whole credibility attack thing. It adds nothing to this blog.

info said...

@ Ricky Bobby

"The properties near the bottom of the range still appear to be selling."

That you think a small range of properties "appear to be selling" doesn't mean anything. You've said nothing factual and presented no data as proof.

Even if these properties are selling it wouldn't mean that prices in that range are stable. Prices in that range are probably dropping as house values in all areas of Greater Victoria have been experiencing price declines since 2010.

Take a look at the (single family home) MLS home price index charts that I've posted. That data suggests a definite downtrend in SFH prices since 2010 and probably presents a somewhat conservative view of the total SFH price correction from peak (link).

info said...

@ DavidL

That link works.

Could you post the CRD population from 1980 to the latest year of data?

No worries if you don't, I'll get around to it soon.

Thanks in advance if you have the time to do it.

info said...

Most housing bulls point to Victoria's unemployment rate as the only gauge of the strength/weakness of Victoria's economy. However, the unemployment rate doesn't provide enough information to accurately gauge the strength/weakness of Victoria's economy.

Several other key factors must be considered:

* the participation rate

* the fact that a lot of young people have left Victoria to find work in AB. This lowers Victoria's unemployment rate. It also keeps the average (median) income numbers higher than they would be if many of these young people remained in Victoria to look for work and took on lower paying part-time jobs while they looked.

* Victoria's vacancy rate has increased about 600% over the last decade. This shows that young people are moving away from Victoria to find greener patures elsewhere because jobs are hard to find in Victoria.

Victoria is a small city with limited employment potential compared to most other Canadian cities. Most people who live here know that and that is why many of the (recently unemployed) young people simply pack up and leave town within a short time of losing their jobs.

Sure Victoria can offer hotel and restaurant jobs (busier in the summer), but those are low paying and it is expensive to live in Victoria. It is no secret that many young people have moved to AB to find work over the past 3 to 4 years.

The unemployment rate alone simply doesn't paint a complete picture of the strenght/weakness of Victoria's economy.

bubbles said...

Today’s Colonist mentions the best bet if you want to make money.

Miller said his focus on multi-family projects is about following an evolution within the market. “We are focusing on downsizers,” he said, adding consumers are increasingly making lifestyle choices that no longer require a detached home. “It’s not just about affordability. It’s a choice. People are saying if you can give me 1,200 to 1,300 square feet with two bedrooms and a den that’s walkable to work, I will make the switch.”

http://www.timescolonist.com/greater-victoria-housing-forecast-improves-1.826658#Scene_1


It’s not rocket science when you know the median boomer turns 55 this year. You sell what’s been strong (houses) and buy what’s been a dog (condos).

Just Jack said...

Not all of that population increase are prospective purchasers.

Some of them are babies.

And then their are couples that hook up to buy a home. That can account for half. Or two retiress moving here - only buy one house.

I just can't see the math why we should be at 7000

I think it might be better if you were looking at household formations to see if they are increasing or decreasing rather than raw population numbers.

During an economic expansion in the local economy, the percentage of prospective purchasers will increase. During a recession that percentage will decrease. The population can stay the same, but the size of the real estate market can change.

When the economy was expanding and the population was 275,000. The real estate market might have been 3% or 8,250 units. When the population was 375,000 the economy could be stable and the size of the real estate market could shrink to 2% or 7,500 units.

What's normal?

Ricky Bobby said...

@Info

"That you think a small range of properties "appear to be selling" doesn't mean anything. You've said nothing factual and presented no data as proof.

Even if these properties are selling it wouldn't mean that prices in that range are stable. Prices in that range are probably dropping as house values in all areas of Greater Victoria have been experiencing price declines since 2010."

If they are dropping, then it's an extremely small percentage. The top end is most definitely dropping significantly, and is probably causing some skew much like you've mentioned before.

Keep in mind that I'm only looking at a smallish area of S. OB and Gonzales, so perhaps more significant declines are coming.

totoro victoria said...

"Looking at the big picture, 2013's SFH sales total was a slight improvement over 2012's, but hardly worth mentioning."

Except that by your logic we can grab any year and compare to any year without looking at any factors except population increase.

Extrapolate the more than 5% increase in SFH home sales in 2013 vs. 2012 forward into the future five years and I'd say it is the start of an undeniable boom in sales.

BTW the population increase in Victoria was much less than 5% in 2013 so we must be doing super well.

If you disagree, you've simply not followed my logic. I'm right, you are wrong.

http://vreb.org/pdf/historical_statistics/YE782013.pdf

PS. Please please don't "throw up another chart"

totoro victoria said...

Ricky Bobby I agree with you on prices in this particular area for the $550000-$750000ish range. I don't know the high end because I don't follow it.

I would take the anecdata of someone who is motivated by their own purchase decision to actively following a submarket over a number of years over a set of stats based on few sales which do not separate out the segments well.

BTW, you can still buy a rental property in Kamloops that gives you okay ROI. Much better than Victoria anyway. New law school, university, prison, lots of mining... but no daily newspaper anymore.

It has the same vacancy rate as Victoria: 3.4.

dasmo said...

@info You state a 600% decline over the last decade, so you are stating that the vacancy rate in 2003 was .46%?
"The average vacancy rate in the Victoria CMA remained relatively unchanged at 2.8 per in October 2013."

"The latest Census showed
that population growth under the age of 45 has been strongest within the 25 to 29 age group in the Victoria CMA." Doesn't sound like an exodus of youth...

"Victoria's tech sector has grown to nearly 900 known technology companies, employs more than 13,000 people, generates $2 billion in annual revenues, has an economic impact of $2.65 billion." A little better than hotel jobs available out there I think...

You see more clearly when you look through objective lenses....

totoro victoria said...

Shall I say it first?

Clearly you are deep in denial dasmo.

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

"Clearly you are deep in denial dasmo." ?

dasmo said...

My sources...

https://www03.cmhc-schl.gc.ca/catalog/productList.cfm?cat=79&lang=en&fr=1391821996649

http://www.victoriatechjobs.com/tech-professionals/get-job/about-victorias-tech-sector

The only thing I am denying is the validity of info's facts ;-)

totoro victoria said...

I agree with you. I just thought I'd save info the trouble of replying.

dasmo said...

Sarcasm is a tough read in the written word ;-)

Victoria said...

I frequently read this blog. I've commented infrequently.

JJ remains my go-to blog poster for his common sense approach and anecdotal views from an insider.

Info's posts are informative and well thought out. Agree or disagree (I agree).

Not my blog but if it were I'd be removing some of the increasingly petty rebuttals with a little more gusto than currently shown.

caveat emptor said...

I'm sorry I offended you info. I seem to have got under your skin as you devoted a screenful to reply. Don't be mad, rather pity my existence

patriotz said...

Victoria's tech sector has grown to nearly 900 known technology companies, employs more than 13,000 people

What means they have an average of 14 employees each.

What is their definition of "technology company" and how many such "companies" are simply consultants and contractors to government?

dasmo said...

Here are some job postings to give you an idea
or here is a listing of companies to also give you an idea...

Renter said...

