Statistics Canada released a report of household earnings based on 2012 reported income recently. Depending on your POV, you may or may not be surprised to learn Calgarians reported the highest earnings in the nation. Thought it may be fun to compare 2012 earnings with 2014 average home prices as reported by CREA for a few towns in the Great White North.
| City | Median income | Average price | Price/Income |
| Calgary | $98,300 | $466,994 | 4.75 |
| Edmonton | $96,030 | $371,839 | 3.87 |
| Ottawa | $94,230 | $365,366 | 3.87 |
| St. John's | $87,150 | $349,649 | 4.01 |
| Victoria | $81,580 | $496,225 | 6.08 |
| Canada | $74,540 | $413,215 | 5.54 |
| Vancouver | $71,140 | $796,714 | 11.19 |
| Toronto | $71,210 | $568,953 | 7.99 |
I was surprised by the incomes reported in Victoria. I would have thought they'd be closer to Vancouver. Perhaps not unexpected is the fact that the two most expensive towns to own a home are also below the national average for income. It's not completely clear what the inputs for "average home price" are in CREA's system, but I'd wager they're lumping and smoothing condos, semi-detached and detached.
Useful exercise? Thoughts? I'm sure some of the more number savvy folks around here can improve upon my Grade 3 level analysis in the comments.
404 comments:
«Oldest ‹Older 201 – 400 of 404 Newer› Newest»Lots of great and sometimes witty comments on this blog, thanks to all for taking the time to post. We are leaning strongly into buying a condo apartment this next year. 1100-1300 square feet that needs to be completely renovated. We have debated buying new or newer but find the prices much higher, one gets less space and interior finishes are often not to my liking. Hope to live in the condo forever. Walking distance to the ocean and downtown would be ideal(there is no movie house in Oak Bay). 'Just Jack' you had mentioned foreclosures...where does one find out about them?
I don't know of any single source for finding foreclosures.
It's tricky because they may or may not be advertised as a foreclosure.
That's were you need a dedicated real estate agent to work with you.
I deal almost exclusively with properties that are under duress circumstances or are impaired in some way that the person needing the report needs a much more detailed report with costs to repair, profit incentives and a detailed analysis that goes way beyond finding three properties that look like the one being appraised.
But I am not a real estate agent. I don't market properties and real estate agents don't do appraisals.
Properties that are in pre-foreclosure where the lender has notified the mortgagee will most likely have a filled out property disclosure and be marketed by an agent of the mortgagee's choice.
Properties under foreclosure will not have a filled out property disclosure statement and may say things like "as is - where is". The agent will now be appointed by the law firm. And most often the homes are now vacant.
Those are the things your agent has to search for. Property disclosure statements, the agent's name and if the home is vacant. Sometimes the listing will say court ordered sale or foreclosure. Or things like employees of the TD bank are excluded from buying the property.
It's a bit of a detective game.
I wouldn't just limit yourself to foreclosure properties. There are a lot of people who have their fingers in the pie when it comes to selling these.
I'd look seriously at Estate Sales. This is Victoria after all.
A good portion of boomers don't make it to 65 years old. And we go a lot of them now.
I agree with JJ. An estate sale in January worked pretty good for me. The estate sale is key since there might be more emotional separation from the property and a stronger desire to convert it to cash.
If you're over 55 and looking for a condo there are some sweet deals.
Buildings with age restrictions have a tough time selling in this market. They often sell for less than properties without any age restrictions despite being large and in high demand areas.
The popular misconception is that Victoria is Canada's Elephant graveyard. That suddenly at age 65, the boomers all across Canada throw their tusks in the air and start trundling their way to Victoria ending up at Ross Bay or at least a micro condo near the harbor.
Condo sales just don't support this illusion.
That's why you are going to be able to buy a good size condo close to the water for less than a 30 something pays for a closet sized unit downtown. For the obvious reason you're likely the only person bidding on it.
If the condo is vacant, an Estate and has been listed for more than 90 days make a single offer at the low end of the price range and don't accept any counters. If you don't get this property today, you'll get the next one like it tomorrow.
Don't know what the price range is for the condo - call an appraiser and have him or her check it out for you.
Sounds like a good plan “renter waiting“. I met some Torontonians yesterday who moved to Cook St Village area this summer. From reading the F.Post I’m guessing they padded their retirement accounts by ~$400,000 in making the switch.
Detached homes were the big prize in the city with prices up 11% from a year ago to an average of $880,433.
http://business.financialpost.com/2014/08/07/toronto-home-prices-july/
Close to 10 million Boomers are currently aged 49-68 and are soon to begin retiring and downsizing. With US prices climbing, and our Cdn$ falling, it’s a no brainer where to park yourself. Like you said “Walking distance to the ocean and downtown” is what the majority will want.
"And we go a lot of them". Should read and we got a lot of them.
But Phil, they're not coming.
Hannibal is not leading them over the Rockies. Hansel and Gretel are not leaving a trail of Viagra behind them on their way to Victoria for others to follow them.
Nor is there any advertising for retirees to come to Victoria. The marketing is all for young urban professionals. Why aren't they advertising for retirees? Because they already have - ten years ago. The boomers drove up prices starting in 2000 up until 2008. When the first of them hit age 55.
We are on the back side of the graph now with fewer boomers age 49 to 55 able to purchase in Victoria. Because the front part of the boomers pushed prices to their highest level in history during the 2000 to 2008 period when they were around the ages of 55 to 49. You want to see where the BB'ers are - look around you.
Last weekend I was chatting with some American relatives who spend their winters in Palm Springs, California. They purchased their "winter" place there more than 12 years ago.
They say that over the past five years, the place has become overrun with Canadians who have cashed in their home "up North", downsized and have enough money left over for a warm winter getaway in Palm Springs for 4 to 6 months each winter. A quick check suggests that housing prices there are about 60% that of Victoria. See for yourself: http://www.zillow.com/palm-springs-ca/
Maybe the lower prices and (even warmer) weather are another reason why there is not a big migration of retirees to Victoria.
Condo sales just don't support this illusion.
The average condo doesn't support it, but when you get into specific segments such as pre-sales over 500k a good chunk of buyers are out of town.
Despite all the new condo overbuilding the steady absorption buoyed by out of towners is helping. Promontory now has fewer than 20 units left (177 unit building). The Sovereign had a few sales last week, etc.
Nor is there any advertising for retirees to come to Victoria. The marketing is all for young urban professionals. Why aren't they advertising for retirees?
The shift is just getting underway, but some already are. I just pulled up one under construction near me (http://www.duetvictoria.com) and two of the three pictures on the homepage scroller are of Boomers.
What you have to realise Jack is for nearly 5 years the US sunbelt has lured our above-par “loonies” planning their retirements. That’s why retirement towns fell, like Victoria & Kelowna, while the rest of the country surged ahead. The trick however is to see the changing trends. Palm Springs for instance has bounced back up to 2007 prices once you factor the exchange rate.
http://www.zillow.com/palm-springs-ca/home-values/
It just makes sense that these type of headlines are now popping up...
Real estate is once again booming in the Okanagan.
http://www.kelownacapnews.com/news/270401611.html
From the above puff piece:
“With strong prices, high demand and low inventory, there is more opportunity for sellers who wish to list and take advantage of the window of opportunity to sell before winter sets in," said , Griffiths. "On the other hand, with the price of single family homes fairly stable in most areas, and mortgage rates remaining at historic lows, there are tremendous opportunities for buyers to get into the market before the possibility of rates rising as the economy and employment further improve going into 2015.”
Sound familiar?
Analyzing why “It’s a great time to buy or sell a home!”
there are tremendous opportunities for buyers to get into the market before the possibility of rates rising as the economy and employment further improve going into 2015.
This deserves its own comment. It's stupid to buy because you think rates will go up. If rates go up, prices will have to go down. But those who buy at the higher prices at lower rates will end up paying the higher rates on the higher prices when they renew their mortgages.
Pre Construction sales are a strange beast altogether.
Start with the obvious, is that they're not "real" estate. They are contract prices for options to purchase.
I suppose the argument could be made that these pre construction units are being sold to out of town baby boomers. And that could very well be true. But a significant amount of the these units will also be re-sold once the building is completed or within the next 12 months to locals. So are they a reliable indicator that BB'rs are coming to Victoria? Or are they just an opportunity for out of town BB'rs to gamble on making a buck. At the same time, the same BB'rs could be buying in Vancouver, Tampa and Toronto that doesn't mean they're moving there.
So how valid is it to assume that since pre construction condos are being bought by BB'rs therefore BB'rs are coming to Victoria in great numbers?.
My guess is that it isn't.
It's stupid to buy because you think rates will go up. If rates go up, prices will have to go down.
Many memories tell a different story.
From 1965-69 five-year posted mtg rates rose from 7-10.5%, home prices soared
1972-75 rates went from 8.5-12%, prices soar
1978-81 rates double, prices soar
More recent examples
2004-07 interest rates rise, prices soar
2009-10 rates rise, price soars
From 1965-69...
In the 60's and 70's there was a trend from 1 to 2 income households, and wages were outpacing inflation.
2004-07 interest rates rise, prices soar
Rates rose from about 5.8% to 6.75%. What happened in 2008?
2009-10 rates rise, price soars
Rates actually fell from 5.8% to 4.5%. What happened in 2010?
And I couldn't go without mentioning the unprecedented household debt today.
5 year mortgage rates
Thanks 'Just Jack' and others for comments re foreclosures. Will talk with our real estate agent. We are over 55 and in no rush to buy...has to feel right...and we do love much about the place we rent. Occasionally vacillate about buying...life feels pretty simple renting.
A comment from a BB...I don't know anyone who lives on the other side of the mountains that would move out here if it means they would leave behind grandchildren who they see regularly...it is hard enough to leave family and friends who you have know for years. This is an awesomely beautiful city but it doesn't trump a close family. Most go south for a few weeks until health prevents them from leaving the Canadian health care system...and then they come to Victoria for a few weeks when it is -40 with 10 feet of snow. I think that is generally how it works but there are always exceptions.
…wages were outpacing inflation.
Just as wages are outpacing inflation today.
What happened in 2008?
Prices first went up ~85% while rates climbed from 5.31 to 6.60 between Mar‘04-Mar‘08 (see your table above), then prices fell ~10%. If you want to verify the price increase, click on Victoria at the following link to see an accurate chart of prices.
http://www.housepriceindex.ca/
Rates actually fell from 5.8% to 4.5%
From the table you linked to, rates rose from 4.62 to 5.30 between May ‘09 and May ‘10. During that time frame Victoria’s Teranet index rose 10%. Check it out for yourself how prices and increased between May ‘09 and May ‘10 as rates increased.
http://www.housepriceindex.ca/
Thanks, when you're ready to buy give me a call and I can do a stat run on the property that will give me a low, high and median price for the home you're looking at. Takes about 15 minutes to do and gives you a good quality unbiased cross check to see that you are not over buying or under selling.
