Monday, December 15, 2014

Dec 15 Market Update

MLS numbers update courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.

Updated Dec 22

Dec 2014
Wk 1Wk 2Wk 3Wk 4
Unconditional Sales112
New Listings148271348
Active Listings345534063301
Sales to New Listings
Sales Projection--455469

Months of Inventory

We won't be hitting the estimate as sales will drop off significantly at the tail end of the month.    Likely closer to 400.    Some signs of a slowdown with the Teranet composite down 0.3% in November with many cities showing a decline, including yours truly.  CMHC also continues to tinker, hiking fees to insure mortgage backed securities by up to 200%.

Update:  A while back there was some chatter about the appreciation rates of condos and single family homes.   I would think that since "they ain't making any more land", the appreciation rate for condos would lag that of SFHs.   So I took a simplistic look at the appreciation rates for both over all 5 year periods over the last 25 odd years and here's the result.

The rates are closer than I thought, but there definitely is a difference between the two.   Average 5 year appreciation is 38% for SFHs, and 32% for condos (or ~1% a year).   I would suspect that a re-sale based index would show a somewhat wider difference.
The condo market is also a bit more volatile, with a range from a 20% drop over 5 years to a 128% increase, while SFHs have ranged from a drop of only 7% to an increase of 109%.


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

The effect of low oil on prices.

Low oil prices and a low dollar has typically been be good for BC's exports.

But will it be good for BC real estate?

There is so much information that you don't have to make any projection.

Oak Bay prices are the most likely to be adversely affected by fewer Albertan buyers. A graph of prices paid by Victorians and Non Victorians shows a definite double mode for prices. A graph that resembles a double humped camel with modes at $700,000 and 1.2 million. Remove the non Victorians from the analysis and the second mode flattens out.

Without the high end prices paid by non Victorians, the median and average for Oak Bay will all shift to the left and show lower home prices under $700,000. You might even find media headlines like...

"Oak Bay prices tumble as Albertans not buying". Which isn't accurate, but that has never stopped the main stream media before.

That could have an influence on Victorians intending to buy in Oak Bay in order to preserve their wealth. As Oak Bay is thought to be bulletproof from lower prices. If prices can drop in Oak Bay - then no hood is a safe haven to park your loot.

DavidL said...

@Just Jack

From what I've observed with Victoria real estate over the past 35 years, with each boom/bust cycle - the more expensive houses in "exclusive" neighbourhoods don't rise and fall in value as much as the lower end "starter" homes in other neighbourhoods.

Between 1986 (bottom of the cycle) and 2010 (top of the next cycle), resale values of houses in Oak Bay, Broadmead, Ten Mile Point, etc. increased about 4 times, while houses in Hillside, Glanford, Gorge areas increased by 7 to 8 times.

Expensive houses at the top end of the market appear to be less volatile to the effects of the economy.

Just Jack said...

Oak Bay
Primary Year Sale Price, Median
2004 $505,500
2005 $584,500
2006 $655,000
2007 $699,450
2008 $760,000
2009 $690,500
2010 $785,000
2011 $760,000
2012 $745,500
2013 $750,000
2014 $775,000

All Core Districts except Oak Bay
Primary Year Sale Price, Median
2004 $338,000
2005 $415,000
2006 $462,000
2007 $520,000
2008 $542,500
2009 $540,000
2010 $580,000
2011 $576,525
2012 $560,000
2013 $546,000
2014 $560,000

Hillside, Jubilee, Fernwood, Oaklands
Primary Year Sale Price, Median
2004 $229,000
2005 $260,100
2006 $321,000
2007 $356,000
2008 $379,500
2009 $360,000
2010 $425,000
2011 $392,500
2012 $380,000
2013 $385,000
2014 $425,000

Marko said...

Just Jack,

Do appraisers do economic (border type income) rent letters?

Just Jack said...

Recently, had an insurance bulletin about providing economic rent estimates. A week after I provided Scotiabank with one. And I went ahhh f%^&. Luckily I made it very clear on my assumptions in providing the letter.

The Appraisal Institute regards estimating an economic rent without an inspection of the property as a violation of Appraisal Standards. So does the Appraisal Foundation of America and International Valuation Standards.

However, an appraiser can do a market review of rents that match the attributes of the property in question.

The economic rent for XYZ property is estimate at X amount amount with the landlord paying utilities.

3 bedroom homes in the Mayfair area are generally renting at $1,600 a month with the tenants paying the utilities.

We can do the first if the property has had an interior and exterior inspection by the appraiser. We can't provide a rent estimate of a specific property if we haven't inspected it. Even if there is a current listing available.

We can do a rent review without inspecting the property as it pertains to general market conditions and you can limit your data in such a way that it matches the physical attributes of the given property.

You have to know how to ask the question of the appraiser.

If you say" I need an economic rent for a listing" You're going to get a no answer.

I need a rent review of properties like MLS listing # 54376982. You're likely to get a yes answer.

Asset-Grinder said...

I have purchased a home in the hillside area and I am wanting to rent it out. But I am in a quandary on how much rent to ask for my newer construction 3000 sqft home. The comparables on all sites have not helped. Anybody know any good resources on how to price my rental? Any help would be appreciated.

Just Jack said...

I'm assuming that you will not be using a property manager.

Because they are probably your best source of information.

Unless an informed person sees the property you're not going to get a clear answer.

3,000 square feet is a heck of a lot of house which would suggest upper middle income. Then it had to be in the Hillside area which is mostly for entry level home owners. And I can't remember any newish homes in that hood selling recently. And if it is newish then you likely have a suite.

You need to pay a professional to come out and take a look at it or hire a property manager.

Asset-Grinder said...

Thanks for the advice Jack. Will for sure be in contact with a property manager and see if its the right fit. Was planning on moving into it but not for another few years. It is a very upscale home that is largely over built for the area.It has the quality of a newer oak bay/fairfield home. I have been looking at craiglist, kijiji and used vic and almost impossible to find a comparable, let alone a decent home to rent in Victoria that size thats not 20+ years old.

reasonfirst said...

Here's a good one,

My landlord thinks that Christmas lights put too much of a strain on her hydro bill. Bah humbug

Hydro says LEds only use pennies of hydro.

Just Jack said...

That's the problem I'm having. I can't put upscale home and the Hillside area together in the same sentence.