@Victoria

The main draw for me is also Just Jack, but I would add Leo's charts and Marco's numbers to that. But honestly, I appreciate any and all comments that aren't sniping over grammar or complaining about Info's charts.

If you don't like a commenter, it's not that hard to scroll down.

Marko said...

2741 Burdick just went over asking in one day.

Just Jack said...

Which is almost exactly what the Burdick property was assessed for in 2007 (July 1, 2006 valuation day).

The property was exclusively listed since January 22, 2014. Why shouldn't well priced properties sell quickly?

bubbles said...

Which is almost exactly what the Burdick property was assessed for in 2007

Looks like Victoria is following ye old real estate cycle…
7 sideways, 7up

CS said...

2741 Burdick just went over asking in one day.

Wow. And it's not the prettiest house on the street or the best kept. And the living room is painted oxblood red.

But then 2571 Dunlevy at $890 K makes Burdick Avenue look like a snip.

Anyhow, I guess I agree with Rick Bobby and the factually deficient know nothings who say that, at the low end, SFH's in OB are still selling at pretty well at their all time highs.

Leo S said...

>> Looks like Victoria is following ye old real estate cycle…

Real prices in the 80s dropped over by over a third. How exactly is that sideways? Even nominal was down around 25%

bubbles said...

Sure it dips in between. I’m more so pointing out that 1988 is exactly sideways from 1981 (7 years), and 2001 is exactly the same level as 1994 (7 years).

7 sideways, 7up

I’m not sure if 2014 is at the same level as 2007 as Just Jack pointed out with the Burdick property. It seems like many are near those levels. I should note, I know several people who bought property last year for in the range of a third off what those places sold for in 2007/2008. Even in a 10% dip (official numbers), what buyers need to understand is much greater discounts can be found.

Justrenter said...

I would appreciate your opinion on this property:
http://beta.realtor.ca/propertyDetails.aspx?PropertyId=14042510

Thank you

Leo S said...

Sure it dips in between. I’m more so pointing out that 1988 is exactly sideways from 1981 (7 years), and 2001 is exactly the same level as 1994 (7 years).


Yes this nonsense seems to come up here a lot.
Just like the Nasdaq went sideways since 2000 and the Dow had a well-publicized episode of sideways travel between 2008 and 2012.

koozdra said...

Bubbles/PD sees the world through the rose coloured glasses of a marketer.

Jack and Cate said...

Justrenter said...
I would appreciate your opinion on this property:
http://beta.realtor.ca/propertyDetails.aspx?PropertyId=14042510

2358 Cadboro Bay Rd, Victoria
___________________________

Priced at approx 70k over assessed. Other properties down the street of similar quality priced 25k cheaper. Holmes tends to test markets with prices early on in each season.

Run of the mill property, nothing special and certainly not worth being overpriced int his market. Just rent as your name says, it will come down. The market is young and probably so are you.

Cheers,

Justrenter said...

Jack and Cate, thank you for your informative answer. I actually thought that it was a good price but now I see that I was wrong, didn't know about the 70 plus assessment. Yes, you are right, we have been waiting for a long time and we're not going to be the greatest fools now.

kunwak said...

LeoS, I don't get why you fit a linear model, I think it should be a power law.

Just Jack said...

As for the Cadboro Bay Road property it seems to be priced well in relation to other properties that have sold along the street. It would be a better deal if it had a basement.

Most of the value is situated in the land component and my guess is that 80 percent and likely more is just land value. That should make the home a tear-down. Yet rarely are these houses ever torn down. Most of the time they are dressed up for a sale.

I suppose you've heard the saying "Buy the worst house on the best street" That's true in a rising market. Not true in a stable or declining market. When you have that much of the home's value in the land, when prices decline these marginal homes suffer more loss than properties with a more equitable split between land and improvements.

Some prospective purchasers buy in the hopes of re-building on the lot some time in the future. Rarely does this happen as it is almost always more economical to sell and buy a home that meets your new needs.

Unless your a builder willing to live in the home for a year before selling, these properties do not make economic sense to buy and rebuild for an immediate profit.

You're simply following the crowd by looking at these properties. This is where Warren Buffet is right. You should find out what everyone is doing then do the opposite.

The property is at a middle income price but the improvements are a starter house. When the market turns you'll be between a rock and a hard place on properties like this. Too expensive for a starter couple and too small for a middle income family.

Today's Oak Bay dream home becomes tomorrow's nightmare.

Justrenter said...

Thank you Just Jack. Very compelling argument.

Leo S said...

LeoS, I don't get why you fit a linear model, I think it should be a power law.

Yes I realize, but I was asked to reproduce the graph, not improve on it :)

David said...

"7 sideways, 7up"

I use 10 up-5 down.
1970-80 up
80-85 down
85-95 up
95-00 down
00-10 up
I suppose it worksout about the same.

Leo S said...

On the caddy bay place.

Visually it checks all the items that make a house hunter excited (and I don't mean that in a negative way, an updated kitchen and bath is just nice).
The place has been remodelled in a nice way, more or less straight out of the "how to remodel to sell your house" book (they forgot the stainless fridge).
Negatives are that the place is almost 110 years old at this point and only 2 bedrooms.

What kills it for me would be the location. On the corner of a pretty busy road that will only get busier as the years go on, with a bus stop out front.

koozdra said...

"The love affair Canadians have with debt is still going strong, according to a new report by credit monitoring agency Equifax Canada.

Equifax said Monday that its figures show that consumer debt, excluding mortgages, rose to $518.3-billion through the end of November 2013. That was up 4.2 per cent from $497.4-billion a year earlier."

Consumer debt swells to $1.4-trillion, but Canadians able to pay it: report

Scary will be the day that we see a drop in debt accumulation.

koozdra said...

"The decline in starts is an indication of housing supply falling into alignment with demand in most major markets," McDonald said.

Canadian dollar falls as housing starts slow

How many years have we been building above household formation now?

The slowdown in housing here is an economic event unto itself. Too much of the economy is reliant on the housing industry. Hopefully exports will pick up...

Where are our exports?

Prosperity is just around the corner.

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

I have some doubts about your last graph: Victoria average house prices corrected for inflation.

It shows the average inflation-adjusted price increasing from 120 K to 500 K, or 4.16-fold, between 1972 and 2010.

But according to the chart shown herethe C$ was devalued 84% between 1972 and 2010.

That seems a not exaggerated estimate to me. For example, gas has gone from about 12 cents a liter to $1.20, or a ten-fold increase. A cheap new car has gone from around $3500 to around $18000, a five-fold increase. A bag of groceries from around $5.00 to $25.00.

Furthermore, it happens that we bought a house in 1972 for $68K (on a quarter acre lot on a good street in N. OB, so probably of something like average value). Applying the 84% devaluation to that price gives a 2010 dollar price of $425 K, whereas, according to your chart, the 2010-dollar price was only around $283K.

This difference greatly affects the implied real price increase over the last 40 years.

In fact, the current assessment of that house is $880 K, or a real increase of 207%, assuming an 84% dollar devaluation, versus your chart which implies a real increase of 416%.