I don't know why the banks don't do this. Cheaper than an appraisal and they get independent verification in the time it takes to make a pot of coffee.
In response to posts about growth in wages (wage rate in constant dollars) outpacing the CPI (core rate). Here's some data extracted from BC Stats shows volitility between the two rates - with no clear pattern: http://www.bcstats.gov.bc.ca/StatisticsBySubject/LabourIncome.aspx
2014 through 2013
CPI Wage Rate*
2004 2.0 -1.5
2005 2.0 0.5
2006 1.7 1.3
2007 1.8 1.2
2008 2.1 2.0
2009 0.0 2.6
2010 1.3 1.8
2011 2.4 -0.6
2012 1.1 0.9
2013 -0.1 3.3
2014
CPI Wage Rate*
Jan 0.0 0.8
Feb -0.3 1.0
Mar 0.1 1.7
Apr 1.5 -1.0
May 1.5 -1.2
Jun 1.9 0.1
Jul - -
* = Constant Dollars
Note that the core CPI excludes some food and most forms of energy and transportation - such that the listed rates are lower than the "actual" inflation rate. Specifically: "The CPI excluding eight of the most volatile components (fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, inter-city transportation and tobacco products) as well as the effect of changes in indirect taxes on the remaining components." CPI, 2000 to present
Here it is in graph format David.
http://rabble.ca/sites/rabble/files/node-images/140121-figure-1-wages-and-inflation.jpg
The labour shortage is a real problem for business owners. 312,000 jobs remain unfilled across the country.
http://www.cfib-fcei.ca/english/article/6435-312-000-jobs-remain-unfilled-across-canada-in-q1-sask-has-12-500-unfilled-jobs.html
"Broken down by province, the vacancy rate was once again highest in Alberta (3.8 per cent) and Saskatchewan (3.6) in Q1. British Columbia (2.8) had the biggest increase in the quarter." (emphasis added)
The recent surge of vacancies in BC will start to push wages higher.
@Phil
I guess that BC Stats and Stats Canada must be mistaken, as their numbers don't match your graph.
Monday, August 11, 2014 8:00am
MTD August
2014 2013
Net Unconditional Sales: 171 540
New Listings: 307 935
Active Listings: 4,465 4,593
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
Detached homes in Victoria City are still in strong demand with only 2.7 months of inventory. New listings can't keep up with demand with 1.16 new listings per sale. The lack of selection means high prices are being paid for some shacks these days with the mid point home selling at 104.7% of its assessed value. If you want a house in the city proper you will likely have to pay over market value. That means you might either have to come up with a larger down payment or find an appraiser that is more interested in her paycheck than the interest of the bank's depositors. Don't worry every Credit Union or broker know who these appraisers are and have them on speed dial. After all you want a loan not an appraisal.
Normally, higher prices would cause home owners to put their home on the market. But nope, Victorians are not cashing in their chips at the real estate casino just yet.
In contrast there is Sooke with half the sales of Victoria last month and 10.8 months of inventory. With 2.4 homes listed for everyone that sells. Seems home owners in Sooke are crowded at the cashier but the cash window is only slightly opened. Here the mid-point for homes shows people selling at 98.9 percent of their assessed value. Certainly not a collapsing market but with some dysfunctional elements. Kind of like thanksgiving dinner with the relatives.
Then there is Oak Bay. Relative to the other districts in the core, it isn't doing that well. It is second to Esquimalt in under performing among the core municipalities. The core months of inventory sitting at 3.4 Oak Bay has 4.4 MOI. Not that 4.4 MOI isn't good or bad. Most likely high asking prices are lowering demand in this hood. I guess there is a limit what people will pay to live there. You can ask $16,000,000 for a property but you'll still only get half that in the end. Pricing properties at those extremes are waste of time for both buyer and seller and tend to make any analysis "fuzzy". If you're asking 16 million for an 8 million dollar home - are you really a willing seller?
Some people might think that I diss Sooke a lot. Actually, I think Sooke has a lot of good deals these days.
$159,000 for a 2-bedroom, 2-bath condominium that previously sold for $240,000 in January 2008. Silly arses have an age restriction in the complex of 55 and older. Really - an age restriction in SOOKE. You might as well put 5 bullets in the gun when playing Russian Roulette. Its vacant and an Estate Sale. You're almost guaranteed of being the only offer on this property. And then you get a little get away for you and the mistress/toyboy on weekends.
Until the spouse finds out - then you've got a permanent residence.
Buying a condo for investment
"we don't know a lot about investor behavior in the condo market" -Dougan (CMHC)
Debt warning for young Canadians
"[Debt] is an abstract concept, it's a tool"
So called expert (really just a sales person for VRBA) just releases that everything is going to be all right. Using the month of July to announce that "...a balanced supply of new and resale homes..." has arrived yet again, sheesh!
Really balanced and mellinials to save market..
The labour shortage is a real problem for business owners. 312,000 jobs remain unfilled across the country.
http://www.cfib-fcei.ca/english/article/6435-312-000-jobs-remain-unfilled-across-canada-in-q1-sask-has-12-500-unfilled-jobs.html
The CFIB is the chief lobby group for bringing in Temporary Foreign Workers, as is obvious just from reading this article. It's well known that employers leave jobs "unfilled" that they could hire Canadians for, so they can apply for TFW's. That's how the scam, er scheme, works.
So I‘m curious, do you believe various federal and provincial gov. depts are in on this scheme/scam too?
Aug 8, 2014 - Global News
Saskatchewan’s unemployment rate hits all-time low
“That is the lowest rate since comparable data became available in 1976.”
published July 2014
http://work.alberta.ca/labour/short-term-employment-forecast.html
“The current 10-year outlook forecasts that Alberta will create 407,000 new jobs”
Likely an arrant underestimate once you consider they created 81,800 in the past year alone.
http://business.financialpost.com/2014/08/13/canadian-home-prices-july-teranet/
"The Teranet data showed prices rose in July from the month before in 10 out of 11 cities, led by a 3.5% gain in Victoria"
^ teranet - interesting if not just a blip. Big rise from the previous month and highest in 1.5 years. Also just 4.1% below the all time peak in 2010. (vs the MLS HPI showing 8.3% down from the 2010 peak)
Maybe we should look at those Teranet numbers a little more closely.
In the core districts of Victoria, there were 176 re-sales in July 2013 at a median price of $569,950 for a 2,147 square foot home on a standard 7,500 square foot lot.
A year later there was a 10 percent increase in sales to 193. But prices for re-sale homes in the core remained flat at a median of $570,000 for a 2,167 square foot home on a 7,405 square foot lot.
Teranet is reporting on re-sales of the same home. The greater the time that has lapsed between the two transaction dates the greater the error. These re-sale homes have likely been recently renovated too. And then there is the small sample size that can lead to an error.
The re-sale method is a valid method to determine price changes. But it should not be the only method used.
Personally, I think Victoria is too small of a market and too varied in size and type of homes that it shouldn't be included in the Teranet analysis. There likely were only a dozen or two dozen paired sales that could come out of one months data in Victoria. Any reputable analysis should state the size of the data pool and the size of the error. Until Teranet does so, I can only consider them a secondary source that is useful a cross check only.
^Translation:
Us bears liked Teranet when Victoria prices were falling, but now that Victoria is leading the country in price gains, Teranet is wrong.
There likely were only a dozen or two dozen paired sales that could come out of one months data in Victoria. Any reputable analysis should state the size of the data pool...
Teranet clearly lists the Sales Pair Count for Victoria. It's much higher than a dozen.
They also discard renovated properties. It's explained in their methodologies section.
I can't speak for the bears but as I said the re-sale method is valid, it just isn't a good enough measure by itself.
I couldn't find the number of paired sales that Teranet used in Victoria in July. I just know how many that I find when I'm doing that type of analysis.
I use the re-sale method when I'm appraising condominiums or vacant lots in a subdivision. If there is a suite or lot that has recently sold in the complex that also sold near the time the property I'm valuing had originally sold. I'll use that as supportive evidence for an adjustment for changing economic conditions. The suites don't have to be similar as I'm just comparing transaction dates.
So I use the re-sale method quite a lot. It just isn't consistently correct to be relied on by itself.
What's a renovated property?
Can a home be remodelled or updated but not renovated?
Would you call a home with just a new kitchen renovated?
What about externalities? 3 years before, the home was in a quiet subdivision. Today there is a new bypass running through the subdivision.
Externalities are a problem when comparing property values in developing areas. As the road systems and new schools are built, those infrastructures increase value in that real estate node but not necessary in the rest of the city or adjoining districts.
Using a re-sale in Sooke River Estates or West Hills can pose a problem as the developer controlled sales in the subdivision. Years later re-sales in that subdivision might show property values have decreased. But that could be that the original purchasers paid a developers premium over market value.
Then we have the GST. Market Value does not include the GST. However, lenders have agreed to finance the GST less any rebates. The appraiser has been instructed to report their values as Net of GST to the banks for improved properties and excluding GST for vacant lots. ie the appraised value is "$500,000 Net of GST with the rebate assigned to the Vendor" That alone can lead to as much as a 5% error in a re-sale analysis.
The re-sale method has its strengths and its weaknesses. That's why you have to reconcile several methods to get a clear understanding of home prices. It is almost a guarantee that if you see an out of character increase or decrease from how the market has been trending then you should suspect the method.
Ha! I remember when Just Jack made the same comments about Teranet last year he was accused of being too bullish.
I predict a lower vacancy rate and higher rents for 2014... Flat-ish prices still though. Pressure from greater school enrolments and more people looking to rent than to buy. Also people working in AB while living here since it's cheaper and nicer. What's the difference, you are flying to the job site anyway....
Just watched the Brad Lamb interview where he guestimated investors are purchasing around 50% of the new condos in Toronto.
That's similar to what I've been thinking in Victoria too.
He also mentioned that investors are usually putting more than 20% down.
And I would guess that is accurate as well. However, the follow up question should have been where the investor is getting the down payment.
My guess is they are using their home equity line of credit. So while they are putting a large down payment or even buying the condo outright, the investor is loading up debt on their principle dwelling.
Oddly, they don't feel this is a debt because their principle dwelling has appreciated so much. In essence, they are buying the condo with found or won money. This gives them the illusion of zero risk.
The risk happens if or when the vacancy rate rises. And that is going to be dependent on what is happening in our local economy.
So why is it important to know how many investors are buying condos?
Because City Council has been told that building more condos will make Victoria more affordable. That means concessions in building heights, number of suites, suite sizes, etc.