And I think those with the income to rent an upscale home are not going to be looking in the Hillside area either. They're off to Fairfield, James Bay or Oak Bay.

And that may be the best reason to use a property manager rather than craigslist. If you've got the cash for an expensive rental you're calling property managers and having them look for you rather than craigslist.

You might look at taking your purchase price and dividing the price by a monthly rental factor applicable to your hood of say 200. That might help. If you spent $600,000 then divide by a MRF of 200 and you have a rent of $3,000 a month. But having said that, if you spent $850,000 or more then using a MRF of 200 won't work in that hood. And it won't work if you have two rental units in the house. Or a view - which you won't have, etc., etc.

There are just too many variables to account for without having seen the property.

Just Jack said...

You're lucky to have hydro included in your rent.

But she can't stop you from putting up a Holiday tree with lights. It's your religious freedom. However, if you're intending to light up the backyard like a used car lot - maybe she's got a point.

Just Jack said...

Putting sarcasm aside - but only temporarily.

Quarterly city utility rates have gone crazy because of some of these wanker city officials who are putting these costs onto the city utility bill rather than property taxes and calling it user fees.

User fees that are mandatory are not user fees - they are a tax.

Next year electricity rates are suppose to increase because of the wankers at BC hyrdro and its subsidiary that tried to game California's power grid. They got caught and we got %^^$ed. I've got a place where they can shove my used holiday tree including the non LED lights - the REALLY BIG ones.

If your rental includes utilities and electricity, the landlord is going to try to raise your rent. If you pay for the electricity and utilities then you're not going to want any 4% increase in the rent you pay now.

dasmo said...

And the vacancy rate in Vic is now 1.5% so it might not be so easy to just move to another place... So much for everyone moving to Alberta I guess....

Leo S said...

On the plus side nat gas is going down quite a bit. I might have to reconsider my heat pump balance.. Not sure if it's actually cheaper to use the heat pump rather than the natural gas when it's cold out.

Just Jack said...

That 1.5% vacancy rate is just for Victoria City. The Westshore is at 8%. Vic West is at 6%. Langford at 3.1%

It's consistent with the trend of people moving from the outer areas back into the city.

The numbers seem a bit nutty. For example, the vacancy rate for bachelor suites in Langford is 12.5% - that's higher than Windsor.

A vacancy rate of 1.5% essentially means that most apartment buildings will have at least one rental available at any time. That's not a shortage. I also suspect that people are looking at the price differential between a condo and an apartment and choosing the more economical apartment. Rent a downtown one-bedroom condo for $1,200 or a one-bedroom apartment for $800.

The CMHC vacancy rate doesn't tell you much. Personally I would track the hook up and disconnect notices for electricity. That would give you a far better indicator than a telephone survey of property managers.

Which leads into the recent survey of "foreign" buyers in Vancouver done by CMHC. Either they don't understand what people are asking or they are intentionally obfuscating the issue.

dasmo said...

1.5% is for greater Victoria. Downtown is 1.9%. (they include VicWest in Downtown). ESQ is 2.2%. James Bay 1.3%. Fairfield .9%. OB .8%.

Chris said...

I knew it!!! Now it’s no mystery why sales and prices have started increasing so much this year. This darn tootin town has a vacancy rate that has fallen to as low or lower than Tor, Cal, Ed, Van. To have sub 1 percent in Fairfiled and OBay is &%$>#!

Just Jack said...

Just in case you think CMHC is consistent take a look at this report issued fall of 2014

Just Jack said...

Just scroll through this report to the following...

Rental Apartment Vacancy
Rates to Remain Stable
Demand for rental accommodation
is expected to keep pace with an
increasing supply, leading to relatively
stable apartment vacancy rates and
rents through the forecast horizon.
Modest employment and population
growth will generate demand for
rental accommodation in the Victoria
CMA in the coming years. On the
supply side, new purpose-built rental
units currently under construction and
recently completed will increase the
number of units available at a faster
pace than demand in the near term.
The rental apartment vacancy rate is
forecast to edge up from 2.8 per cent
in 2013 to three per cent this year,
and to dip lower to 2.7 per cent in
2015 and remain at that level 2016
as demand balances new supply.

So who you gonna believe that CMHC report or this CMHC report.

Chris said...

At least we’re not as bad as west end Van yet.
“It shows some shockingly low rental vacancy rates, which can only mean one thing. Rents will likely be going up for tenants once this news reaches local landlords.
In Vancouver's West End, the vacancy rate plunged from 0.9 percent to 0.3 percent from October 2013 to October 2014. The average two-bedroom rent in the West End has reached $1,849 per month, up from $1,794 a year ago.”

dasmo said...

That was what they were predicting. They were wrong. The report I linked to is what it is....

Chris said...

They sure missed the mark in the earlier forecast thinking it would move higher to 3%. Holy shnikes!

Just Jack said...

How bad is it to find an apartment in the West End. Go to Vancouver craigslist and see the map of the West End. According to CMHC that's what 0.3% looks like.

dasmo said...

It makes sense to me. When I put our Fairfield property up for rent I had 80 inquiries before I pulled the ad. Then the existing tenant asked if they could stay. I said yes and raised the rent...

totoro victoria said...

Asset-grinder it is fairly easy to price your home. In that area you are going to be over $2000 a month for a big whole house - how much I'm not sure but it is going to be similar to Oaklands/Fernwood and less than Oak Bay/Fairfield.

You will know if you overprice if it does not rent immediately. Better to slightly underprice after analyzing the market.

Marko said...

Slower time of year has given me some time to look at various numbers.

Today I looked at some historical average sale price - average finished square footage numbers.

1994 - 2014 Broadmead

Average Sale Price: $370,100 - $733,757 (98% increase in price over 20 years)
Avg. Fin Sq/ft: 2,985 - 2,838

Makes sense as not a lot of homes in Broadmead were built with unfinished basements and the homes are big enough that most people wouldn't look to add additions.

When we look at an area like Oaklands we find

1994 - 2014

Average Sale Price: $202,000 - $506,826 (151% increase)
Avg. Fin Sq/ft: 1,347 - 1,791

Makes sense as many unfinished basements have been finished over the years. The average prices has also increased substantially over an area like Broadmead secondary to improvements.

Marko said...

In that area you are going to be over $2000 a month for a big whole house - how much I'm not sure but it is going to be similar to Oaklands/Fernwood and less than Oak Bay/Fairfield.