The result, incidentally, is fairly similar if the Bank of Canada CPI inflation calculator is used (it indicates an 81% dollar devaluation between 1972 and 2010).

Leo S said...

It shows the average inflation-adjusted price increasing from 120 K to 500 K, or 4.16-fold, between 1972 and 2010.

$136k to $629k actually. You seem to be picking numbers off the linear trend line which makes no sense. Then you're comparing those numbers to inflation, which makes even less sense since inflation has been specifically factored out.

Applying the 84% devaluation to that price gives a 2010 dollar price of $425K, whereas, according to your chart, the 2010-dollar price was only around $283K.

When you use two completely different multipliers you get different results. Is that a surprise?

In fact, the current assessment of that house is $880 K, or a real increase of 207%, assuming an 84% dollar devaluation, versus your chart which implies a real increase of 416%.

Why do you expect it to match? The graph title is not "The value of CS's old house in oak bay corrected for inflation".
Average house price in 1972 was actually $25,610. Why do you think that a house on a large lot in Oak Bay would be anything close to the average price? It was in fact 265% higher than average at the time. That would be like buying a house for 1.5million today.
So your old house under performed the market quite severely. If it had paced the market it should now be worth $1,650,000.

Marko said...

Tuesday, February 11, 2014 9:00am

MTD February
2014 2013
Net Unconditional Sales: 101 394
New Listings: 372 1,039
Active Listings: 3,556 4,072

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

CS said...

"It shows the average inflation-adjusted price increasing from 120 K to 500 K, or 4.16-fold, between 1972 and 2010."

$136k to $629k actually. You seem to be picking numbers off the linear trend line which makes no sense.

If it makes no sense to pick numbers off the linear trend, what is the point of fitting the line?

CS said...

When you use two completely different multipliers you get different results. Is that a surprise?

You state the obvious. The real question is: which multiplier is correct?

CS said...

In fact, the current assessment of that house is $880 K, or a real increase of 207%, assuming an 84% dollar devaluation, versus your chart which implies a real increase of 416%.

Why do you expect it to match?

I expect it to match if your inflation adjustment is correct, which, it seems, it is not.

CS said...

Your trend line, incidentally, matches the actual data exactly for 1972 and is close for 2013, therefore, whether you take the trend line or the actual data, you are showing a more than four-fold increase in real price from 1972 to 2013, which I believe is about twice the actual constant dollar appreciation.

Just Jack said...

There are 475 houses for sale in the Western Communities with only 50 selling in the last 30 days. That's 9.5 Months of Inventory indicating a bear market.

In comparison the core districts have 478 listings with 100 sales in the last 30 days. That's 4.8 MOI which is considered to be balanced, neither favoring buyer or seller.

It does appear that we have two distinct housing markets operating within the Greater Victoria Area.

But how about the core municipalities are there some better than others?

Victora 99 listings-25 Sold (4.0)
Oak Bay 73 15 sold (4.9)
Saanich Esst 155 - 36 (4.3)
SUB TOTAL 327/76 (4.3) A bullish market in favor of sellers.


Esquimalt 31 -6 (5.1)
Vic West 8 - 1 (not enough)
View Royal 36 - 4 (not enough
Saanich West 87 12 (7.3)
SUB TOTAL 162/23 (7.0 MOI) which is just on the border of balanced and a bear market

When it comes to the core districts, the housing market seems to splitting apart. Victoria, Oak Bay and Saanich East being significantly more active than any other districts in Greater Victoria by about 2 to 1.

In my opinion, the people buying in Victoria, Saanich East and Oak Bay today are the "Gung-ho" buyers. They need to be in a specific areas and will not consider anywhere else. The home price is important - but they are willing to overpay in the "right" neighbourhood for the right home. And they all seem to be wanting the same thing. If you're wanting to find out what is happening in the real estate market - you don't want to watch this group as economics is not their motivating factor. These people have chosen to overpay when the right property comes along.

Unfortuneatly, these are the hoods we are all deeply interested in. We marvel when someone pays over asking price. We shouldn't be - the people buying in these areas are not being governed by economics but by a myopic view of real estate.

Stop being lead by irrational buyers. What if someone had turn to Custer at the Little Big Horn and said...

"You know George - I don't think this is a good idea."

But no one did and the results seem to always end in a slaughter be it the 7th Calvary or house buyers.

CS said...

But sticking with the linear trend, which obviously precisely reflects the overall trend, the 2010-dollar price of the average Victoria home increased from 100 K in 1968 to 500 K in 2010, i.e., a five-fold increase in real price.

Or am I misreading the graph?

If I have that right, then I believe that if you use the BoC inflation calculator on some actual data, you will find that the real price increase has not been as large as your graph indicates.

But I agree that the calculation based on my knowledge of one particular property is by no means conclusive.

Just Jack said...

What is happening in the market when it comes to the Westshore.

Almost without exception anyone who has bought a strata home in the Westshore in the last decade from the developer will sell for less than what they bought.

Like in the commercial and residential complex on Veteran's Way known as Reflections. Third floor suite bought from the developer for $340,000 in 2006 and sold today for $230,000.

And how about a 2,000 square foot home on a 6500 square foot water view lot in Sooke Village, sold at $271,000 and close to 200 days to find a buyer. Same house in Estevan you're looking at $700,000 with multiple bids.

How about a basement entry home with a suite. Grossing over $24,000 a year for $285,000 in Langford. A price to income ratio of 12. You don't have to go to Penticton to get deals.

How about 2 level acres of land with a 2600 square foot home within walking distance to the golf course in Metchosin at $535,000. You can get your daughter a pony if you lived here or she can watch rats mate in the backyard of your Oaklands home for the same price.

Ahhh, but you want status. Something few people have and what others would envy. Something where your inlaws would want to come out and stay with you. Why not west coast waterfront. 1.2 million in the city or $500,000 in Whiffin Spit in Sooke. And it took 6 months to find a buyer at $500,000.

And what will 1.2 million get you in Sooke. Two acres of French beach waterfront with a ten year old 3600 square foot mansion, your own beach area that you can catch salmon from. You can't find properties like this in Oak Bay or Victoria - they don't exist.

Leo S said...

If it makes no sense to pick numbers off the linear trend, what is the point of fitting the line?

You said "it shows inflation adjusted price increasing.." then you used the linear trend line. That is not correct. If you are interested in how much inflation adjusted price increased between two points, then use the data. If you're interested in the overall trend over the entire range then use the trend line.

You state the obvious. The real question is: which multiplier is correct?

They're measuring two completely different things. Both of them are correct. Mine is measuring the gains in real estate after inflation, and you are looking at inflation. I don't understand why you think they should match if they're completely different.

I expect it to match if your inflation adjustment is correct, which, it seems, it is not.


I think you are confused about the graph. The inflation adjustment is correct. This is not a graph of inflation, it's a graph of house prices WITHOUT inflation.

Leo S said...

If I have that right, then I believe that if you use the BoC inflation calculator on some actual data, you will find that the real price increase has not been as large as your graph indicates.