While in fact it is doing little for affordability and a lot for developers profits. And redirecting construction from building units for families to smaller and smaller units for investors. Suites that will remain vacant during any recession. And vacant suites don't buy beer and pizza that keep the local economy running.
If these small units were added to the rental pool then rents should be coming down. But there being used as weekly and daily rentals. Rentals that compete with the hotel and motels in Victoria. Hotels and motels that pay wages and business taxes. It's unfair competition that effects the bottom line of the hotel industry.
Fairmont should tell the city to put a stop to these developments or they should stop paying commercial taxes to the city and province.
How many of us would like to see the Empress close its doors and be redeveloped as condominiums? Then what will happen to tourism when Victoria will have as much appeal as Bellingham?
Smaller units make sense downtown Victoria. Not a Lot of families looking for condos downtown. High density family oriented development should be what happens at the capital city centre lot and not high rise condos...
They just don't make sense when they are cold beds(empty).
"Oddly, they don't feel this is a debt because their principle dwelling has appreciated so much. In essence, they are buying the condo with found or won money. This gives them the illusion of zero risk."
Housing debt is good debt.
Funny, that's what my banker tells me too. And my broker and my agent.
And it is - it's very good - to them.
I own an investment condo at the 834, Promontory, just bought one at the Era, will likely buy one at the Escher and pre-sales are a market I closely follow.
The last form B I pulled at the 834 showed that 54 out of 115 units were rented so in a building with small units 50% investors may not be a stretch; however, in Victoria you rarely see investment condos sitting vacant. My guess would be that at least 110 condos at the 834 are either occupied by tenants or owners. At the 834 there are at least 10 accidental investors as in individuals who lived in the unit then moved because of job or similar and because they couldn't break even on their unit they ended up renting it out. Pretty much anything under 300k is cash flow neutral or positive; therefore, low incentive to sell at a loss.
When you get into more luxurious buildings like the 365 Waterfront and Promontory the amount of investors drops off a lot. 365 Waterfront for example has less than 20% renters as per the last form B I saw. I think the Promontory will be under 20% renters too.
I believe that more condos being built make things more affordable in a variety of ways from ownership to increasing rental inventory. With my unit at the Promontory every single individual that took a look filled out a rental application, it was a lot easier to rent out than my unit at the 834 1.5 years ago which tells me that stock of downtown rental condos is still tight especially in the sub $1,200 range.
If the Promontory has 177 units and let's say that 170 end up being occupied does it really matter whether they are occupied by owners or tenants?
I've also noticed all the building putting slow downward pressure on condo prices. The pre-sale unit I picked up at the Era a month ago is a better buy than the unit I bought at the 834 in 2009 while the rental market is better for the type of unit I like to buy and carrying costs are lower. My Promontory unit I rented out for $75 more than I planned on when I purchased the pre-sale 2.5 years ago and I planned on 3.0% to 3.5% for carrying costs and I ended up sub 2.5% variable yet again.
“The CMHC surveyed more than 42,000 households in Toronto and Vancouver, and found 82.9% of people who own a condo reside in it year-round…data released August 8 shows 6.9% of condo investors maintain vacant units.”
http://www.biv.com/article/20140808/BIV0111/140809947/-1/BIV/69-of-condo-investors-in-vancouver-and-toronto-maintain-vacant
So 6.9% of the 17.1% investor-owned, or about 1% of all condos are purposely left vacant in TO and Van. I suspect offshore money has a role. But as Marko mentioned, I haven't heard of any investors leaving their units vacant here and the latest vacancy report confirms that Vic's vacancy rate is now falling (down 0.7 to 2.7%).
The latest CMHC survey does not include foreign investors and corporate investors in condos. It also did not include investor-owned condos sitting empty or rented via free websites such as Craigslist or Kijiji.
Why CMHC designed a survey with such obscure result is beyond me. If you wanted to find out how many condos are vacant, call up BC hydro and ask them about power usage. How many condos are just pulling enough power to keep a fridge going each month. Or how about the GST. An investor has to pay full GST a home occupier pays Net GST. Call up the CRA and ask them. Or how about a call to BC Assessment and ask them for the number of assessment notices that are being sent to other addresses rather than the property assessed. How many are sent to law firms or out of country.
This isn't difficult stuff - why all the obfuscation?
Seth said:
"I ask myself: In 3 to 5 years, what obvious thing will I be kicking myself for missing?"
Answer: Bitcoin and Ethereum.
I'll be back in 5 to show you my neighbourhood of million dollar homes... bought with bitcoin and digitally transfered to my ownership under an Ethereum smart contracts.
PS. I'm mostly not kidding.
^^speaking of bubbles^^
Yep 5 bubbles and counting, are you invested and ready for #6, 7 and 8?
Only ~10 million global users so far with a growing user base of 200-400% (avg) per year. Here's just one bitcoin wallet software user adoption chart.
Here's the last 4 bubbles you missed out on so far!
Here's what one of them looked like vs stock market top performers in 2013.
The 2014 bubble hasn't happened yet, and price is down 20% as of last week, so as the realtors always say "It's a good time to buy!" ;-)
The B in Bitcoin stands for Bubblicious... or plan B (to the US dollar) as those entertaining Ron Paul fans keep reminding us!
I'm fine with missing them. It's all random fluke anyway. You might as well be pitching some randome penny stock...
There are several bloggers on HHV posting that they believe that they timed the market perfectly by buying a SFH during the past year or two. They go on to say that prices seem set to rapidly increase in the near future.
If this was the stock market I'd happily take their money by shorting them because I believe that prices will drop like a rock if 5 year mortgage rates go up by 3+%.
Has anyone figured out a legal strategy to short real estate SFH in Victoria?
“…if 5 year mortgage rates go up by 3+%.”
Rates likely won't rise more than 1-2% for the next ~20 years. That may seem implausible but it's the same reasoning why they didn't in the previous two cycles from the 1890s to 1910s, and 1940s to 1960s. It's primarily to do with a large demographic of wealthy old people being in their saving/bond-buying phase of life. Once the median-age Boomer (now ~55) reaches their late seventies, then you can worry about rising rates. (S)he who has the gold (or treasuries, in this case) makes the rules.
"There are several bloggers on HHV posting that they believe that they timed the market perfectly by buying a SFH during the past year or two."
Can you point us to some examples of people claiming they timed the market "perfectly". A couple posters here have said they bought recently. None that I recall claimed brilliant market timing - rather they just bought at the right time for them.
"Has anyone figured out a legal strategy to short real estate SFH in Victoria?"
Why would you want to pick an incredibly illiquid asset to short? The payoff wouldn't even be that great. Assume a big crash of 50% in 4 years. Take off transaction fees and you have an unspectacular return. And that's the best case.
LeoM
If you already have a home you could try selling a call option on the home. 600 K home. Sell an option to buy in five years at 400 K. Maybe legal? You could even sell multiple call options on the same home which would probably be illegal.
I think you'd have trouble finding takers. Even if someone wanted to take that option they might legitimately worry about how they would get someone to honour the contract
Possibly one of the group here would like to comment on the latest post of Garth Turner regarding the post-construction woes with weeping condos and a report from a leading architect that indicates nothing but $$$ to keep these newly constructed units from falling apart.
Assessments will become the new norm
Garth's post
Professor Ted Kesik, University of Toronto's published article
You do not see the temperature swings in Victoria that you see in Toronto and building design in Victoria is very conservative. You just don't see glass towers with floor-to-ceiling windows. Case and point, this is the newest project in Victoria -> http://www.eschervictoria.com/building
I guess we won't know until something happens here, since the City doesn't inspect condominiums anymore.
The city still makes inspections of a detached home during construction - but not condos.
Condos in Victoria are perfectly safe. I suggest you buy one at the 'Falls' whose marketing department was surely clairvoyant.
lol, Victoria streets are covered with 40-50 year-old buildings that still have original windows, siding, decks, et cetera with no issues whatsoever. If the multitude that went up in a short time frame 40-50 years ago don’t have issues, are you really worried about the few going up today? Contractors like Farmer as example are no fly-by-night, particle-board-slinging house builders.
http://www.eschervictoria.com/team/#general-contractor
The govt airheads who brought in the airtight bldg codes (leaky condos) in the 80s/90s is a different story.
A lot of good builders got nailed with leaky condos. They were building to specifications with the "state-of-the art" materials of the day. Just as they are today.
Condos today are built with rain screen walls. Yet according to some builders - this has not completely fixed the problem as the buildings are rotting from the inside to the outside. The moisture of a hundred people breathing, showering and cooking every day.
No one really knows how a lot of the new materials being used are going to stand up to 20 or 30 years of wear.
A friend of mine is a plumber, he is now finding that the contact cement that was and still is being used begins to fail after 15 years of use. 50 years ago in was all soldered copper.
Most things are made on the cheap today. Houses are not being built to last forever and neither are condo complexes. Increasing maintenance costs for both houses and condos, like cars, may shift people into thinking that housing is more of a liability than an asset in the future. They will come to expect that their condo, like a car, will drop in value every year.
The 800 pound gorilla in the room.
The Great Chinese Exodus
Chinese nationals are leaving in vast waves: Last year, more than 100 million outbound travelers crossed the frontiers.
Most are tourists who come home. But rapidly growing numbers are college students and the wealthy, and many of them stay away for good. A survey by the Shanghai research firm Hurun Report shows that 64% of China's rich—defined as those with assets of more than $1.6 million—are either emigrating or planning to.
Monday, August 18, 2014 9:00am
MTD August
2014 2013
Net Unconditional Sales: 331 540
New Listings: 545 935
Active Listings: 4,442 4,593
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
Marko:
Looked thru Era, for rental investment, would you say: 1 bed is better bet than the 2 beds?
at that location, there's seems no view till 10th fl...
Much appreciated.
Maybe we can pump this to 300!
Pump it UP!
Just looking at some of the terranet charts I'd say we've got a vortex of doom forming. There's a clear downward leg followed by a sharp turn in those graphs which indicate vortex of doom 99% of the time. As for bitcoin charts they always indicate buy buy buy.
Marko:
Looked thru Era, for rental investment, would you say: 1 bed is better bet than the 2 beds?
at that location, there's seems no view till 10th fl...
Much appreciated.
I personally think one bedroom is the way to go for a number of reasons....
i/ Smallest capital investment for everything from purchase price to property transfer tax, best possible gst rebate, etc. For example, 200k one bedroom = 2k in PTT, 400k two bedroom = 6k in PTT.
ii/ 200k-215k one bedroom at the Era will fetch approximately $1,150 to $1,200. You'll have a hard time obtaining over $1,700 for a 360-400k two bedroom.
iii/ Strata fees/property taxes/expenses are usually a lower percentage of the gross revenue on the smaller one bedroom units. My 450 sq/ft unit at the Promontory rents for more than 1/2 of the 1,160 sq/ft units but they pay almost 300% more in strata fees.
iv/ More liquidity having two one bedroom units in two different buildings versus one two bedroom.