I think a newer 3,000 sq/ft home is going to be substantially more than $2,000/month.

DavidL said...

I thought that the current rental price in an "average" neighborhood in the core Victoria municipalities is about $1 / sq. ft. per month. Does this seem reasonable?

Leo S said...

Sounds about right thinking back to our rentals. Although I think in the high end its a bit less.

dasmo said...

The place we rent out is $1.6 a sq. it's small though. I think that's a very coarse rule of thumb...

Just Jack said...

As the size of the rental unit increases the rent expressed as a price per square foot decreases. At some point you'll find that say a 4,000 square foot home will have the same economic rent as a 7,000 square foot home.

Diminishing utility

Just Jack said...

Are you the master of the home or is the home becoming a mistress with a high limit bank card?

The median price for a home may be $600,000. Forgetting mortgage payments and down payments can a person afford a home with high property taxes, utilities charges and other expenses related to the operation and maintenance of a home?

A typical city home with no mortgage would still likely have other costs of $6,000 or more a year. The same with a condominium. And the government bodies that impose these taxes and "so called" user fees are not projecting decreases.

A decade or more ago, these taxes and user fees took a much smaller percentage of wages. And were mostly an after thought when buying a home.

Today lots of people seem to able to buy a home - but can they keep this mistress?

DavidL said...

Over the past five years, my property taxes in Saanich have barely changed. However my "water bill" has morphed into a "utility bill", including water, sewer, garbage and associated fixed charges and fees (not based on usage). What used to cost about $400 per year now costs $1000.

Leo S said...

And we can look forward to another $70 increase in 2015.

patriotz said...

The (CMHC) survey is conducted on a sample basis in all urban areas with populations of 10,000 or more, and targets only privately initiated structures with at least three rental units, which have been on the market for at least three months.

CMHC doesn't even look at what we would call amateur landlords. Purpose-built rental buildings have low vacancy rates because the managers know what rent to charge to fill a tenancy without any vacant months.

Leo S said...

Yes, but the trend should still be meaningful.

Just Jack said...

There are only 67 houses for sale in the City of Victoria today. They range from a low of $350,000 to a high of $3,000,000.

For the year so far, the City has had 360 house sales. Ranging from a low of $280,000 to a high of $2,255,000. half of these buyers spent between $280,000 and $555,000 for a house.

75% of all buyers spent between $280,000 and $710,000.

87.5% spent under $865,000

The elite 7% (about 25 people) paid a median of 1 million dollars to buy in Victoria City this year. A third of which had basement suites.

The highest price private dwelling sold to a buyer from Toronto.

A casual review of the million dollar home sales shows an even split between newer homes and character homes. Those buying newer homes are willing to make significant trade offs in house and lot size for newness.

And it appears that buyers from out of town prefer newish modern homes while those from Victoria purchase the old character style home.

Tren said...

just jack: just wonder where does your sample come from? or this is the population?

Just Jack said...

These numbers are just for houses in the City. They don't include the surrounding districts like Oak Bay or Saanich.

Victoria City is the +/- 67th largest city in Canada with a population similar to that of Chilliwack. But since we have so many commuting each day we assume we're larger than we are.

Just Jack said...

The number of active listings are way down in the city this month. And for the last six months prices have been rising and falling relative to available selection. More selection results in higher median prices.

Except for December. The number of listings has dropped so low in December that prices have risen! This likely reflects those prospective purchasers that "need" to buy. And there are people who need to buy either for emotional reasons or even tax reasons.

For those who own an unusual property this might be the time to sell and not to wait for the Spring when people have a much better selection. If you have a property along a busy street like Bay or Shelbourne or a house that needs a lot of repairs. This is likely your BEST market to sell in before listings increase and less people are interested in viewing your property.

Month Listings, Sale Price, Median
Jul 128 $550,000
Aug 125 $597,500
Sept 125 $585,000
Oct 115 $531,000
Nov 105 $523,000
Dec 88 $581,000

Single family detached in Victoria City only.

Just Jack said...

Condominium prices in the core districts have remained stable since 2007; despite the drop in sale volumes from over a thousand units sold to 700 units today. That's probably related to the increasing number of listings over the years. Which seems to have stabilized in the last two years at some 300 to 400 active listings for most months.

This seems to be the best measure of affordability for new buyers these days at around $285,000. That puts the cost of ownership up around $1,900 a month for a CMHC fully mortgaged condo. Playing by the rules, most first time single buyers would find it difficult to qualify at a bank. And that could be the reason why there seems to be a price ceiling on condos in Victoria.

Marko said...

CMHC releases data on foreign ownership of Canadian condos.

Just Jack said...

I don't think CMHC wants to answer the question people are asking. Better to obfuscate the issue and have the press misinterpret the findings.

To answer the people's question would only feed into racism. Then the people would demand the government do something. And it isn't in the governments economic interest to do so. Lots of money in property purchase tax and GST. Real estate got really dirty when the government got their piece of the pie.

Personally, I don't care about foreign ownership or Albertan or Manitoban ownership.

I do care about market manipulation that makes buying property or renting costly for Canadians. Along with a shadow inventory that can be dumped onto the market and destroy Canadian's wealth.

From a real estate millionaire to a pauper in 60 days.

Leo S said...

So they asked only property managers about foreign clients. What makes them think that's representative of the market? A condo left empty does not require a property manager. Silly study.

Tren said...

voice of canadians says: me , me. me. i do not want to suffer from the higher price, so blame the foreigners..

voice of money/foreign ownership: um...willingness rules or forbidden by "canadian" law?

imho, victoria is not too bad re. foreign ownership compare to vancouver downtown, and kings way area near metrotown's properties.
oh yes, canadian passport is no longer for sale effective jan 1 2015, but property, hell yes. look at hot foreign money pumping into local economy, i have mix feeling about Victorians, too.

Marko said...

Monday, December 22, 2014 8:20am

MTD December
2014 2013
Net Unconditional Sales: 306 355
New Listings: 348 437
Active Listings: 3,301 3,554

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

Just Jack said...

The truth is we don't know how "bad" market manipulation has been and still is.

Everyone of us is affected by it.

Only when the market corrects are we going to see the extent of the manipulation, corruption and deceit by omission. The class action suits, the empty condo buildings, etc.

I'm reading a class action suit that is describing what happened in the USA. The same games are being played today in Canada, we just choose not to believe it's happening here.