Which actual data are you referring to? The actual data I am using is the VREB average house price back to 1960. I don't have the foggiest idea how reliable it is back that far, but they gave it to me so that's what I'm using.
For example, In 1972 they say the average house price cost $25,610. Put that into the BoC inflation calculator and correct to 2010 and you get $134,338 (in my graph it is $136,000 due to limited precision in the CPI series I'm using to calculate).
Average in 2010 was $629,000, therefore increase of 4.68 times after inflation.

Leo S said...

Who knows if the source data is accurate though. They say in 1960 the annual average was $8796. Hard to believe....

Leo S said...

Updated article with new versions of those graphs. It isn't 2010 any more after all.

CS said...

Leo S: Thanks very much for the additional info and new graphs.

koozdra said...

Opposition:
Debt continues to climb. The average Canadian now owes a dollar and 64 cents for every dollar they bring in. What is the government doing to address the growing debt of Canadians.

Government
Mr. Speaker this government has told Canadians time and again that interest rates are not going to to stay low forever. We have told them not to take on too much debt. We feel that Canadians are making prudent decisions with their finances. While the member opposite the house...[insert ad hominem of the day]




Meanwhile unsecured debt up 4% and mortgage debt up 12% from 2013 to 2014. Low interest rates create the illusion of affordability.

I hope the economy never recovers. Perhaps we'll see that not only does Emperor Harper have no clothes but most our neighbors are buck naked also.

DavidL said...

@Leo S
Who knows if the source data is accurate though. They say in 1960 the annual average was $8796. Hard to believe....

These numbers seems pretty accurate. I know of two Victoria area houses bought in 1968: 0ne in Royal Oak for $14,500 (sold for ~$500K in 2012) and the other on Ten Mile Point for $32,500 (sold for ~$700K in 2013).

@ CS
... the average Victoria home increased from 100 K in 1968 to 500 K in 2010

You would be hard pressed to find many houses selling for $100K in 1968. Most were selling for much less!

Leo S said...

You would be hard pressed to find many houses selling for $100K in 1968. Most were selling for much less!

That would be in $100k in today's dollars.

koozdra said...

1968: $14,500.00
2013: $92,664.06

Inflation? technically no
Wage growth? not REALly

Dual incomes: yes
Suites: yes
Temporary emergency low rates because the economy is in terrible shape: Hell yeah!!

The new normal of affordability.

DavidL said...

@Leo S
That would be in $100k in today's dollars.
Good point! I missed that ...

@koozdra
In 1968, a 5-year fixed rate mortgage was about 9%. My father managed to negotiate a 25-year year fixed rate at 8.5%. It "saved his bacon" in the 1980's. Other things that have not matched inflation over the past 45 years: property taxes, house insurance, land, construction costs.

In both the late 1960's and the early 2000's, the average SFH in Victoria cost about about 2.5 to 3 times the average family income.

CS said...



I think you are confused about the graph.


Quite possibly. But I seems it is that my data were in error. My wife informs me that we bought the house in question in 1976, not '72 (she's always right), and those four years make quite a difference.

A house purchased in 76 for 68 K was valued in 2010 dollars at $250 K. With an assessed value of around 880 K in 2010 (i.e., in the same constant dollars), the real price appreciation was 3.5-fold, whereas the trend line of your graph shows a 2.8-fold increase — which is fairly close.

koozdra said...

B.C. property market hazy after 'millionaire visa' scrapped

"Most of the buying is coming from Chinese immigrants who are wealthy, so if we make it difficult for them to come into this country, we have killed 80 to 90 per cent of the buying in West Vancouver."

Shed a tear everyone for the paper millionaires of West Vancouver.

Leo S said...

My wife informs me that we bought the house in question in 1976, not '72 (she's always right), and those four years make quite a difference.

Apparently the average price in '76 was $60,062 so that now does sound more correct for the property. So it was a bit over the average price. And it is today also a bit over the average price so that about checks out.

A house purchased in 76 for 68 K was valued in 2010 dollars at $250 K. With an assessed value of around 880 K in 2010 (i.e., in the same constant dollars), the real price appreciation was 3.5-fold, whereas the trend line of your graph shows a 2.8-fold increase — which is fairly close.

Ok I finally understand what you're doing here. Yes now it roughly matches up, with the property having slightly outperformed the rest of the market over that period.

Just Jack said...

In 1976 there was also a real estate boom in Victoria. This is when most of Gordon Head was built. The 1970's saw the end of the Vietnam war, rapid inflation, the creation of the two family income household, standardised mortgages and the Oil Embargo. It was also the time when the baby boomers from the Great War were moving to Victoria to retire.

As one retired realtor explained to me - the average home price in Victoria was higher than in Vancouver.

Jack and Cate said...

koozdra said...

B.C. property market hazy after 'millionaire visa' scrapped

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

Don't know if you caught it but the original headline read - "Canada scraps ‘millionaire visa,’ sends B.C. property market reeling…"

It took only a couple of hours before the change was made by CBC. Spin Doctors hard at work - slide baby slide!!

Spanky said...

As today's Teranet numbers show, Western Canada is heating up again.

Financial Post
"Year-over-year price gains were seen in eight of the 11 markets, led by a 7.5% gain in Vancouver and a 7.1% rise in Calgary compared to January 2013."

koozdra said...

Why Canadians Should Be Cheering For A Correction In The Housing Market

Contrary to popular belief, perpetual strength in housing isn’t always a good thing for an economy. Sal Guatieri, senior economist at the Bank of Montreal, drew attention to the downside of ever-rising home prices in his recent North American Outlook. ”In Canada, accelerating home prices in Toronto (7.1% y/y in January) risk straining affordability further, causing a correction when interest rates normalize and the market is trying to absorb a record number of newly built condos,” he said.

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

If you care to know why it's heating up again, its partly because we've escaped the 'Bear'muda Triangle.
As I've said before, I think the best time to buy in Vic will be looked back upon as 2013.

When everyone thinks prices will languish for 5-10 years, you can be sure prices are about to rise. What I mean is most owners I know are now bearish. Even on here, people like David and emptor (I think?) are bearish about prices. I know there are others too (toroto...) None feel prices will rise. Buffett knows better.

reasonfirst said...

As today's Teranet numbers show, Western Canada is heating up again.

...except Victoria which is down 5.7% yoy.


The divergence from MLS HPI is growing.

koozdra said...

"you can be sure prices are about to rise"

In your opinion.

Spanky said...

It always heats up first in the big metros and then spreads outwards. IOW it makes sense Van and Calgary are rising first.

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

Spanky:

...most owners you know and people on this blog are your sample? Funny!

koozdra said...

Surely the market in Victoria can't keep sinking. Surely when the national market starts its inevitable crash, Victoria's market won't take a steep nose dive.

Surely.

Spanky said...

I'm only trying to help people see how things are unfolding. There are certainly better places to have your money right now. And don't call me Surely ;)

dasmo said...

"Victoria % change y/y - 4.01%"

Just Jack said...

Just to be Frank, there isn't the necessary pent up demand for housing to create another boom from the centre to the outside areas.

We would need falling unemployment and low vacancy rates for several years before a boom market could emerge again.

The low interest rates seem to have stabilized the inner city housing market. Yet if you are not in Saanich East, Victoria or Oak Bay you're experiencing declining prices.