A few other reasons why I prefer one bedroom over two bedroom. I'll write an article for VV when I get back from vacation on the topic.
Regarding views.......never buy a rental unit based on emotional factors. My unit at the 834 is on the 3rd floor and Promontory on the 2nd floor. The Era I splurged and went for the 5th floor because they only had a $2,000 floor differential up to the 5th which I thought was quite low given the 5th floor cleared an adjacent building.
The extra capital investment for a better view usually cannot be offset by a higher floor rent premium.
Bitcoin will just continue to bounce around in a random fashion. It's volatility alone introduces more volatility. As a vendor why would I accept bitcoin when it's value could evaporate so quickly? It's pure speculation right now and it fit's into the purest definition of a bubble. I'm much happier with buying Gopro the day after the IPO :-) It's a real company with real value not some random BS like Bitcoin. Might as well be betting on horses...
1264 Faithful St sold fast. How much did it go for I wonder.
Thought I'd look at some, in my opinion, good deals that happened in condominiums so far this month.
It seems someone has thrown ice water on the market for older condos these days. A top floor corner condo in the Jubilee hood. Purchased way back in 1994 for $95,000. Today re-sells at $145,000 for 681 square feet. That's $213 a square. And it can be rented.
And it pays to be in the "right location" or should I say you're going to pay a fat premium to be in the right location.
And Esquimalt - isn't that "right" location. A ground floor condo built in 2008 sold at $252,000. Re-sells today at $164,000 or $255 a square. Loaded with granite, a fitness room and allows pets and rentals.
One-bedroom not enough for you. How about a 2-bedroom along Inverness in the Quadra hood. The strata plan number is a low 133. That's an old complex going back to 1974. But the suite has been re-furbished. Bought in 2009 at $233,000. Just re-sold at $159,000 or $159 a square.
Or how about an older downtown condo built in 1999. 765 square feet for a One bedroom near Johnson and Vancouver for $217,500 or $284 a square. This should provide you with a positive ROI with conventional financing.
Condos are like cars, have someone else pay the depreciation and get yourself a positive ROI sooner.
1264 Faithful St sold fast. How much did it go for I wonder.
Listing is showing as inactive rather than sold.
Faithful has been relisted at 509K
What was it listed for originally? It's a curious spot as it's a small lot with a small house. A nice house and a fantastic location. However, I have seen a number of older houses in the area be converted to bigger homes, duplexes, small lot and condo conversions. This can't become any of these so it's a pure buy it to live in it kinda house. This is why I was surprised the for sale sign disappeared so fast.
My thoughts about Faithful is that paying half a million for an older home that is too small in living area for the average Canadian family shows an extreme faith in prices rising in the future.
Or Faithful could become a building lot for a much larger home that meets the needs of an upper middle income family.
However, looking at the homes along the street suggests that the soil conditions may require special engineered foundations. Fairfield's a nice place - but it can be a swamp in some areas.
I would pay a half million for a lot in this location but only if I was assured that the cost of a foundation would be reasonable. As I'm not interested in being a long term landlord unless there is an opportunity for significant increases in market rents. And that's not going to happen unless the vacancy rate drops below 1 percent.
I think the days of the passive investing in real estate have come to an end. You can't just buy and hold anymore. You have to be an active investor. You have to buy, subdivide and build.
That means you'll need a team of professionals to find these properties, analyze them and advise you on options. And what's more important -you're going to have to listen to them.
It's not in the swamp. This spot is about 8 meters above the zero mark and Victoria clay I believe. This is not it's limiting factor. It's the 4000 sqft corner lot that is it's limitation for redevelopment.
I would also like to start a petition to give posting rights to JJ. I think HHV and Leo are out...
It's pure speculation right now and it fit's into the purest definition of a bubble.
Not a bubble really. A bubble exists when the price of something clearly exceeds its fundamental value (i.e. value based on usage or earnings).
Bitcoin is just a token with no intrinsic value and thus is simply a Ponzi scheme.
Hehe, I can agree with that!
If this gets to 300 comments I'll sign the JJ petition!
Where is info when you need her!
Tuesday, August 25, 2014 8:00am
MTD August
2014 2013
Net Unconditional Sales: 477 540
New Listings: 732 935
Active Listings: 4,390 4,593
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
Almost at 300!
Do you feel that there are a lot of "For Sale" signs in your neighborhood?
In 2011, Oak Bay had a population of 18,085 and 8,190 homes of all types. Today 131 homes of all types are listed for sale. 1.6% of the total stock of Oak Bay housing is up for sale.
Victoria with a population of 80,017 and 47,691 homes with 663 listed has 1.4% of the total stock listed.
Or Sooke with a population of 11,435 and 4,986 homes with 324 listings or 6.5% of the stock of housing up for grabs.
Or Langford at 3%
Colwood at 2%
Saanich at 1.2%
Sidney at 2.1%
Perhaps this might help to illustrate why prices appear to be stable in the core districts. And in langford and Colwood prices seem to be stable to decreasing due to a demand-driven downturn market. While in Sooke prices are declining because of supply. A supply-driven downturn.
Real Estate for Greater Victoria is not one cohesive marketplace, but several distinct markets. Some are doing well and others - not so good.
It really is feeling like the death of HHV is upon us... This in itself is a sign of something....
Come on Dasmo...it's just the calm before the storm...right? Right!?!?
Why would one think of the death of HHV...this is an awesome site...full of info that is hard to gather up yourself...it does not matter if you think the housing market is going up or down...lots of good ideas and local facts...a lull does not mean the end...soon something new happens...good or bad...and the blog is off again.
I love this blog!
True, But I'm a halibut so don't expect much to happen. I do however support the alternative distribution of information this blog has provided. It's just that the owner capitulated and bought years ago, passed the reins to another who has capitulated and bought. This has resulted in a lack of interests by the primary posters to the blog. What we have here is a comments section, not a blog. Thus I wish to nominate JJ to be given the admin reins to the site. He seems to have the interest and capacity. He even seems to have a tiny bit of talent in his writing style at least if not his grammar ;-)
SFH sales in the core areas are well below their long-term averages. Slow sales is an accurate indicator of a weak and unhealthy housing market, regardless of the number of listings (listings will increase in the core areas).
Interest rates are at historically low levels. Monthly sales totals in the core areas should be at record-breaking levels, but that clearly isn't the case.
Slow sales leads to future price declines, even if the number of listings drops for a short time. This was evident in the US, Japan, Greece, Ireland, Spain, etc., as housing markets in those countries weakened after forming bubbles. It isn't different in Victoria or the rest of Canada.
Those of you who concentrate on the current supply/demand ratio are ignoring the big picture. The big picture is slow sales which indicates a weak and unhealthy housing market.
The general direction of house prices in Victoria will continue to be down. Victoria's price bottom will be far below current price levels.
I've posted less on this site in the last number of months due to time constraints.
. . . . . . . . .Single Family Home Prices. . . . . . .
. . . . . . . . . . . . . . Oak Bay. . . . . . . . . . . . . . .
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-------------------------------------------------------------------------
. . .March 10. .Dec.10. .Dec.11. .Dec.12. .Dec.13
This graph was put together using SFH median price data for Oak Bay (averaged over 3 months to smooth out monthly price fluctuations). By the end of December 2013, SFH prices in Oak Bay had fallen 15.3% below March 2010’s peak level. Note that December 2013 was the last month that median price data was available for Greater Victoria.
It hasn’t been uncommon over the last 3 to 4 years for prices to (temporarily) increase during the spring/summer market. That may be happening this year as well. The general direction of prices in Oak Bay will continue to be down over the next number of years.
Slow sales in Oak Bay points to an unhealthy market, despite historically low interest rates. The number of listings will increase. The current supply/demand ratio will prove to be temporary.
Update your Ascii man! It's so 2013!
I've been busy writing on another site that is entirely comprised of American real estate appraisers. If you think some of the stuff I write about here is dry try one of these sites. It's like partying with a group of Accountants - the dull ones.
Actually, the discussion is interesting and will likely change a lot of the sloppy appraisal practices of the past. A lot of the discussion is about full disclosure to the consumer, international valuation standards, definitions of value, etc.
So I'm not the one to author this blog unless you want me to go on and on about determining external obsolescence using a monthly rental factor based on a reasonable assumption of the ratio of land to improvements.
Or estimating the value of in-fill residential lots using residual land techniques based on optimization of the floor space ratio. ZZZZZZZZZZZZZ
Or how about my next evening meeting where the hot top is about fair, equitable and reasonable in the BC Assessments and how to appeal your property's assessment.
That one will keep you up a night.
I wouldn't be a good choice as an author for the blog....
But I do birthday parties.
Then that's it. We are just going to be stuck in the coments section of this post. Maybe that's kinda interesting in it's own way. A blog within a coments section of a blog post!
Or give the admin rights to info so it becomes a web based art installation.
You know, because of her talent for ASCII art...
If JJ doesn't want to be a blogger can we at least agree to make a new post with Marko's numbers each week?
JJ, speaking of " estimating the value of in-fill residential lots using residual land techniques ...", what do you think of 1808 Newton? Put together from a bit of 1806 and a bit of 1810 ... listed at 395K?
Go take a look at the house at 1983 Watson. That's a fairly new 2,245 square foot home on a 5,265 square foot lot. That sold at $820,000.
If you can find a contractor to build that size and quality of a house for between $375,000 to $425,000. Then the lot is worth the asking price.
Thanks, that's a good illustration.
I was thinking more like the land for 300-350K and the house for no more than 300K ... but it looks like I'm in the wrong market :)
what do you think of 1808 Newton
only 46' wide and with a 15' offset in Saanich you are looking at a 31' wide home. When you go below 35' wide it becomes difficult to design an attractive home especially with a double car garage.
house for no more than 300K ... but it looks like I'm in the wrong market :)
300k for construction costs is not going to happen....every single year there is more and more paperwork thrown into the mix increasing fixed costs. Saanich and City of Victoria are both brutal in their respective ways.
City of Victoria will make you replace sidewalks/curbs/etc. (even if existing sidewalk/curbs in good shape), the entire length of the lot plus other crap. Saanich will make you install a complicated rain garden drainage system in your back yard ($$$)....etc.
and lot prices haven't corrected since 2010 while everything else has.
He even seems to have a tiny bit of talent in his writing style at least if not his grammar ;-)
Agreed:)...I like that 'tiny bit of talent' as well but best of all his info and insight is interesting.