Why can't Hydro tells the number of condos in Vancouver and the number of these condos that are only using enough electricity to turn over a fridge each month. There's your vacancy rate broken down by areas.

Want to know how many condos are foreign owned. Get BC Assessment to provide the information on where the assessment notices are being sent. To the condo being assessed or offshore, USA, Manitoba, a law office?

Why is it so impossible for CMHC to do this?

Because they don't want to. The man to blame at CMHC is Bob Dugan in Ottawa. Get the medieval wooden stocks out and your rotten tomatoes. The bureaucrats should be reminded who they're working for.

Introvert said...

dasmo, have you ever invested in medieval wooden stocks?

dasmo said...

I hear their MACD on the ups!

Just Jack said...

There are still prospective buyers looking for houses to renovate and are willing to bid over ask price. Such as a starter home in need of work situated along Bethune in Saanich. Listed for 4 days and sold over asking price at $310,000.

Half the prospective buyers in the core districts have been looking for homes under $575,000. There are only 115 homes available, in the core, under 575,000 today. And on average for the last 3 months about 75 have sold each month. That's just 1.5 months of inventory in this price range.

That puts your odds of getting a "good deal" on a home in this price range as unlikely. The odds are in favor of the seller, that you'll bid over market value to get a home.

That used to be a problem in the past, say when your parents bought their home, as the banks only lent on the market value or the sale price which ever was lower. That would have translated into an increase in the number of collapsed deals. However since CMHC and the banks rely far less on appraisals and much more on computer programs or risk assessment tools that use regression analysis, the odds are that financing will succeed when the distribution of sales is non uniform.

Now that property and other over bought properties set the new price levels and the computer program allows higher and higher sales to be financed.

And this is how we got where we are today.

dasmo said...

See... I'm not so brazen after all...
"Cramer recommended that the best strategy is for an investor to manage their own portfolio of individual stocks."
"At the end of the day, I think a cheap S&P 500 index fund is the least bad way to passively manage your money-better than the vast bulk of actively managed funds,"
"Cramer thinks an investor can beat the performance of an index by picking the stocks themselves. However, if you are not up for that task, steer clear of managed mutual funds and ETFs."

Leo S said...

Cramer? Is that the guy that throws stuffed animals at the camera and yells a lot?

dasmo said...

He is an entertainer after all. Maybe if Garth wasn't so gloomy and repetitive he would have his own show too... Have I bought and sold based on cramers advice? No. Do I respect his performance and career? Uh huh...

Leo S said...

Here's a good article about Cramer.

I think he's actually very similar to Garth. Entertainer first and foremost. His fans celebrate when he's right, and ignore it when he's wrong.

But the more damning criticism of Cramer comes from Wall Street professionals who know how much expertise it takes to make money trading stocks. Amateurs, in their view, don’t stand a chance, and Cramer is merely egging them on. “Cramer induces his viewers to do things that are bad for them,” says David Swensen, who manages Yale University’s endowment. “He’s smart enough to know what he’s doing. ‘Mad Money’ delivers a very dangerous message — that individual investors can beat the market with momentum-driven, high-octane trading strategies. There are individuals who do beat the market, but their number is vanishingly small. Cramer is a master manipulator. He has absolutely no accountability. This is serious business; people’s retirements are at stake.”

dasmo said...

Says the guy that makes money from other people giving him money to invest...

Leo S said...

That would be exactly Swensen's point. There are people who can beat the market over a long period with real money, but not very many at all, and not those that do it off the side of their desks.

Cramer is brilliant in that he encourages a lot of canon fodder to get into the market.

dasmo said...

I call BS on that. I think they don't want the public to know how easy it is. There is just too much money to be made from fear.
I just looked at all my holdings and most have beat the S&P over the last 5 years, Some have absolutely creamed it, some have matched it and only a few have failed against it. This isn't even taking into account timing. It's simply looking at the last 5 years. The two that have failed in the same period against the S&P I have recently bought in the valley so in the end even those might be better than an indexed fund where people are syphoning money away... I've put those two at the end for easy bashing...

I don't watch him that much since I don't have a TV. But... from from his articles and snippets that appear on Yahoo, He pretty much prescribes investing how I do. Over a long period of time and investing in solid companies. He doesn't pimp penny stocks or putting everything you got into a single stock.... Here is my list of holdings as of now. I've been in it for a while. Got out of it for a bit and dove back in in 2009 and again this last October. Anyway, you can see this is far from crazy speculation...


Leo S said...

I think they don't want the public to know how easy it is. There is just too much money to be made from fear.

Silly conclusion to come to. All the money is actually being made selling the idea that you can beat the market. Mutual funds are a $13 trillion dollar industry and 96% of them trail the market. They are all in the business of convincing you that their active management can beat the market. Guys like Cramer and the entire business talk system is geared around people convinced they can beat the market and think they can get an edge by listening to it.

The least money is made in selling index funds, that's kind of the point.

Not that you have to trust anyone, the data is very clear. Unless you're one of the chosen few (i.e. the next Ray Dalio), you won't beat the market in the long term.

dasmo said...

You are saying what I was saying... So not so silly after all. Mutual funds are a sham. It just might turn out that ETFs might be a low cost version. The only difference is that you beleive them so your conclusion is you think it's worth it to pay them money to manage your money for you... Seriously, look at my picks. Most beat the index without any special timing. I've done better still because my timing.

Leo S said...

I've been in it for a while. Got out of it for a bit and dove back in in 2009 and again this last October. Anyway, you can see this is far from crazy speculation...

A while would be 10 or 15 years not 5 years of strong recovery after the financial crisis. Also your returns have leaned very heavily on AAPL, which has done very well, but of course cannot do that well indefinitely.

I don't care what you invest in, it's just that statistically you will not outperform.

Leo S said...

It just might turn out that ETFs might be a low cost version. The only difference is that you beleive them so your conclusion is you think it's worth it to pay them money to manage your money for you

An ETF isn't actively managed. That's the whole point.

Leo S said...

As for fees, ETFs can be had with expense ratios as low as 0.05%.

Trading fees aren't zero if you manage your own money either.

dasmo said...

I've been in for over 15... I'll keep you all updated how I perform. I've taken profit from apple and will again. Took my original investment out when it more than doubled. Oops. Took more out late this year to get rid of the credit cards. With Apple Pay and the Internet of things they have room to double again... I'll take some more out then.

Leo S said...