Its an interesting time when you can sell your Humboldt Valley skybox for an equivalent priced home on waterfront in the Western Communities. Typically, these transitional markets don't last for long. Just for the security of the capital invested, Sooke waterfront would be a superior investment to a downtown condo.

They aren't making anymore waterfront land. But they will be making another 2000 condos in the city.

dasmo said...

I agree a boom market in the near future is unlikely. More "flat" is what I see. A return to a larger spread between areas is also more likely. The bulls will kick up dirt when there is a few % rise and the Bears will roar when there is a few % drop. Meanwhile us Halibuts will swim around the bottom with both of our all seeing eyes looking up towards to sun...

koozdra said...

Barbara Yaffe: Don’t bank on Vancouver’s real estate bubble bursting

"The truth is, the housing sector here is not like other markets."

Oh is it different there?

reasonfirst said...

Dasmo,

the teranet website is one month behind. I rec'd their e-mail this morning for January - 5.7%

dasmo said...

Ah. Sorry about that. Hm that's .7% outside my flat tollerance...

Just Jack said...

It comes down to the value of money. How much more are you willing to pay to live in idential homes in Fairfield versus Glanford?

$500 a month?
$1,000
$1,500
$2,000 more a month over a Glanford home?

The best I can figure is $687,500 for a Farfield home and $510,000 for a similar Glanford house. Today, that's close to a difference of $900 a month in a mortgage payment.

reasonfirst said...

is the halibut gaining weight around the waist? :-)

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

.Percentage Price Increase / Decrease Since June 2010 . .
. . . . . . . . . . . . .All Property Types. . . . . . . . . . . . . . . . . .
. . . . . . . . (Teranet House Price Index). . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +15%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . +14%. . Canada
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +13%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +12%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +11%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +10%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +9%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +8%
. . . . . . . . . . . . . . . . . .* . . . . . . . . . . . . . . . . . . . +7%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +6%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +5%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +4%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +3%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +2%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +1%
*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3%
. . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . -4%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . -9%. . Victoria
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10%
-----------------------------------------------------------------------------
June 2010. . . . . . . . . . . . . . . . . . . . . . . . December 2013

Since June 2010:

Victoria: -8.85%
The rest of Canada (without Victoria): + 13.52%

info said...

. . . . . . . . . . Percentage Price Decline From Peak . . . . . . . . .
. . . . . . . . . Greater Victoria - Single Family Homes. . . . . . .
. . . . . . . . . . . . . . (MLS Home Price Index). . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .0%. . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 0.5%. . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 2.0%. . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 2.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 3.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 3.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4.5%. . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5.5%. . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . .
- 6.0%. . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . .
- 6.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 7.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 7.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 8.0%. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . .
- 8.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . . . . . . . .
- 9.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 9.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . *. . .
-----------------------------------------------------------------------------------------------
. . . . . . . . . .10. . . . . . 11. . . . . . .12. . . . . . . 13. . . . . .14. .

info said...

As of the end of December 2013, the MLS home price index indicates that single family home prices across Greater Victoria have declined by 11% since peak.

It would be extremely difficult to argue that the single family home price correction so far has been less than 11%. Afterall, the MLS home price index is put together by real estate boards (realtors). It is highly unlikely that they would overstate the price correction.

The Teranet index claims that prices (all property types) have declined by only 8.85% (as of December 2013). It is quite obvious that single family home prices have declined less than other property types. If we had access to Teranet's data, we would most likely find that the total price decline of SFHs from peak would be less than 8.85%.

When looking at the total price declines from peak of both indices, it makes the most sense to consider the index with the biggest price decline from peak as the most accurate, as the groups behind both indices have vested interests in continued high (bubble) house prices in Canada.

The MLS home price index indicates that SFH prices across Greater Victoria have fallen 11% below peak. We must consider this to be the minimum total SFH price decline as data manipulation (to make the numbers look stronger) has recently been an issue with some Canadian real estate boards.

At best, Greater Victoria single family home prices have declined by 11%.

Those who are in denial about Greater Victoria's (minimum) 11% SFH price decline from peak will, obviously, go with what the Teranet index states and avoid considering anything else.

info said...

Soon I will be posting a chart that compares recent yearly SFH sales to yearly SFH sales of past years. It will be population adjusted since population adjustment is necessary in order to make these comparisons fair and meaningful. Greater Victoria's population has grown substantially since the 80s and 90s, making it unfair to compare recent yearly SFH sales totals to yearly SFH sales totals of the 80s and 90s without adjusting for population.

The results of this chart will be more evidence that SFH sales have been in the tank since 2010. Some of the regulars of this blog will be shocked.

Animal Spirit said...

Has PCS/matrix stopped updating the pending sales in the public view?

In my SFH 450-575K, core areas, my last sale showing is Feb 4. For rural Saanich West / East the last sale is Jan 4.

Any idea on this, or have some sales dropped off a cliff?

DavidL said...

@Spanky
When everyone thinks prices will languish for 5-10 years, you can be sure prices are about to rise.

When everyone thinks that prices will languish, it becomes a self-fulfilling prophecy. Pessimism grows as nobody wants to purchase "knowing" that the resale value will be dropping, sales decline, and prices eventually follow.

DavidL said...

@Animal Spirit
Has PCS/matrix stopped updating the pending sales in the public view?

Both my PCS and Matrix listing are showing pending sales. Based on your criteria, the most recent I have is 3222 Keats St (MLS 332588) sold for $480K on February 5th. That said, the lower end of the SFH market appears to be on life support while there's still some activity in the $650K+ market.

DavidL said...

@Just Jack
How much more are you willing to pay to live in idential homes in Fairfield versus Glanford?

Interesting question! I would be willing to pay about $250/month - suggesting that the $510K Glanford home should be selling for about $560K if located in Fairfield.

DavidL said...

A couple of years ago, I suggested that there appears to be a sixteen year cycle in Victoria when interest rates are average-to-low and prices are very low. This has occurred in 1968, 1986, and 2002 - as illustrated in Leo S's recent chart. What does this suggest for 2018?

Just Jack said...

A new sale of a gorgeous home on Garden Gate in Brentwood this week. Asking price started out at 3.9 million in 2008. And just sold for $1.9 million. This home screams " A Rolls Royce lives here".

There was also a sale of a home in Uplands at 1.6 million. A boring box of a home that would be complete if there was a 1980 Ford Granada leaking oil on the driveway.

Location is really over rated in Victoria. Better to have a fine home to come home to than save 15 minutes driving time.

Just Jack said...

In 1968 the Baby Boomers were just turning 23 their parents were turning 50 and coming to Victoria(1918 baby boom). Two groups, the first time home owners and retirees were colliding.

In 1986, The parents of the Great War baby boom (born 1895) were dying off. Baby Boomers were just 41 and their kids were 11 years old. No collison


In 2002, the Baby Boomers were turning 57 and retiring to Victoria. And their children were buying their first home. Again a collision between two buying groups.