If reins need to be taken I would be grateful to the person that takes them.
Love this blog.
300k could happen if there is no garage, you build yourself, and you cheap out on windows and things. Just build a 80s bungalow. That's cheap to build! Single pain aluminum windows. Base board electric heating. Simple box design. Cheap fixtures. Etc. As Marko eludes to, there are other factors that have driven up the cost of housing....
I had a dream last night that Poloz announced interest rates would be at 6% by the spring.
I think I need to stop reading the business section and take more walks.
RSMeans book of 2008 has sqft cost at $84.40 for a "simple design, average two story" of 2200 sqft. Even with a 10-15% inflation since, how did we arrive at such outlandish prices?
Marko & Dasmo, I'm not questioning your numbers, I'm hearing the same story from everyone in business, but I'm just saying the construction cost is inflated in Victoria.
Or maybe the problem is that given high lot prices, it makes more sense to doll it up and go upmarket. Rather than build something boring and not outrageous.
That's exactly it. You need to build in proportion to the lot price. Anyway, standards and expectations are simply higher than they were. Not a lot of single bathroom builds anymore... Here is a cost breakdown for a suite of windows. Nothing fancy, just good quality double pane windows.
4 40X64 opening $3780
17 28X54 casement + fixed $7650
7 50X54 casement + fixed $4550
4 6X54 casement + fixed $2540
4 36X54 fixed $1600
6 40X19 fixed $2400
8 40X19 Top awning $3240
2 12X64 fixed $810
Total: $26570
Not including install cost.
Go for some nice import windows like gaulhofer and you will double that cost.
Or how about a green, living roof?
Roof beams Carpentry-Material:$8,500.00 Labour:$4,000.00 Equipment:$1500 Subtotal:$14,000.00
Roof Raycore panels-Material:$11,500 Labour:$2,000.00 Subtotal:$13500
Roof decking-Material:$5,250.00 Labour:$5,250.00 Subtotal:$10,500.00
Roof plywood-Material:$1,575.00 Labour:$500.00 Subtotal:$2075
Roofing, Flashing, Fascia -Material:$3,500.00 Labour:$2,500.00 Subtotal:$6,000.00
Plants-Material:$1950 Labour:$5200 Subtotal:$7,150
Total:$53,225
"You need to build in proportion to the lot price."
You only need to do that if you're a developer trying to maximize the profit. I'm looking to build a practical house for myself for the next 30+ years, I don't care how much I can sell it for. So with a goal of reducing cost, rather than maximizing selling price, one should be able to build 2200 sqft for 300K.
I already said you can. You just need to be your own GC and make sacrifices. No double car garage, no infloor heating, Just do two bathrooms, etc. Shoot you can plop a prefab panel home on the lot for 80k not including site prep...
The costs for the Watson improvements works out to about $175 (rounded to the nearest $25) a square foot for a custom quality two storey home. To me, that seems reasonable.
A new suited basement entry home of standard quality finish like the home along Ryan with 3,000 finished square feet sold at $820,000. Construction costs on that would be around a $150 a square foot (rounded). That's reasonable too.
It's tough to be anymore accurate on construction costs. The materials and labor are the same but the profit margins and mark ups on materials can be quite different between builders.
Generally, builder's profit on a home is around 12%. But we live in a free market economy, so if the builder can get you up to 20% profit, that's just life. Ironically, in a high interest environment, builders will make less profit on a home as consumers are more frugal in their decisions. Adding another $25,000 to $50,000 to the cost to build adds only marginally to your monthly cost but greatly to the developers bank account.
The most economic house you can build while maximizing square footage is the basement entry home built on a grade level poured slab foundation. The more square the configuration of the building the lower the cost per linear foot of wall and roof area.
To save costs, you can leave the basement unfinished or at least with roughed in plumbing for a future suite.
Doing your own general contracting, you could get the costs down to around $125 a square.
If you really want to save on construction. Then I'd start looking at buying a home where the developer has gone bankrupt. There are a couple available that are at the lock up stage with windows, doors and roof on.
You'll get these half built homes at a fraction over lot value. Then you can do all the finishing work.
In some municipalities you can move an existing home onto the lot. Look for developers that are trying to assemble lots in established areas and some times you can have the old house on the lot for free. You just have to pay the moving costs to your new home site.
Thanks for all the good info. Here's another dumb question: what about going basement-less? Just have the main floor on the slab, and bedrooms upstairs. Wouldn't you save something there, too? Or does that make it harder to bring in utilities and you lose any savings there?
Does that count as one question?
Ooops, I think I made a mistake in the calculations with the basement entry home.
Anyway - the cheapest home to build is a one storey home on a slab foundation as it uses the least amount of materials and labor to build.
A one storey home of 2200 square feet has more concrete and roof area than a basement entry home with 1100 square feet on the main and 1100 unfinished square feet in the basement. That extra money that it cost to add a basement can provide a lot more potential space that can be finished at your leisure.
Then there is the 2-storey home that has your main living area on the ground floor and your bedrooms upstairs.
This is more costly to build than the basement entry home with an unfinished basement.
And generally a bit more costly than the basement entry with a fully finished basement of the same square footage.
Basements tend to be finished at a lower quality than upper floors. Not always - but generally less quality goes into them.
You only need to do that if you're a developer trying to maximize the profit. I'm looking to build a practical house for myself for the next 30+ years, I don't care how much I can sell it for. So with a goal of reducing cost, rather than maximizing selling price, one should be able to build 2200 sqft for 300K.
I guess you could build 2,200 sq/ft for 300k by using low cost laminates for flooring, ikea kitchen with laminate counters, cheap bathrooms, baseboard heating, etc.
However, with lots in the core ranging from 350k to 600k you just don't see individuals taking this approach.
Anyway - the cheapest home to build is a one storey home on a slab foundation as it uses the least amount of materials and labor to build.
It depends on the situation. If you have to backfill a slab more than approximately 3 1/2' to 4' than crawl space becomes cheaper and crawl space in my opinion is a better option if cost is same as slab.
Just an fyi lookingforhomeinvic...a 2,200 sq/ft home with 1 kitchen, 3 bathrooms, 3 bedrooms, on a slab is not going to be a lot cheaper to build than a 2,800 sq/ft home with 1 kitchen, 3 bathrooms, 4 bedrooms plus rec room, on a slab.
As the size of the home increases the price per square foot decreases. After an optimal point adding an additional square foot of building area will cost less than the previous square foot until the rate flat lines.
As Marko alluded to, most of your costs such as the kitchen and bathrooms are already included in the 2,200 square foot home. That additional 600 square feet is not costing the same price per square foot rate as the first say say 2,200 square feet.
Building that square footage today, is cheaper than trying to add it years later with an addition. Some one adding a 600 square foot family room to their 10 year old rancher today will have higher costs than someone adding an additional 600 square foot to a pre-construction home.
And of course I now have to add that this assumes everything else is equal as there is always someone coming up with a different situation.
I'd be interested to know the the difference in cost between a full basement and a crawl space, assuming that there is no rock to be blasted. Any comments would be appreciated.
If you don't have blasting involved just do the unfinished basement. It will be marginally more than a good crawl space with a slab and be more useful and flexible in the future. I would not recommend a basement entry unfinished. Kinda a crappy feeling entering an unfinished basement every day....
No basement entry home has a totally unfinished basement. The entry area is typically finished with painted gypsum walls and ceilings and a tile floor. The remainder of the basement could be concrete floors with roughed in plumbing and insulated exterior walls with untaped drywall half walls. It could also have interior stud partition walls with the rooms roughed in and roughed in wiring and plumbing.
But to give you an idea of how much more an unfinished basement is in relation to a home on a crawl space I'd guess at least a 20% increase PLUS the cost of finishing the entry, partition walls and any other roughed ins.
As an example
A 1,400 square foot on a crawl would be 1,400 X $135 or $190,000
A basement entry home with 1,400 square feet of main floor and 1,200 square feet of unfinished basement might be..
1,400 X $162 or $227,000
PLUS some minor basement finish
1,200 X $20 or $24,000
That adds up to around $250,000
Then you have garages, patios, balconies, decks, landscaping, etc.
Then you might want to upgrade from standard finish to custom with over height ceilings, crown moldings, vaulted ceilings, granite counters, etc. That can add another 20 percent to the costs again.
Even with a detailed specification sheet and building plans you can expect three separate builders to come in at wildly different construction estimates.
And these are not the same as Insurance cost for losses. Those costs are bumped up by another 50% again.
It isn't easy to say that a house cost X amount a square foot to build. It's going to vary between builders and locations. All that you can say is what is a reasonable range you should expect to pay. And keep your cheque book handy.
" marginally more than a good crawl space"
Am wondering how much "marginally more" might be. For example, if it required excavating another 3 feet with a 2000 square foot footprint, that would mean an extra 220 cubic yards of dirt to remove, plus an extra 10 or twelve cubic meters of concrete, and additional shuttering. Would that not add up to several tens of thousands?
Estimates would be of interest, notwithstanding JJ's point about the great variation to be expected in quotes received.
Am wondering, also, if there are significant advantages or disadvantages in a crawl space over a slab.
House in fairfield near me just sold for approximately 6.5% more that it sold in 2012. No upgrades in the interim. Very nice house and slightly sub $1M, so probably a very sought after sliver of the market.
Walking on a floor over a crawlspace is way more comfortable than one on a slab. Even with all the underlay and subflooring etc it's still nicer. Plus if you're a midget or you design things well you can store your junk in a crawlspace. I prefer to throw junk out but my wife likes the stuff so there you go.
As for the blog and it's future it's clear hhv has either died or bought in Victoria.
He bought on the mainland somewhere I believe... Years ago...
A crawl space is preferable to a home on a slab.
You can insulate and heat the crawl space giving you nice warm floors in the winter. And it's easier to run cables or pipes in the future. Adds another 5 to 10 percent in costs over a home on a "standard" poured slab.
Sometimes it isn't possible to have a crawl space because of soft soil conditions. Then you have to go with an engineered floating slab or concrete pylons. In some areas I've seen the site excavated 8 feet, foundation walls poured, then back filled with 8 feet of tamped sand, then a slab poured over top. Just to support the weight of a one storey home. Brutal costs for the foundation work.
I suspect this may be why you find small homes in some low lying areas of Fairfield and Fernwood.
Blasting rock is always exciting. Plan for a crawl space. Miss judge the powder and you get a basement.
Make sure to order more cheques.
I'd be interested to know the the difference in cost between a full basement and a crawl space, assuming that there is no rock to be blasted. Any comments would be appreciated.