I've been in for over 15... I'll keep you all updated how I perform.

Great. Let's hear the 15 year return.

Leo S said...

Vancouver home prices driving people away

dasmo said...

My two long term holdings 15 year performance:
AAPL 3,150.6345%
BNS 434.71%
S&P 43.2961%
lost the money I took out of apple investing in Liquid Audio. 100% loss. It would represent a -2% on the above gains. Worth the lesson learned there.
I also had mutual funds over the same period that grew about 0%. This is why I woke up, dumped the financial advisor, sold all the mutual funds in 2009 and reinvested myself. How have I performed in those holdings I've had for 5 years? This excludes dividends...

DIS 194.6667%
CAT 65.34%
TWX 210.3587% (add this to the above list)
PFE 74%
MMM 101.11%
V 204.85%

S&P 87.3168%

Sold a few low performers I lost faith in late last year:
KO 40.146% Stopped drinking the crap.
TM 47.76% Realized the better electric car play
TXN 67.52% Lubbuck Texas sucks...

S&P 59.84%

In that 5 years I also held and sold MRVL for about 6 months before dumping it. Too speculative, dividend too low... no gain no loss.

I think you are too much a mustachian Leo. Another fellow that dishes out financial advice that I am impressed with. Some good advice but more impressed with his cult creation! I would not be welcome in those forums... Not that I'm welcome here but it's lawless here....

dasmo said...

That Vangard ETF doesn't charge fees because it's skimming your dividends. By around 2% a year....

dasmo said...

This is what happens when you don't have a TV....
You also need to pony up a minimum 10k purchase for that ETF (VFIAX). Maybe not a 2% dividend skim but you judge. Here are that ETFs top holdings and their dividend yields.

AAPL 1.7%
MSFT 2.6%
XOM 2.9%
JNJ 2.6%
GE 3.5%
WFC 2.6%
PG 2.9%
JPM 2.6%
VZ 4.8%
CVX 4.1%
PFE 3.5%
INTC 2.5%
T 5.7%
BAC 1.1%
ko 2.9%
MRK 3%
PEP 2.7%
IBM 2.8%
DIS 1.3%

The ETF: VFIAX 1.78%

Why not just start picking away at making your own version of this? How is that any more risky then investing in something like this fund you have not control over?

Jack and Cate said...

Looks like this blog has gone from housing to "I have more invested and you aren't as smart as me...." blog.

Oh well, all good things must pass, just like the golden days of real estate. Happy New Year.

totoro victoria said...

This blog has been based on a comparison between rent and buy that presumes you will invest the savings renting might bring.

I don't mind discussing the investment side myself.

I don't believe I can beat the market myself, but I do believe someone with a lot of knowledge and attention to the matter could. Look at Warren Buffet.

Marko said...

Monday, December 29, 2014 8:25am

MTD December
2014 2013
Net Unconditional Sales: 351 355
New Listings: 377 437
Active Listings: 3,238 3,554

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

Phil said...

No offense dasmo, but it's hard to believe someone could beat the market who is willing to buy stocks on the advice of other bloggers, and who then continues to add to those positions numerous times before said stocks get annihilated.
It's wonderful if you really can beat the market, but there are plenty of stock blogs to make your claims.

dasmo said...

None taken. I don't think SJ advised anyone to buy SDRL. He brought it up in refernce to high Yield stocks. It's probably the riskiest move for sure and would not recommend it to anyone. It's in my RRSP so it's a longer term play for the dividend. It's still a small percentage of my portfolio so if it evaporated into nothing I wouldn't much feel it. I might take another position in the new year. it's leveled off right now. Another advantage of investing yourself. That ETF I need to put 10k in at once. I can buy positions for 1-2k at a time. It's called dollar cost averaging and taking a position slowly. SDRL are still leasing rigs they built in the 80's so they aren't a fly by night operation. The risk is they don't re-instate the dividend in the next year. Then it's looking at the capital that's in there and wondering if it can do better somewhere else. And... this is the problem with RRSP's If I sell my SDRL position for the 30% it's down I can't write that off against a gain to compensate for the loss....

So you need to wait a year before the beat down. If they don't reinstate the dividend I will admit defeat and call myself a fish that took the bait... Wait I already am a fish. A Halibut!

Leo S said...

Why not just start picking away at making your own version of this? How is that any more risky then investing in something like this fund you have not control over?

You could, but you will probably pay quite a bit in trading fees maintaining it, you will spend a lot more time maintaining it, and I almost guarantee you will not be able to stop yourself from tweaking the mix based on your own thoughts, and then you're back to picking stocks

dasmo said...

So you think it is a safer practice to hand your money over to someone else to skim mean manage?

"Much of the income earned by ETF sponsors comes from income generated by their funds. Most ETFs own a basket of stocks that produce dividend income throughout the year. Instead of receiving a full annual dividend from all the stocks owned in an ETF, investors see a small fee deducted from this income stream.

But what’s got researchers more up in arms is a practice called securities lending. Hedge funds and other institutional investors often borrow shares held by ETFs to sell them short in order to hedge their portfolios. In this scenario, the lenders of the shares receive interest payments to compensate them for lending the shares, boosting returns for investors and the ETF firm. By making money from lending securities, ETF sponsors can lower their management fees to appear as though their investors are incurring very low expenses."

renter waiting to buy said...

I read this blog regularly and really enjoy it. I am a renter who is debating buying. I enjoy watching the housing market, and am fairly new to Victoria which is another reason to like this blog. One downside to renting is not being able to renovate to ones own taste. However, renting is pretty relaxing. The other thing I do is watch the stock market and trade. So drifting over to the investing topic has not disappointed me and to some extent is relevant to this blog's topic.

The drop in the Canadian dollar seems to have impacted a nice uptick for the local economy...which seems to be rippling over to the housing market (sales are up).

I am curious if any of you have thoughts on why there are not more listings. The usual reasons for selling a home would most likely still be occurring. Are people holding on to property hoping for higher prices..are more buyers trying to get in before rates go up? I would have thought the baby boomers would be selling. Also wonder how the dramatic drop in the price of oil and natural gas will impact housing. More money floating around to spend...but less gov't revenue. Any ideas around these thoughts?
Thanks to all that take the time to post.

totoro victoria said...

I'm not sure why there are not more listings.

My reasons for not selling right now are primarily financial. My interest rate is low and my tenants cover my costs.