In 2018, the Baby Boomers children will be turning 43 and the Baby Boomers will be turning 73. No collision

In 2025, The Baby Boomers kids will be turning 50 and retiring to Victoria. But the Baby Boomers will be dying off. No collison

patriotz said...

Prices were down from a year earlier in Victoria (−5.7%), Halifax (−2.9%) and Ottawa-Gatineau (−0.6%). The 12-month decline was a first for Ottawa-Gatineau, the 11th straight for Victoria and the fourth in six months for Halifax.

Looks like Victoria is headed for a gold in the downhill event.

The medal will be clinched when Victoria's index, now 133.48, hits the trough of 129.88 reached in April 2009.

Leo S said...

This has occurred in 1968, 1986, and 2002 - as illustrated in Leo S's recent chart. What does this suggest for 2018?

I think graphing home values on a log scale and using that as a basis for price projections is inherently dangerous.

Victoria has sustained a high real rate of price appreciation for the last 65 years or so (approximately 4% real increase per year). This has happened due to household income growth (both real and due to increasing number of dual income families), increase in size of houses, loosened credit restrictions, and lowered interest rates.
Some of these factors are now tapped out. I suspect future long term increases will slow down significantly and will diverge from this trend.

Leo S said...

Location is really over rated in Victoria. Better to have a fine home to come home to than save 15 minutes driving time.

I'll take the 15 minutes. In fact I'll take the riding my bike to work over driving at all, and will pay the associated premium.

I believe Totoro once calculated the increased mortgage you could carry by not commuting from Langford every day.

bubbles said...

Jack says
“In 2018, the Baby Boomers children will be turning 43 and the Baby Boomers will be turning 73. No collision”

Except that your numbers are not even in the ball park!

All you have to do is look at the Boomer bulge and their childrens bulge on Canada’s 2013 age structure. The bulge is what matters as that’s where the peak numbers lie. Last year’s 50-54 Boomer bulge will be 55-59 in 2018, and their childrens 20-24 bulge will be 25-29 in 2018.

Gee *sarcasm noted* I wonder if any of the 55-59 and 25-29 olds will be buying in Victoria in 2018?

*sarcasm off* I think 2018 is the impending collision of buyers you speak of.

Leo S said...

>> Gee *sarcasm noted* I wonder if any of the 55-59 and 25-29 olds will be buying in Victoria in 2018?

55-59 year olds will not be buying in Victoria unless they already live here (in which case they would not be net buyers). Those people will be working.

25-29 year olds that live here might be buying but mostly condos. And those are a dime a dozen with the current rate of construction

Spanky said...

JustJack:
Just to be Frank, there isn't the necessary pent up demand for housing to create another boom from the centre to the outside areas.


Meanwhile the two largest centres in W Canada, Vancouver & Calgary are accelerating upwards over 7% from last year at this time.

Spanky said...

OK, maybe 7% isn't a boom yet but it's not too shabby.

subprime11 said...

Spending too much time focusing on million dollar moldy boxes in stuffy, conservative & safe Victoria where people fall asleep and get old...where you can see the rest of your life unfolding exactly as planned....boring...I'm moving to Mexico and beyond...life is for living, not playing it safe with your investments so that you can afford to have a nurse wipe your ass when you're an old fart. . Live while you can mates. Cheers

S-J said...


For those following the Oak Bay market (and there seems to be a few of us), an interesting sale today on Pattullo Place, at under assessment. It is a large 4-bedroom home, nicely presented with a decent sized back yard.

Pattullo is an exclusive cul-de-sac off Newport Ave in South Oak Bay. Listings there are rare and they usually get snapped up pretty quickly. This one was on the market for 84 days, with price reduction from its original listing of $839,000 and a final sale of $807,000. This is $79,000 under the assessed value of $886,000.

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13865540

Compare Pattullo to 2571 Dunlevy in Estevan. Both houses are of a similar size with a similar sized back yard. Dunlevy is only assessed at $792,000, but is asking $890,000.

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

I used to think South Oak Bay was considered a more exclusive area than Estevan, but looking at these three recent sales in Estevan, this area of Oak Bay seems to be doing quite well:

2675 Topp Ave at $710,000 - assessed at $640,000 and needs updating.

2584 Thompson at $855,000 - assessed at $729,000, but with some flashy renovations.

2741 Burdick at $791,250 – a red hot sale with a red hot interior, that flew off the shelf in one day at over asking and over the assessed value of $780,000 (but could do with updating as well).

However, as well as Estevan is doing, I would still be very surprised if 2571 Dunlevy sold without a price drop first!

Just Jack said...

Added some math in brackets to help some of you.

In 1968 (1968-1945) the Baby Boomers were just turning 23 their parents were turning 50 (1968-1918) and coming to Victoria(1918 baby boom). Two groups, the first time home owners and retirees were colliding.

In 1986, The parents of the Great War baby boom (born 1895) (1986-1895) were dying off. Baby Boomers were just (1986-1945) 41 and their kids were 11 (1986-1975)years old. No collison


In 2002, the Baby Boomers were turning 57 (2002-1945)and retiring to Victoria. And their children (2002-1975) were buying their first home. Again a collision between two buying groups.


In 2018, the Baby Boomers children will be turning 43 (2018-1975) and the Baby Boomers will be turning 73 (2018-1945). No collision

In 2025, The Baby Boomers kids will be turning 50 (2025-1975)and retiring to Victoria. But the Baby Boomers (2025-1945 age 80)will be dying off. No collison

It isn't the bulge in the demographics it is whether demand is increasing or decreasing that makes prices rise or fall. As we lead up to the bulge prices increase. After the apex, demand decreases and prices fall.

We had a real estate boom starting in 1968 and into the beginning of the 1980's. A real estate fall in the mid 1980's. A real estate boom at the start of the naughties.

And it looks like it will be a decline in the late 2018's and into the mid 2020's.

Just Jack said...

Without decreasing unemployment and low vacancy rates we can't have pent-up demand.

Demand has to come from somewhere. And that would be through jobs and people moving here. An expanding economy.

Spanky, I don't know about Vancouver and Calgary perhaps you could enlighten us.

caveat emptor said...

"Location is really over rated in Victoria."

Says the guy who lives in South Oak Bay :-) ??

caveat emptor said...

According to BC Stats Victoria (CRD actually) will grow by 80000 over the next 22 years (roughly from 380K to 460K). At the same time BC as a whole is projected to grow from 4.7 M to over 6 M

bubbles said...

Jack correctly states
“As we lead up to the bulge prices increase. After the apex, demand decreases and prices fall.”

Boomer bulge is presently ~53. Their children bulge is ~23, although less pronounced. So we have at very least 10 years of a Victoria retirement wave until apex and ~7 years before their children hit their apex (average first-time buying age of 30).

bubbles said...

So Jack, what orifice did you pull the following conclusion from?
"And it looks like it will be a decline in the late 2018's and into the mid 2020's."

dasmo said...

here is the population pyramid for 1968, 2002 and 2011

I simply don't share the boomer doomer predictions. If you look at what is happening there is no indication of a foreboding cliff of despair in the future. The spike will just slowly fades away as the population grows...