Bylaws in the core usually determine crawl space versus full basement. For example, the maximum size of a two level home you can build on an R1-B lot that is 5,500 sq/ft is approximately 3,000 sq/ft with 200 sq/ft for garage (single). If you want a double car garage you need to drop your interior sq/ft to approximately 2,800 sq/ft.
If you want to build a three level home your maximum build size increases by only 200 sq/ft to approximately 3,200 sq/ft with single garage.
Therefore, if you want a basement you totally have to change the design of your home as your footprint will have to shrink drastically.
If you are building a two level home you design it as per bylaws and you are left with crawlspace versus slab. You don't really have an option to add a basement (bylaws).
Three level home totally different design with much smaller footprint.
Am wondering, also, if there are significant advantages or disadvantages in a crawl space over a slab.
http://youtu.be/pJXlqrBqqnI
Thanks, Dasmo, DP, JJ and Marko for helpful comments re basement versus slab or crawl.
It would be regrettable to see this blog fold since it provides valuable information about many aspects of housing, a topic of concern to just about everyone at some point in their lives and and probably most people at a number of points in their lives.
If there is no one with the expertise or time to prepare posts such as Leo S's excellent statistical analyses, could someone not simply create a new post every week, or at least every month, based on Marko's market stats. The opportunity to continue the free wheeling discussion would then remain.
They need to be given the rights by HHV who is AWOL...
Yes, thanks guys, very helpful info!
Marko, good video, but try to look at the camera! :)
From your postings time sounds like you're in Europe, hope you're having a good time.
House prices keep going up but they are more affordable thanks to cheap debt
“Rates would erode housing affordability across Canada and weigh on homebuyer demand,” warns RBC.
sounds like you're in Europe
On Hvar (Croatia) right now...after going two years without a vacation and over 150 transactions in the last 24 months it was time for a break :)
However, can't seem to get away from my real estate addiction. I flew into Munich and two days later I was checking out new condos in Munich. Everywhere that I've been so far that I would want to live is expensive per sq/ft for condos.
Where real estate is cheap is usually unattractive.
HAM being blamed there much?
With about ten new postings per day, I wouldn't suggest that this blog is "dead"!
HHV moved away a few years ago and I'm guessing that Leo S is on vacation. Just Jack understandably doesn't want to run the blog ... Any other volunteers? (Whatever happened to "Animal Spirit"?)
A Housing Bubble in Canada?
With about ten new postings per day, I wouldn't suggest that this blog is "dead"!
I fired an email off to HHV's gmail account on the main page to ask him to stop by to dicsuss giving a couple of others access to post new entries...even if it it just to post stats from Marko.
I was checking out new condos in Munich. Everywhere that I've been so far that I would want to live is expensive per sq/ft for condos.
Expensive compared to what? Prices in Victoria? - that's irrelevant. What matters is how expensive compared to local rents and incomes.
According to the Economist Germany has among the cheapest RE of major economies relative to local rents and incomes. And Canada has.. well you know.
Economist house prices
Germany is a high flyer lately. Germany sees dizzying rise in housing prices
Yet not as flyying as Ireland. 25% per year is scary fast. Soaring house prices in Dublin spark fears of new property bubble.
The thing to remember for Canada is you have areas of Vancouver upwards of 10 price to income and then heartland cities in the 3’s. Canada is all over the board. Victoria is not unreasonable at 6 (look up^^ @ the blog post ratios^^, when you consider it’s the Hawaii of Canada. I know of tarsands workers for instance who live on the island during their time off. Can’t blame them.
What matters is how expensive compared to local rents and incomes.
Price to rent and price to income ratios are very high in many of the places I've visited. For example, my cousin just bought a $46,000 euro condo in Gospic, Croatia (unattractive part of Croatia) and he rents it out for $200 Euros per month. The average income in Gospic is maybe $5,000-$6,000 Euro per year.
Nancy, France is a nice city close to Paris where I have family members and same story just the absolute numbers are higher.
"Victoria is not unreasonable at 6 (look up^^ @ the blog post ratios^^, when you consider it’s the Hawaii of Canada."
How those numbers were arrived at is unknown. Victoria's price-to-income ratio could be substantially higher than 6.
It is entirely possible that Victoria's median income is upward skewed. It's no secret that many people who lose their jobs in Victoria don't waste much time before moving away to find work elsewhere, knowing the limited options that Victoria's job market provides. Victoria is a small town.
This would upward skew Victoria's median income which would push Victoria's price-to-income ratio down.
It is important to look at the price-to-rent ratio when considering whether or not a housing market is overvalued.
Rents are cheap in Victoria, considering how expensive housing is, compared to other Canadian cities.
Victoria's housing market is extremely overvalued based on rents and incomes. There is no getting around that.
The average SFH in Victoria costs about $600 K. Many of these houses are nothing more than shacks.
For approximately that amount of money (or less), you could buy a beautiful, massive house in one of these US locations (with year-round warm weather). Many of these are luxury homes located in exclusive neighbourhoods.
(min. 5 beds, 3 baths, 10 years old or newer, min. 5,000 sq. ft., attached garage, pool)
Florida:
$366 K, Port Saint Lucie, FL
$469 K, Fort Pierce, FL
$577 K, Royal Palm Beach, FL
Arizona:
$368 K, Queen Creek, AZ
$564 K, Phoenix, AZ
"with year round warm weather"... Now that's a bit of an understatement!
"If cities were stocks, you'd want to short Phoenix.
Of course, it's an easy city to pick on. The nation's 13th-largest metropolitan area crams 4.3 million people into a low bowl in a hot desert, where horrific heat waves and windstorms visit it regularly. And it depends on an improbable infrastructure to suck water from the distant (and dwindling) Colorado River."
If warm dry weather is such a big factor shouldn't Seattle be dirt cheap compared to Florida?
Tue Sep 2, 2014 8:15am:
Aug Aug
2014 2013
Net Unconditional Sales: 609 540
New Listings: 904 935
Active Listings: 4,316 4,593
Please Note
Left Column: stats for the entire month from this year
Right Column: stats for the entire month from last year
This information comes from the latest 'Monthly Comparative Activity By Property Type' Report
Interesting comment on Greater Fool today.
"Bank Stocks and RE decline
My bet is that nobody will even notice a housing decline of 10-15% or more.
I live in Victoria where we have lost about 15% over that past 5 years.
But each month the local MSM reports happy RE news brought to us by the press releases of the real estate board.
There is always something you can manufacture positive news from. Either sales are up year over year or month over month, or prices in some area are up month over month.
Most people I talked to do not even understand that an increase in “sales” is not an increase in “price”!
If all else fails and there is no good news to cobble together out of the dubious RE boards stats then they can simply say they forecast a healthy market over the next year. The local MSM will just report it without question.
People in Victoria are totally oblivious to the price decline until they try to sell. Likely why we have so many properties 20-30% overpriced.
So I think we can have a nice 10-15% or even more of a correction with out anyone even noticing.
So unless there is blood in the streets bank shares will be OK."
Tens of thousands of Canadians have bought vacation properties in the US. House prices in the US corrected significantly after peaking in 2006 and are currently much cheaper than in Canada (historically, the norm is for house prices in Canada and US to be approximately equal). This has resulted in more Canadians buying US real estate in recent years than at any time in the past.
In terms of Canadians buying vacation properties in the US, the most popular states are Florida, California, Arizona and Texas. Clearly the reason is warm winter weather. No Canadian city has summer-like winter weather.
I always laugh when certain regulars of this blog argue that Victoria's winter weather is comparable to the winter weather in these states. The fact of the matter is that there is no comparison at all.
Consider the following Victoria winter weather snapshot:
December 2013:
Date___High___Low
3______ 3.9___ -0.9
4______ 2.8___ -5.4
5_____ -0.2___ -5.8
6_____ -1.3___ -4.7
7_____ -0.9___ -8.8
8_____ -0.4___ -8.1
9______ 1.3___ -2.3
10_____ 2.6___ -0.6
11_____ 4.3___ -0.6
12_____ 4.2___ -1.3
The weather in Phoenix through the winter months is simply beautiful (not too hot at all) and is one of the main reasons that Arizona is one of the most popular winter destinations for Canadians.
There are plenty of websites set up to assist Canadians with buying real estate in Arizona, proving that Canadians buy a lot of Arizona real estate (which proves that Canadians love Arizona's winter weather).
"Canadians buying US Real Estate are enjoying the weather, and are especially impressed with the value of the homes. Many Canadians in Arizona tell me that the same homes that we find for $250,000 now would go for $750,000 in Canada."
"Popular Subdivisions For Canadians"
"We've been Specializing in helping Canadians buy/invest in Real Estate in Arizona for over 12 years!"
Testimonials
"Arizona realtor Diane Olson has become the go-to person for Canadians looking to purchase Phoenix vacation homes and investment real estate in sunny Arizona."
"Canadians make up a vast percentage of Scottsdale's seasonal residents, and a great deal more choose to spend their winters anywhere in the Valley. In fact, the Canada Arizona Business Council estimated around 872,000 Canadians that come to Arizona each year and spend hundreds of millions of dollars."
Arizona for Canadians
I just don't get the attraction, there's so much more to life than "hot dry weather"... like, not living in a desert. You couldn't pay me to live in Arizona. Well, I guess you could but it would take a lot ;)
Let's take a look at house prices in Arizona.
(min. 3 beds, 2 baths, 1800 sq. ft. of primary, above ground living area, max. 10 years old)
A similar house in Victoria would probably cost at least $700 K.
$150 K, El Mirage, AZ
$113 K, Buckeye, AZ
$148 K, Avondale, AZ
$92 K, San Tan Valley, AZ
$120 K, Tucson, AZ
$127 K, Sahuarita, AZ
$122 K, Maricopa, AZ
$136 K, Buckeye, AZ
With beautiful winter weather and cheap real estate prices, it's no wonder that thousands of Canadians have bought vacation homes in Arizona in recent years.
A look at supply and demand for homes on an acre of land and less in Sooke.
There are some 137 detached homes, as described above, listed for sale. And for the month of August there were 18 homes like this that sold. At the same time another 29 were listed.
At the present rate of consumption it would take 7.6 months to sell the current inventory. But that isn't likely to happen as Sooke is adding inventory at the rate of 1.6 new listings for every one sold.
The median price for the last six months was $369,000 as compared to the median one year ago at $366,500.
5 to 8 Months of Inventory along with a New Listings to Sales ratio between 1.5 to 2.5 indicate a balanced market between buyer and seller with stable prices.
Inventory typically increases after summer holidays are over. That will likely push the New Listing to Sale ratio higher. And the housing market for Sooke homes under an acre would then favor prospective purchasers which may lead to an erosion in prices.