I'm waiting for prices to rise again. It may be several more years.

Others may be doing the same, or staying in their current home for the same reason. Without strong appreciation the property ladder stalls a bit.

Leo S said...

So you think it is a safer practice to hand your money over to someone else to skim mean manage?

I think there is still a misunderstanding here. The whole point is that they basically don't manage it. They structure it to match the index as closely as possible and that's it. The day to day maintenance to make sure it continues to track the index is probably mostly automated.

Most ETFs own a basket of stocks that produce dividend income throughout the year. Instead of receiving a full annual dividend from all the stocks owned in an ETF, investors see a small fee deducted from this income stream.

There is no insidious dividend skimming going on. They are talking about the management fee which is published and is in the range of 0.05 to 0.9% depending on the fund.

By making money from lending securities, ETF sponsors can lower their management fees to appear as though their investors are incurring very low expenses."

Great. Less fees for me. Never heard anyone concerned about this.

Leo S said...

I think the long slide in prices discouraged a lot of sellers. The house we bought was listed twice before at higher prices during the slide and failed to sell.
Now sales are up a bit but sellers haven't quite clued in yet that they might have better luck now. Maybe we'll see an increase in listings when they do, but I suspect if people aren't needing to sell they would want to hang on a bit longer to see if prices have improved at all.

Marko said...

I often have BNN running in the background in my office and I've come to the conclusion that it is impossible to outperform the market as an average Joe. In my opinion the most you can do as an average Joe is avoid mutual funds/excessive fees and don't invest on emotion. Use common sense and there is a 50% chance you'll outperform and 50% chance you'll underperform; however, if you aren't paying fees on average you are probably outperforming mutual funds/other fee associated crap.

I took a number of accounting course at UVic/UBC but I would be foolish to think I can analyse cash flows, income statements, and balance sheets better than a professional.

I made a lot of money on a start-up out of Vancouver (Coastal Contacts) but it was more to do with luck. I just kept buying into the company (on emotion none the less because I was ordering glass and contacts from them) even though they posted a loss almost every quarter until they got bought out.

At the same time I was ready to buy a 1000 shares of lululemon for $6/share until I asked advice from my girlfriend and she seemed to think at the time that it was going to go out of style. I never pulled the trigger and she continues to buy overpriced lululemon products and I missed out on a 6 figure profit, although I would have probably sold out much earlier.

Marko said...

Regarding low listings.

My on the front lines experience has been prices have been flat/down over 7-8 years while the rental market has remained strong and interest rates very low.

Every month I would say I get 2 to 5 inquiries with someone wanting to sell and when I give them my opinion of market value they decide on continuing to rent the property.

I have a woman that has a rental condo downtown that has called me three years in a row and she is just going to keep renting it (cash flow neutral) until market value is where is can get back what she paid for long that will take, who knows.

I just don't see baby boomers selling in huge numbers for the purposes of downsizing. You would be surprised how many 65-90 year old continue to live in 3,000 sq/ft + houses.

You also have owner occupiers that in the last 7-8 years have not established enough equity in their property to move up the property ladder so they are stuck where they are and the property is not being listed.

For example, in 2003 you bought a condo for 100k, sold it for 200k in 2006k and bought a 500k house.

In 2008 you bought a condo for 300k and in 2015 it is worth 275k and you don't bother listing it because you can't afford a house.

Chris said...

I was reading a paper on the ferry that was pointing out today’s parallels to the mid 1980s. I made note of some parallels:
- Victoria prices corrected from ‘81-85 and ‘10-14
- 1960-born BBs were turning 25, 1990-born BB kids are turning 25
- mortgage rates fell sharply during both 4-year periods
- our currency tumbled until the mid 80s
- after remaining range-bound for years oil crashed in mid 1980s like now
- also mentioned how vacancy rates fell here in the mid ‘80s as Albertans fled west

It was pointed out that Victoria home prices rose 175% from ‘85 to ‘94 and something along the lines of people in 1985 would have locked you up for suggesting such a thing was about to happen.

Just Jack said...

It's too soon to tell how oil and the dollar are affecting prospective purchasers. Here is the volume of sales for each month of 2014 for condominiums in the core.

Month Sales
Jan 80
Feb 82
Mar 120
Apr 124
May 127
Jun 108
Jul 123
Aug 129
Sep 111
Oct 112
Nov 101
Dec 68

Personally I don't see any uptick in the number of sales for the last two months.

The same for detached homes in the core.

Month Sales
Jan 91
Feb 125
Mar 150
Apr 216
May 218
Jun 208
Jul 200
Aug 170
Sep 167
Oct 175
Nov 113
Dec 83

We have also had a drop in new detached home listings coming onto the market in the core which has kept house prices stable.

Month New Listings
Jan 229
Feb 244
Mar 305
Apr 398
May 402
Jun 310
Jul 276
Aug 205
Sep 283
Oct 213
Nov 133
Dec 71

House prices in the core for 2014 by month

Month Sale Median Price
Jan $576,250
Feb $579,000
Mar $568,950
Apr $599,450
May $609,450
Jun $583,000
Jul $576,000
Aug $595,000
Sep $585,000
Oct $570,000
Nov $569,000
Dec $565,000

These numbers are for all houses and condos in the core. There will be price differences in the neighborhood, building style, type, size and whether the property is a first time buyer home, middle income or the "last kick at the can" house.

If you've narrowed down the physical and location attributes of the property you're looking to buy then it would be easier to analyse the market segment you're buying into. Including how stiff the competition is and how aggressive your bid may have to be in order to be successful in getting the property.

Just Jack said...

I don't see Baby Boomers down sizing in any significant numbers to condominiums.

There parents didn't - so why would this generation be any different.

The Baby Boomers are buying their "bucket House" Then off to a retirement home or an Urn at the bottom of one of their kid's closets. Note: to BB'rs you should have taken the kids to Disney Land rather than buy that fourth condo - that's why your ashes are near the dog's dish.

And the properties that I deal with are over mortgaged. They can't sell because they are upside down in their mortgage and owe more than they will net on the sale. They've extended and blended their mortgages to the maximum and are living on their credit cards.

Others are stuck being accidental landlords and are paying a bit each month over the rental income and waiting for a market rebound.

I am surprised at the resiliency of our rental market for well located homes with a good walk score. That certainly seems to have been a stabilizing force in the core districts' marketplace. The core districts being within an eight mile radius of the downtown. Because that is really the size of our residential marketplace.