Plus in 1968 it looks like the baby boom bulge was 10 years old. Hardly first time buyers ;-) Also interesting to note that there is a slightly larger volume of people as the baby boom bulge right now in the "first time buyer" age bracket....

koozdra said...

No condo bust on horizon, CIBC analyst says

"Canadian real estate bears are patient,' Tal writes. "For more than half a decade, they have been waiting for the inevitable crash in the Canadian housing market, only to be disappointed by a defying market.

"The market will be tested by higher interest rates. But as things stand now, those bears will have to continue to wait as interest rates are likely to remain low well into 2015."



Why is our market so crappy in the face of low rates when other markets continue to boom? How will it handle getting "tested" by higher rates?

Not well, not well at all.

Just Jack said...

Simply, overlay real estate peaks and troughs with the demographics.

The first of the boomers hit 69 this year. The youngest is 50. However it's the leading edge that causes market changes. Those ages 56 to 69. The back half of the boom simply have to follow the market, they're not instrumental in forming it.

Our sale volumes are near the lowest in 30 years because the boomers age 56 to 69 have already bought. Those aged 50 to 55 find it difficult to relocate to Victoria because the prices are so high.

Your assumption that at age 65, boomers pull up stakes and move to Victoria is the mistake. It doesn't fit with any of the peaks and troughs in the market. The boomers have been moving here since 2000 when they started turning 55. That's why our prices went so high. That was the baby boomers relocating here. The reasons most relocate here were to be with their grandchildren or a company transfer so that they could work here for a couple of years before retiring at 65. Which is now 67 for those born after March 1958 by the way.

Very few people make a substantial life change to move away from friends and family at age 65. And you would think the developers would know this from the advertsing companies that they hire. And they do. A decade ago the ads were for retirees to move to Victoria. Today the ads are for young urban professionals.

You chose to ignore this - that's fine with me. But keep your personal attacks in your pants.

bubbles said...

“Your assumption that at age 65, boomers pull up stakes and move to Victoria is the mistake.”

If you say so, I guess the conducted studies are bunk.
Of note, three times as many boomers say they will retire to Vic than the entire number saying the US, and that was when US prices were much lower two years ago.

“But keep your personal attacks in your pants.”

Apologies Jack, from your picture I thought you would appreciate the orifice comment.

LeoM said...

JustJack-
I appreciate all the good facts and opinions you post here, but you got one fact wrong. In 1976 the boom was over and SFH had declined about 22% from the peak in1974.

In 1964 you could buy a nice big house in Fairfield on Olive St or Howe St or Wellington for $13,000.
Then by 1968 the same house was selling for $30,000.
But by 1970 prices had declined by about 20%.
Then by 1974 prices had skyrocketed to $80,000.
But by 1976 prices had crashed to $55,000.
Then a boom and inflation to 1981 put prices at $130,000 to $160,000
But by 1983 prices had fallen to about $110,000 if you could find a buyer.

And today the cycles continues. The 11% drop so far is just the beginning and if interest rates increase there will be wholesale prices on SFH in Greater Victoria, probably down 30+% from peak.

Just Jack said...

I'm not disagreeing that Victoria isn't a place people would like to retire to. The percentage desiring to retire to Victoria likely hasn't changed in the last 30 years.

We have always been known as the newlywed and the nearly dead.

The study isn't saying an additional 15 percent want to retire here or that we're about to have a landing of retirees set to hit the beaches on some R Day in the future.

But as shown by our sale volumes, fewer have been comming since 2007. Maybe it's because the Victoria in the brochures isn't what they find when they come for a visit. This isn't the same Victoria as 20 years ago we are becoming a high rise concrete city. We've gone from mom and pop shops to big box stores. 20 years from now we'll probably just evolve into another city like Surrey.

caveat emptor said...

http://www.theglobeandmail.com/report-on-business/report-warns-of-excess-supply-of-rental-units-in-toronto-and-vancouver/article16844345/

Just Jack said...

We had a recession due to the Oil Embargo in 1976 that plunged us into a recession that interupted the baby boomers buying decisions. After that was settled and we traded our Chrysler New Yorkers in for Dodge Horizons the market continued on until the early 1980's.

In 1968 the first of the baby boomers was 23 by 1981 they were 36. The back side of the boomers were age 22 to 17 and the baby boomers grand-parents were into their 80's. Not hard to project what was to happen to real estate for most of that decade when most had bought and most of the original homesteaders to BC were dying. Those aged 17 to 22 were not old enough to buy into the market and there wasn't any high paying jobs for them. What would you think would happen to prices?

DavidL said...

@Leo S
I think graphing home values on a log scale and using that as a basis for price projections is inherently dangerous.

Agreed ... As an investment broker would say: past indicators do not predict future performance.

My statement from a few years ago was based on the observation that [1] very low prices, combined with [2] average-to-low interest rates make for an excellent buying opportunity - such as in 1968, 1986 and 2002. After these conditions occur, housing prices have always risen within a few years (early 1970's, late 1980's mid 2000's).

Age demographics can certainly affect the supply/demand cycles, but so can interest rates - which are primarily governed by markets and international trade. History has shown that while interest rates can rapidly change, housing prices are much slower to react. There can often be a window of opportunity to buy when rates have dropped but prices have not yet risen.

The buying/selling patterns appear to be changing. Many boomers cannot afford to retire, needing to work past typical retirement age. Young people are facing higher student loan debt and higher unemployment rates than in the past.

DavidL said...

@Just Jack

Victoria is home to the newly wed, nearly dead and barely fed. Only one of these groups is buying ...

DavidL said...

@caveat emptor
I decided to investigate the CRD population projections further (using the calculator at http://www.bcstats.gov.bc.ca/StatisticsBySubject/Demography/PopulationProjections.aspx. If you select the "5-Year Age Groups" rather than "Totals", you'll notice that for the CRD (region 17000) that the vast majority of the population growth is in the > 70 age groups. In fact, the 70 to 90+ are expected to account for more that 52,000 of the 80,000 projected population growth from 2104 through 2036. This group of citizens will be downsizing with many considering rental over ownership.

bubbles said...

Senior (Age 65+)
2013 --- 765,488
2036 --- 1,494,239

So BCStats predicts a doubling of seniors in BC by 2036. That’s a 3% per year growth rate!

Does anyone else think condos without stairs in BC’s retirement havens would be a good investment over the next twenty years?

LeoM said...

DavidL said
"In fact, the 70 to 90+ are expected to account for more that 52,000 of the 80,000 projected population growth from 2104 through 2036. This group of citizens will be downsizing with many considering rental over ownership."

Myself and all my close friends and acquaintances (about 10 couples) are at the very bottom of your age range (70 to 90) and you are right. We are all talking about selling and renting, but not quite yet... we are all planning for the next boom as our selling time frame, in about 7 years. Time to cash-out and travel and spend the kids inheritance. In fact, some have already started spending their kids inheritance by taking out HELOCs.

caveat emptor said...

@DavidL

I agree the growth in senior population is huge (relatively speaking). Of the projected growth there is 8000 in the 0-19 cohort, 13000 in the 20-64, and 56000 in the 65+. The same trend is seen province wide, but it is more extreme in Victoria.