@ Supernova
"I just don't get the attraction, there's so much more to life than "hot dry weather"... like, not living in a desert. You couldn't pay me to live in Arizona. Well, I guess you could but it would take a lot ;)"
I haven't mentioned anything about "dry weather" in this conversation. You obviously haven't ready my comments. Marko made the same mistake.
I've talked about Arizona's winter weather and how attractive it is to Canadians who wish to get away from Canada's cold winter weather. This has to do with Canadians buying vacation properties in Arizona, with the intention of spending some of the winter months there, not the entire year.
You obviously skipped over this link, which shows that Arizona's winter weather is simply beautiful and not too hot at all.
Again, please follow along and read all of the comments that are related to the conversation that you wish to join.
Yep, it's only inhabitable for half a year at a time so house prices should be about half of Victoria...
Oak Bay is ending the summer with lots of inventory. 102 homes are listed for sale ranging from a low of $465,000 to an asinine asking price of $16,998,000.
The average asking price is now $1,765,500 with the median coming in substantially lower at $1,150,000. And the median selling price for the last six months coming in at $790,000. Up from last years median at $765,000. Clearly some of the home sellers in Oak Bay are not seriously willing to sell their property.
This really fucks with any kind of analysis in this hood and leads to a lot of Albertans irrationally overpaying to live there. Luckily there are just as many Victorians who are quite willing to relieve them of their economic burden.
A bit of a hint for you house hunters in Oak Bay. You should never pay over twice the median selling price in a neighborhood unless the property has some unusual feature such as acreage, water views or waterfront. That would also mean that the cap amount for any type of housing be it waterfront or acreage would likely never be greater than 10 times the median price in the hood. That puts a significant amount of sellers into the delusional category in Oak Bay.
Last month 18 sales and 28 New listings in this hood. 5.7 MOI and 1.6:1 ratio.
Here you have two markets with similar MOI and NSL numbers but at opposite extremes in the marketplace.
Here is how to survive Phoenix in the summer:
1) Get out! Go to California or wherever you came from for as long as possible. And wherever that is, when the days there begin to get shorter, colder and grayer—or when you see all the birds leaving town—you'll know it's time to return. But since leaving home for the summer doesn't work for most working people, following are some more practical suggestions.
2) Stay inside. Make a game of it. Pretend the earth is covered with hot molten lava (not really far from the truth so even those with poor imaginations can play) and step outside only when absolutely necessary and for as short a time as possible.
3) Use shade when you must venture outside. Stay out of direct sunlight whenever viable. Most people already know this, which is why every parking space with even a dried up leafless branch anywhere near it will be taken. But when the interior of the car reaches one-hundred forty degrees in seconds, it's really only an illusion anyway that parking in shade helps. Even if we had two-hundred year old maple trees providing shade here (which we don't), it wouldn't be a fair fight against the desert sun.
4) Wear oven mitts when driving. Because that steering wheel WILL burn your hands. And unlike cell phone usage, it's generally accepted that hands-free driving is not the safest practice.
5) Rise early. We hear that the key to getting anything done is to do it before it gets hot. The problem with this theory is that in the summer it's ALWAYS hot. But, hot is relative. It's true that it gets down to the low nineties during the night. Then again this occurs between two and five in the morning, after which (thanks to the lack of daylight savings time) the sun blasts through the heaviest of window coverings. So it's not really conducive to taking a walk, mowing the lawn or running errands. Plus if you're not a morning person, extra sleep will win out over temperature all day long.
6) Wear as little as possible. While naked is good, it is nonetheless illegal. For those in office jobs, air-conditioning usually solves the problem while at work and can even necessitate wearing a sweater. But when you must be out and about, tank tops, bikinis, shorts, and going braless help. Be warned that those of a certain age and/or body type may need to make some honest and tough choices before leaving the house. Take comfort in knowing that discarding jewelry, watches, closed shoes and purse straps can also help, while minimizing the risk of overexposure (caveat to this: PLEASE keep an eye on the condition of those feet!).
7) Stay hydrated. Even when indoors, it cannot be stressed enough how important it is to keep drinking. Beer, margaritas and pina coladas are preferable but water will work in a pinch. Better yet, stay iced. Even though they say that cold drinks in hot weather are bad, that's just stupid. After a long air-conditioned lunch and four glasses of ice water, I have been known to achieve a sublime shivery state even in triple digit temps.
8) Stay wet. Spend as many hours as your day allows in either a pool, a shower or under a mister . This theory does have one problem: after a couple of months of unending heat, most pool water temps hover at well over ninety degrees. Not too refreshing. Same for the water coming out of your home's pipes. There really is no such thing as a cold shower in Arizona in the summer. It’s equally important to be aware of this when doing laundry. Best to wait until fall to wear anything requiring a cold water wash.
@ dasmo
"Yep, it's only inhabitable for half a year at a time so house prices should be about half of Victoria..."
A typical dasmo comment. With that sort of logic, it could be argued that Victoria is only inhabitable for about 6 months of the year - that part of the year without constant rain and cooler temperatures.
Phoenix is the fifth most populous city in the US. Obviously its weather has a lot to do with that.
Clearly I have shown that similar houses costing $125 K in several Arizona cities would cost 4 to 6 times as much in Victoria, not twice as much.
This shows that Victoria's housing market is extremely overvalued.
"I'm from Toronto and moved to Victoria BC after living in AZ for a bit and I can tell you that for me it was dismal. It's not just the rain, it's the dark skies, low clouds etc. that got to me. I was cold (in the bones type of cold) all the time. I should also mention that Victoria is supposed to get less rain than Vancouver (same with White Rock).
It seemed to me like it rained fall, winter and spring, with summer starting in July. I didn't like feeling wet all the time. When I first arrived there I went hiking with someone I met and didn't realize that I needed rain pants as well as a rain jacket (which I had) to hike. My legs were drenched and I was so full of mud by the time the hike was over that I never hiked there again and I LOVE hiking.
I'm back in AZ but have decided I'd rather face Ontario's cold and snowy winters than BC's dark, wet, mild ones."
@ dasmo,
Again, the conversation is about Arizona's warm winter weather. It has nothing to do with summer weather.
link
Please read all of my comments before joining the conversation.
http://www.vice.com/read/reasons-why-phoenix-is-the-worst-place-ever
enough said....
The conversation is not about Arizona's warm winter weather... It's about the relative price of houses. I'm pointing out, in my usual way, that there is more than weather that creates demand... Big picture, our climate is mild. Our geography is great for human habitation, our economy is diverse and stable and our geopolitical position is extremely mellow. This makes for a good place to live ALL year around. I have a friend that owns a place in AZ. They go there to play baseball and golf over the winter.... IT's not their primary home. That is in Victoria....
Clearly I just don't get why a sunny warm climate spot is way more desirable, yet house prices in Seattle are 3-4x the median price of Phoenix. Seattle must be about to crash.
595 houses for sale in the core districts of Victoria and 137 of them are asking more than $1,000,000.
Little old Victoria with 23% of the homes listed for sale being million dollar houses.
The land of million dollar homes starts in View Royal for a 3,400 square foot home on an Ocean front home and ends in Oak Bay for a 15,500 square foot home on a 2.4 acre Ocean front home. Price difference between the two is $16,000,000.
Talk about a location adjustment!!!
Median asking price $1,550,000
So how many million dollar mansions sold last month in the core....
17
That's actually not too bad. At just 8 Months of Inventory.
95% of them sold under 2,000,000. At a median price of around 1.3 million. 1.3 million will get you a waterfront home in Cordova Bay or a 3,400 square footer in Uplands or a fixer upper on a waterfront lot in South Oak Bay.
So why are nearly 30 percent of the 137 listed priced over $2,000,000? Or to put it another way. How can you negotiate with any seller who is that delusional about their property?
I've been looking at the 1-1.5 million dollar properties in OB. They aren't that great for the most part. When I was a kid a million seemed like the pinnacle. Damn inflation.
Here are some price to rent ratios for Victoria
Cook Street 4 suiter
Gross Income $37,200 before Vacancy and Bad Debt sold at $634,000. Price to Rent ratio is 17
4 Suiter along McKenzie Avenue with an G.Income of $49,000 sold for $725,000. Price to rent ratio of 14.8
4 Suiter in Langford generating $50,400 yearly sold at $735,000. Ratio is 14.6
4 suiter in James Bay sold at $752,000. Gross Income of $47,400. Ratio at 15.9
4 suiter near Government and Dallas road. Gross Income of $48,000 and sold at $845,000. Ratio of 17.6
4 units in Fairfield steps from the Village. Gross Income $49,300. Sold at $850,000. Ratio at 17.2
Fort Street 4 suiter grossing $62,300 and sold at $995,000. Ratio of 16.
Even in smallville Victoria the price to rent ratio varies greatly among knowledgeable investors from a low of 14.6 to a high of 17.6
These places are affected by the same political, geographical, and economical conditions and there is considerable variability in the price to rent ratio. How realistic is it then to compare Victoria to a city in Europe, the USA or even Toronto!?
The answer is it isn't, but it got you to buy the magazine. It annoys me that Canadian banks and Economists rely on this shit kind of analysis to determine "over valuation" It underscores, to me, that the people in these bank positions have an obscure understanding of the fundamentals of real estate value.
And that should scare us all.
How are the asking prices in the core for houses these days.
Asking prices start at $245,000 for a floating home in James Bay. A floating home isn't real estate. It's just a R.V. without wheels. No mortgage on this one - just a collateral loan. If you can find a bank that lends on floating homes.
The first real house is listed at $299,900. It's a small home sandwiched between two condo complexes along busy Tillicum Road.
Sold "As is, Where is"
-This may be one for you "investors" to take a second look at. It's an estate sale, an ugly duckling and has been listed close to 100 days. All of which suggest this little piece of the rock needs a low ball offer.
Then there is Fernwood. The hot hipster hood. Postage stamp house on a postage stamp lot asking $349,900. Described as an alternative to a condominium. A rental property gone vacant and now being sold by its Baby Boomer owners. Slashed by $20,000 after only 22 days on the market. Seems these people want out. I'd wait till it hit 70 days and then low ball. If it sells before then, that just means there will be one less person to compete with you on the next home to come up for sale.
Sell/List ratios sure have done a U-turn.
Aug Aug
2014 2013
Net Unconditional Sales: 609 540
New Listings: 904 935
Last Aug it was only 57.7%, this Aug 67.4%.
I believe higher than 60% is deemed a sellers market.
http://www.timescolonist.com/business/victoria-real-estate-sales-on-the-rise-1.1339094
Speaking about days-on-market.
Well at least I was.
If you've had your home up for sale since 2008 without an offer - maybe it's time for a price reduction.
Vendors have a lot of pride in their homes especially if they have put extras into the property like a high tech boiler system or specialized concrete construction that could survive a Russian IBM attack. Things like that are called superadequacies. And most prospective purchasers don't give a damn about them. But the Vendor just won't drop the price.