Outside of that area it's a different market altogether.

dasmo said...

"The whole point is that they basically don't manage it."
No their computers do... What are their 40,000 global employees doing?

ETFs are also a complicated house of cards that is growing higher and higher. It is way more susceptible than owning the actual stocks. Note:

"On May 6, 2010, the Dow Jones Industrial Average plunged 998.5 points in just 20 minutes, wiping out more than $1 trillion in market value, before rebounding and closing only slightly down for the day. More than 21,000 trades were canceled as a result, 68% of which were ETF trades. An investigation by the Securities and Exchange Commission (SEC) cited ETFs as a significant player in the crash."

Better off to notice all those good looking bums walking around and ask yourself "who is selling those magic pants?" and invest in that company... Just don't ask your spouse first...

Just Jack said...

The significant difference between this market and that of the 1980's is easy access to credit at cheap rates.

Lenders were much more conservative in the 1980's as CMHC wasn't bank rolling them like today. Home equity lines of credit were difficult to get. So were credit cards.

So while we can draw some similarities to the 1980's recession in BC, the current housing market isn't likely to unfold the same way. Using the past couple years to forecast the next year seems to indicate that Dasmo's halibut market is the most likely to occur.

dasmo said...

I think there are less listings for a number of reasons.
-Less ability to make quick money
-Move up houses are very expensive.
-Prices have been flat so little equity has been built up recent buyers properties to move up market.
-Less people moving to Alberta
-Rental market is good so it's easy to rent your property if you have bought another.

Leo S said...

I just don't see baby boomers selling in huge numbers for the purposes of downsizing. You would be surprised how many 65-90 year old continue to live in 3,000 sq/ft + houses.

Me neither. Baby boomers will become a drag on the market but that's another 10 years off or so when the leading edge starts dying off. Stats out of the US show that in retirement destinations, people become net sellers in their 70s.

Leo S said...

What are their 40,000 global employees doing?

Who's? The entire industry? That's peanuts.

ETFs are also a complicated house of cards

It really isn't. Of course you can substitute index mutual funds with low fees and use the same strategy. No ETFs required at all.
High frequency trading is a totally different thing. Of course nothing is stopping the HFTs from trading in ETFs.

dasmo said...

Just Vanguard has over 40,000 employees global plus US.

Just Jack said...

In most instances, the lucky people were those who bought prior to 2007. Those that have bought within the last seven years have the increase in equity mostly from mortgage paydown.

In today's market your property has to appreciate by some 10% to cover property purchase taxes, GST and sales commissions before you begin to break even. And that's were most of your mortgage paydown is going if you wanted to sell in the last seven years. And on average we simply don't hold real estate long term anymore. 6 or 7 years before we get itchy to move on.

As Dasmo said, this makes going from a condo to a house tough to do. As you're likely selling a fairly new condo with granite and stainless steel and buying into a starter dump.

I think guys can move down in quality. Closing time on a Saturday at the Sticky Wicket illustrates that point. - but I don't think many women can do that. Once you have granite you can never go back.

If you're a single guy - your chances are better to get laid if you live in a newer downtown condo than a two bedroom shack on Bay Street. Starter homes are not sexy and are big jump in maintenance, taxes and utility rates. So prepare to be broke and single for a long time.

dasmo said...

"It really isn't."

Creating an ETF begins when a prospective ETF manager (known as a sponsor) files a plan with the U.S. Securities and Exchange Commission to create an ETF. Once the plan is approved, the sponsor forms an agreement with an authorized participant, generally a market maker, specialist or large institutional investor, who is empowered to create or redeem ETF shares. (In some cases, the authorized participant and the sponsor are the same.)

The authorized participant borrows stock shares, often from a pension fund, places those shares in a trust and uses them to form ETF creation units. These are bundles of stock varying from 10,000 to 600,000 shares, but 50,000 shares is what's commonly designated as one creation unit of a given ETF. Then, the trust provides shares of the ETF, which are legal claims on the shares held in the trust (the ETFs represent tiny slivers of the creation units), to the authorized participant. Because this transaction is an in-kind trade - that is, securities are traded for securities - there are no tax implications. Once the authorized participant receives the ETF shares, they are sold to the public on the open market just like stock shares.

When ETF shares are bought and sold on the open market, the underlying securities that were borrowed to form the creation units remain in the trust account. The trust generally has little activity beyond paying dividends from the stock, held in the trust, to the ETF owners, and providing administrative oversight. This is because the creation units are not impacted by the transactions that take place on the market when ETF shares are bought and sold.

Here's how arbitrage sets the ETF into equilibrium with its benchmark index. The ETF's trading price is established at the close of business each day. ETF sponsors also announce the value of the underlying shares daily. When the ETF's price deviates from the underlying shares' value, the arbitragers spring into action (computers doing HF trading). If the underlying securities are trading at a lower price than the ETF shares, arbitragers buy the underlying securities, redeem them for creation units and then sell the ETF shares on the open market for a profit. If underlying securities are trading at higher values than the ETF shares, arbitragers buy ETF shares on the open market, form creation units, redeem them to get the underlying securities, and then sell the securities on the open market for a profit. The arbitragers' actions set the supply and demand of the ETFs back into equilibrium to match the value of the underlying shares.

Redemptions have to flow through an authorized participant, which is usually a broker or market-maker, and it's only that institutional layer that can actually redeem. If for some reason a significant portion, say, half or 80% or so, of the total fund ownership wanted to redeem and get the underlying stocks from the ETF through the authorized participant layer, you would fundamentally have a crisis in a fractional-reserve system.

The ETF could not deliver the underlying stocks to all the would-be redeemers. The investors who really owned just an IOU on shares that had been lent to short-sellers wouldn't have a direct claim on the fund, so their demand to redeem would force an unwinding of the short-sales.

Leo S said...

Just Vanguard has over 40,000 employees global plus US.

Wikipedia says 14,000. Not that it matters one way or another given you have no idea what a reasonable number is to run that business.

As for your wall of text about how to start an ETF. How is that relevant? You know how hard it is to list a single stock on an exchange? I'm sure you can paste 1000 pages of what needs to be done for that.

dasmo said...

You are right 14,000 employees...

dasmo said...