In 2014 CRD has an estimated 33 seniors per 100 working age. That will rise to 54 seniors per 100 working age.

I don't regard the population projections as especially bullish (except perhaps for senior's housing and Filipina caregivers).

On the other hand 70 is already the new 60 - both the good (better health) and the bad (lack of retirement savings). Maybe in 2036 80 will be the new 60?

Leo S said...

If you say so, I guess the conducted studies are bunk.

Not this bunk again. An online survey is not much of a study, and just because people say something doesn't mean they will do it.

Does anyone else think condos without stairs in BC’s retirement havens would be a good investment over the next twenty years?

Condos can be created at will and very quickly. They will never appreciate more than the rest of the market, and usually less (and drop faster). So no, not likely to be a good investment.

DavidL said...

@LeoM

Last year, one of my family members (who is in your age group) sold her house in Victoria, and is now renting. Besides gaining a cash windfall that will support her through the rest of her life, her month to month cash flow has improved. Interestingly, her monthly rent is almost the exact same amount as the oil heat, garden care and property taxes were for the house. She no longer needs to worry about the roof that needed replacing or the drafty doors and windows. It's a win/win situation for her.

Leo S said...

@DavidL, LeoM

Interesting. I would not have expected a significant number of retirees to consider renting. I would have thought there'd be more downsizing into condos rather than renting.

koozdra said...

"downsizing into condos"

Why though? If you do the math renting that same condo is much more economical. Why tie up your money into a syncing market?

It's worse if they have friends that have condos that watch the market.

How many years in a row does the condo market have to decline before retirees look at the alternatives?

Marko said...

Why though? If you do the math renting that same condo is much more economical. Why tie up your money into a syncing market?

It's worse if they have friends that have condos that watch the market.

How many years in a row does the condo market have to decline before retirees look at the alternatives?


Yes, using Garth's math you rent cheap and invest your cash at a minimum of 9% return, essentially risk free.

Last time I checked a Yaris is more economically than an IS250, both get you from point A to point B.

Renting is perfect. Landlords take into consideration you just booked your three month dream retirement vacation when issuing you two months notice. When you are forced to move moving costs are cheap and the new retirement furniture you picked out for your rental condo will fit perfectly into the next one.

I've lived in a unit I own, right now I am living in a unit I rent. Not the same in my opinion.

koozdra said...

" new retirement furniture you picked out for your rental condo will fit perfectly into the next one"

This is the most perfect time to take advantage of people that can't sell their units. People are clamoring over each other to make some money from renting the houses that they think will be worth more "next year".

Sure you'll have to move a couple of times because some landlords will be assholes or pull a banky.

The cost of those moves will be nothing to the amount of illiquidity and price decline you get from condos in the worst performing market in Canada. Sorry... one of the worst performing markets in Canada.

You're still young you have plenty of time to lose money on subsidizing a renter because you don't want to sell your rental units at a loss. Hell, if you can hold on to your units through the worst recession this country has ever seen you might even make some money in 25 or so years.

¡Viva la Renting Revoluci├│n!

Marko said...

You're still young you have plenty of time to lose money on subsidizing a renter because you don't want to sell your rental units at a loss.

Subsidizing a renter? LoL

Mortgage = $615/month
Strata fees = $160/month
Property taxes = $125/month
Insurance = $18/month

Rent = $1,175 per month. Yes, I know, I am not making 9% risk free interest on my 60k equity in the condo.

None the less, somehow I think I will manage to survive.

Sorry... one of the worst performing markets in Canada.

I would rather buy into a market that has been the worst performing over the last 6-7 years than one that has been up 20 to 50%.

koozdra said...

"Mortgage = $615/month"

Every move up in the interest rates is a cut to your profit. A doubling would wipe out your profit margin completely. Thankfully we'll never see a recovery in the economy. Nothing to worry about.

"I would rather buy into a market that has been the worst performing over the last 6-7 years than one that has been up 20 to 50%. "

We can all accept that it is a near given that the market here will start it's recovery when the national housing market starts to crash. It's just a matter of time.

The recovery is just around the corner. "Next year".

n.y.k. said...

"9% risk free"

Yeah, right.

When has Garth Turner ever claimed to have a risk free investment with a 9% return?

Russ Dale said...
This comment has been removed by the author.
reasonfirst said...

Marko has a hate-on for Garth and thus tends to exaggerate a "little"

Just Jack said...

Just by quitting to smoke, you'll likely save more cash than Marko's condo investment makes. And it is very unlikely that you'll be able to find a deal today like Marko did.

In contrast a BMO $50,000 mutual fund made $5,000 in just the last quarter.

dasmo said...

Investing in real estate is a terrible idea for the average consumer. The only way it makes sense is if you are adding value. The developer who bought the land and built the condo made a good investment. The consumer who buys the condo as an investment most likely did not... I do think buying a home is a good idea. However, if I was a youngster, I would rent right now. Here is my direct experience with investing in real estate since in a way I have become an RE investor inadvertently. I bought the crappiest house in the nicest neighborhood in 2011 with plans to build. I'm in no hurry and its a big deal to make this move so it's been a rental for a few years now. Also, in 2011 I transferred money from cash investments to max out my TFSA. Because of this I can see an easy total %gain over the same time period as owning the "rental house". The TFSA is up 40% since 2011. The house is flat (my assessment went up by 1% this year actually). Doing simple math on the rental it is making 2% on what is going in based on subtracting interest and expenses etc from the income. That is at today's rates and assuming the value remains flat. The rental is not cash flow positive and simply pays off most of the mortgage. As an investment it absolutely sucks especially in the short term...

Leo S said...

Why though? If you do the math renting that same condo is much more economical. Why tie up your money into a syncing market?

Because when I'm 70 I'm not about to start thinking about not having a guaranteed place to stay for the next 5-30 years. There are very few nice rentals that are purpose-built that will give you the peace of mind that you will never be kicked out.

caveat emptor said...

When has Garth Turner ever claimed to have a risk free investment with a 9% return

I usually hear him talk about 7%. I don't think he actually says "risk-free", but he sure as heck plays down the risk. Reading his blog you "understand" that the 7% return is pretty much guaranteed. Which makes sense - he is a salesman of financial advice - it is in his interest to play down the risk of financial investments.

By many measures the Canadian and US stock markets are at least as over-valued as the Canadian housing market. Doesn't necessarily mean the stock market is going to crater immediately. Just like the housing market can keep going up when it is already overvalued, so too can the stock market.

For those who are waiting for 30-50% off Victoria house prices you might want to also consider that you may be able to buy the TSX for less than 14000 and the SP500 for less than 1800 at some not so distant future date.

koozdra said...

"peace of mind that you will never be kicked out."

I agree that I would like that too but what kind of premium are you willing to pay for that?

It just doesn't make sense financially. It is cheaper to rent the same condo than it does to buy it.

A crash would change that. This bubble has created an absurd situation.

Rent the condo from the landlord that loses money every year from depreciation.

Don't get me started on the situation that would be created if rates start to rising...

«Oldest ‹Older   1 – 200 of 266   Newer› Newest»