Then there are those miss guided souls that spent hundreds and hundreds of thousands of dollars on renovations. Spending $750,000 on home renovations when the home would only cost two-thirds that amount to build new. This is called the Theory of Substitution. A buyer won't pay more than the cost to replace the home new.
The result is a year on the market and no offers.
Generally speaking, I would say the Days-On-Market is a reliable gauge of the marketplace. Obviously there are difficult vendors that can make the stat a bit fuzzy but if you're looking at the median days-on-market this stat should tell you the absorption rate of housing. 30 to 90 days has historically been the norm for a balanced market between buyer and seller. Less than 30 days and you're into bidding wars. More than 90 days and the market strongly favors buyers with sellers having to make concessions in both price and terms to effect a sale.
I wouldn't call it a U-turn.
It's more like watching grandma trying to turn the car around in the driveway.
I wouldn't infer from the Times Colonist that just because the HPI has increased your home has gone up in price.
Your location, type, style, age, condition and other factors are going to influence if it is a buyers, sellers or balanced market for your specific property.
But for an overall indicator it's still good news for buyers and sellers. It would mean that as a prospective purchaser you can have a property inspection done and maybe have an appraisal done or pay for an unbiased analysis of the market for the specific property you're looking to buy. A well spent $100 just to know if you are paying too little, too much or just right relative to what is selling, what was selling and where the market is going. Takes about 30 minutes to do one of these for a client.
@Just Jack. can you please email me your contact info if possible @jasmine.w.dream[at sign]gmail[dot]com. I might need your service to check out a fews places.thanks
http://www.kijiji.ca/v-house-rental/victoria-bc/main-level-saanich-east-custom-home/1015650405
rent $1975/month or to sell at 760k...
come on... really? any thought?
That house has a main floor suite and an upper suite. $1,975.00 is to rent the upper suite only.
As for price, I would not pay that for that home or area myself. It is only assessed at $595,000 by BC Assessment, not sure if or how much under market that is.
The main floor seems to rent for $1000 a month. http://www.padmapper.com/search/apartments/british-columbia/victoria/180151721/
The most expensive home to sell last month was in Saanich East on 5.1 acres of rocky mid-bank waterfront along Queenswood Drive. Sold at 4.5 million or 7.5 times the median home price in Saanich East, after being listed on and off since 2008. Original asking price 6.9 million.
The moral of the story. 95% of homes sell within the market value range for that type of property. Listing too high in order to snag a buyer is highly unlikely to work and will just mean years of showings and price reductions.
Or you can hold out for that 20 something hipster who has just made it big on a snow boarding App. - Angry Boards
I enjoy reading this blog but don't post much. I am always amazed by how much you know and hence I was hoping it would be all right to ask you a question. I am moving overseas for a few years and am looking for a company that can manage renting out my home and a rental property that I own (Gordon Head & Cedar Hill Cross areas). Any recommendations would be greatly appreciated!
ooohhh getting close to 400! It's fitting. We are burying HHV under six feet of comments!
Maybe rates could go lower still?
"The central bank said it was trimming the main refinancing rate to 0.05% from 0.15% and the deposit rate to -0.2% from -0.1%. At a subsequent news conference President Mario Draghi said that the ECB would start buying asset-backed securities and covered bonds in a further bid to stimulate growth, and that the governing council had discussed the implementation of a program of broad-based asset purchases, known as quantitative easing."
So when the heck is this supposed wave of retirees going to start?
Back in 2007 a new condominium complex was built with an age restriction of 55 and older. An above average complex in the heart of the retiree town of Sidney. And here is the re-sale history of the last unit to sell in the complex and its days-on-market.
$419,900 November 2007-full price
$362,500 November 2010 - 181 DOM
$325,000 September 2014 - 146 DOM
The leading half of the Baby Boomers is from 1945 to March 15, 1958 (the feds have chosen this date as changing the retirement age from 65 to 69) That would make the leading edge aged 69 to 56 today. Prime age for buying into this complex - yet prices are declining.
I agree, that there will be another wave of retirees coming to Victoria. It just won't be the Baby Boomers. It will be their children who are in their mid 30's today.
A 2014 survey of Baby Boomers found,
6 in 10 of those surveyed, expect to sell their existing homes and buy or rent smaller living spaces over the next five years. Top reasons for moving from their existing home are reducing maintenance work (81 per cent), lowering the cost of living (80 per cent), moving to a smaller home (62 per cent) and increasing their ability to travel more (60 per cent).
Eighty-eight per cent of the homeowners surveyed own a detached home, 6 per cent a semi-detached, 3 per cent a condo unit and 2 per cent a row or townhouse. Of the 6 in 10 homeowners looking to downsize, 78 per cent say this would be their final home. Half (47 per cent) would consider a condo or apartment unit.
Only half would consider a condo, so the current 3 percent condo owners would only rise to a maximum of 30 percent. Many Baby Boomers will choose to downsize to smaller houses.
That downsizing doesn't mean an old war shack. Downsizing but to a newer quality built home. They aren't going to be sharing their homes with the rat population of Oaklands and Fairfield.
And new homes aren't found in most of the core districts either. Small lot developments are situated at the fringe of the core like in View Royal. Yet property values are declining there too.
So where are half of the baby boomers, those between 56 to 69 years, retiring too today?
I guess you'd have to find some place where property values are increasing substantially in order to squeeze all these hundreds of thousands of retirees into.
Just out of curiosity.
Did any of you prospective purchasers go and take a look at the 3 properties on Nel Hamerton?
They were unfinished homes put up for sale and under foreclosure. The listings said there was another $60,000 of finishing to be completed. A true real estate Vulture would have heard the dinner bell ring on these ones.
They looked like a pretty good deal to me. Anyone take a look at them?
I find it interesting how close to assessed value the vast majority of places are selling for these days. And then I see how high some folks are listing - like three or four hundred thousand higher.
It will be interesting to see what happens to places like 2442 Florence Street (1.1 million and assessed at $734,000) and 1633/35 Davie (1.2 million and assessed at $788,000).
I don't believe the market will support those list prices - even with the renos, but maybe I'm wrong.
JJ, Nel Hamerton looks like a great deal! Not my area unfortunately, I'm holding out for a good deal in the city proper, thanks.
Want a deal closer to town.
How about a second floor condo at 1005 McKenzie. 841 square feet asking $124 a square foot.
Wow, you should have been at the eviction party!
Cleaned up and remodeled to standard quality you're likely to resell this condo for around $185 a square foot.
It's a foreclosure that has been on the market for over 200 days but recently re-listed after a $40,000 drop in the asking price for the last 17 days.
This is one that you toss in a ridiculous low ball offer and walk away if it isn't accepted. The bank's going to wear this one anyway. If it's CMHC insured even better - then no one cares about this orphan.
It's a small profit - but its a small project.
Why is Victoria the oddball in Canada?
I believe most economists have agreed that this long term low interest rate has pulled demand forward. The baby boomers have assisted their children in buying their first home sooner than they would have been able to without that support.
Because of this I would expect there will be a weak demand until the 20 somethings can buy into the marketplace. Regrettably that increase in demand will coincide with the increasing mortality rate of the leading edge of the baby boomers.
Looking at the area under the graph demonstrates how large that baby boomer group is relative to any other age group.
"The baby boomers have assisted their children in buying their first home sooner than they would have been able to without that support."
The majority of baby boomer kids would presently be university age (see stats Canada graph above). I believe most would currently rent, live in campus dormitories, or still at home, but I could be missing something.
"I would expect there will be a weak demand until the 20 somethings can buy into the marketplace. Regrettably that increase in demand will coincide with the increasing mortality rate of the leading edge of the baby boomers."
I expect the bulk of babyboomer kids presently in their early twenties, to overlap their demand for smaller starter homes with their downsizing parents. Another way of saying it, the gusher of births starting in 1946 in that graph above (leading age currently 68) will begin looking for smaller homes at the same time as the bulk of the millennial generation. I don't think the mortality rate of the baby boomers will rise much until approximately 15 years, once the leading edge reach their early eighties (current average lifespan).
The majority of baby boomers are now grand parents.
The graph shows the increase in births beginning in 1939. A lot of single men joined up to serve their country. However, if you were a married man you could get a one year deferment if your wife became pregnant. Contrary to John Wayne movies not everyone was willing to have their lid popped off by a German sniper.
So why do so many people pick 1945 as the beginning of the baby boom when the graph clearly shows it as 1939? Probably because it's more patriotic to suggest it was a bunch of horny soldiers coming home banging the first girl off the ship than a bunch of men not wanting to go to war. You had a choice, you could hump it across Germany or hump the wife.
So why did the baby boom end? Easy the birth control pill was approved in 1957. March 15, 1958 is likely the peak in Canada with the birth rate dropping rapidly after then. The result is that there are a lot more baby boomers born between 1939 to 1958 than 1958 to 1966. Simply compare the areas under the graph.
Forgetting all of the above - as it really isn't necessary. Just look at the graph itself. Those born between 1939 to 1958 were the largest demographic group to have an effect on post war North America. They're now aged 75 to 56. After that point the birth rate drops substantially.
We also had a boom in real estate prices from 1975 to 1982. That was the baby boomers buying their first home. The oldest was 36 in 1975 and the youngest was 24 in 1982. See how the BB'rs coincided with the market rise.
The BB'rs retirement wave also matches with the market rise from 2000 to 2008.
^ doesn't jive with the age pyramid...
http://www12.statcan.gc.ca/census-recensement/2011/dp-pd/pyramid-pyramide/his/index-eng.cfm
There is just as big a population now between the ages of 20-40 as the baby boom it's just more distributed. I would be worried if there was a sudden drop after the spike but there isn't. It's just an even, distributed growth.... The boomers were lucky because they didn't have the population before them as we Xers Millennials and Whiners do now. We are now entering an era where we have a large population distributed across all ages. As time goes on you can see the boomer spike get less and less prominent and what takes over is simply a mass of populous growing across all the age brackets. One should also note there are twice as many babies in 2011 as there were in 1939...
As time goes by the boomer wave will be less prominent as they die off.
But they can't take their homes with them.
What would be interesting if statscan provided a pyramid chart of spending and saving habits as boomers transition from buyers of real estate to sellers. As they begin to sell off rental properties and then eventually their primary house is sold because of death or moving into a health care facility.
That's a tremendous amount of housing that has to be absorbed by a much smaller demographic group of first time buyers.
That will have an impact on months of inventory and the ratio of new listings to sales in the future. It will also have an effect on construction and those employed in construction related jobs. You may want to think twice about becoming an electrician or plumber as the demand won't be there a decade from now.
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