To compare...
Individual equities:

A share of stock is literally a share in the ownership of a company. When you buy a share of stock, you're entitled to a small fraction of the assets and earnings of that company. Assets include everything the company owns (buildings, equipment, trademarks), and earnings are all of the money the company brings in from selling its products and services.

To buy or sell a stock you initiate your brokerage to buy. The electronic markets use vast computer networks to match buyers and sellers.

caveat emptor said...

"When you buy a share of stock, you're entitled to a small fraction of the assets and earnings of that company"

Try going to Cupertino and claiming your share of AAPL's assets :-)

Management has many ways to hose you out of your share of the earnings, the primary of which is issuing themselves vast numbers of options (diluting your ownership) and then using earnings to buy back shares at the peak of the market.

caveat emptor said...

Can you beat the stock market?

Obviously investors in general can't beat the market since collectively they ARE the market.

If you believe in efficient market hypothesis then no amount of hard work and intelligence would allow you to systematically beat the market and conversely no amount of sloth and stupidity would lead you to underperform systematically.

Of course criticisms of EMH are legion and is it really likely that ANY field exists where skill and hard work make no difference to the outcome?

My guess is that some dedicated individual investors can outperform the market since they have some unique advantages over the professionals of long timelines, small dollar amount trades and freedom from unplanned redemptions.

However Dasmo's or any other person's outperformance doesn't in the short term prove any investing skill since even if investing was done by dartboard there would be some big winners expected

caveat emptor said...

index funds - great option for small accounts as there are no trading fees.
broad ETFs - great option for medium accounts.

However once you are well into six figure portfolio you should consider dispensing with ETFs even if you want to be a passive investor. You are better off IMO creating your own zero expense ratio basket of stocks. For instance even with less than 100K you could easily create a basket of stocks that tracked well with the TSX or SP500.It also gets rid of the ETF complexity that Dasmo referred to

Chris said...

I can’t see many of our 10 million BBs downsizing much either, although the eldest (70) will soon need better access to health care, single level living and possibly milder climates. With the falling Canadian peso, the west coast centres with the best facilities will turn out to be the winners. I was surprised by how many BBs I chatted with in Vancouver this past week who said they are planning on retiring to Victoria. One couple could hardly believe how cheap it was here when they visited this summer.

Just Jack said...

What did the Baby Boomers' parents do when they retired?

Did they leave their friends and family to move to an unknown city?

Did the BB'rs parents sell their home and move to a condo?

Some did, but most stayed in the same town with the friends and family that they have known all of their lives.

So why would the BB'rs be any different from their parents?

The life expectancy may be 83 years in Canada but that only means half of the boomers are going to make it to 83. On my street this year we've had two retirees die of strokes between the ages of 65 to 69 despite being less than five blocks from the hospital. On the next street over a lady aged 98 passed away this year. They all were native Victorians that lived by themselves in a house.

Could BB'rs go completely against what every generation before them have done? Sure. But it isn't likely

For those who think massive amounts of Vancouverites are coming to Victoria when the couples are between 65 to 69. History shows it doesn't happen. They do move to a new city where their grand children are young enough to be played with - but that puts them in their 50's not late 60's.

The front half of the boomers were in their fifties between 2001 to 2007. And that corresponded to the highest volume of sales and greatest increases in prices. They were young enough to move to Victoria to be around their grand kids and to make new friends.

When the back half of the boomers reached 55, house prices were very expensive. Which resulted in the lowest volume of sales over the last seven years. The back end of the curve are staying put and moving into the jobs vacated by the front half of the boomers.

You constantly are bombarded by someone selling a book about baby boomers. I simply ask "what did their parents do?" Chances are the BB'rs are going to do the same.

That means a LOT of Estate Sales coming our way of expensive homes that few can afford. That's your Beach Drive waterfront and Oak Bay Mansions.

renter waiting to buy said...

Just finished reading all your lovely comments. Insightful...and at times funny! I appreciate the time taken to post the data on sales and median prices. No one wants to sell and take less than they paid...although some may get forced into it. Understandable how people go into a bit of a holding pattern. It is concerning that the Bank of Canada's governor has spoken openly about inflated housing prices. For those holding waiting for the house/condo prices to go up...I don't see that happening. I think high debt levels are potential trouble. However I do feel that the more I learn the less confident I am in what I know. There are so many moving parts to think about and then surprises come along.

Maybe I'll take that tip, forgo the condo and fund a family trip to Disneyland.

For those of you following the stock market I thought this article had some interesting truisms and market history.

Thanks kindly, I greatly enjoyed the information and like clever wit.

Leo S said...

Thanks that's a good article. I like this one. "Most investors have no idea how they actually perform. Markus Glaser and Martin Weber of the University of Mannheim asked investors how they thought they did in the market, and then looked at their brokerage statements. "The correlation between self ratings and actual performance is not distinguishable from zero," they concluded."

Just Jack said...

Time to look at what I consider to be good deals this month.

A 27 year old 1,300 square foot home on a 7,800 square foot lot on Rey Road in the Tanner area of Central Saanich for $380,000.

A condo along Goldstream avenue that originally sold at $205,000 in 2005 and just re-sold at $215,000. Of course this originally sold at a time when developers may have been price fixing new condo complexes in the Westshore.

A retirement manufactured home in a well kept complex off Central Saanich Road. Originally purchased in 2007 as the wave of Baby Boomers crested in greater Victoria at $154,000. Re-sold this month at $134,000.

An Oak Bay starter home with a basement and a walk score of 81 at $525,000. This home was owned for 60 years by the original buyer. Then a little lipstick was applied and the home was sold in two weeks at below assessed value by the Estate. Proving that in the world of LETS MAKE A DEAL, the kids would rather take the money than what's behind door number 2.

dasmo said...

My favourite is
60. When you think you have a great idea, go out of your way to talk with someone who disagrees with it. At worst, you continue to disagree with them. More often, you'll gain valuable perspective. Fight confirmation bias like the plague.
It's the only reason I squawk here...

dasmo said...

My other favourite is:
26. James Grant says, "Successful investing is about having people agree with you ... later."

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

Dasmo, do you think Gold is going to get a good drubbing if or when the Russian's sell off their 93 tonne Gold reserve to stabilize the Ruble?

Russia is hurting like H-E double hockey sticks and until Crazy Ivan plays nice nice with Uncle Sam's foreign interests I think Gold may just tank. The USA is still a tiger - and you don't pull its tail even if you're a bear. I would speculate that after more than a decade in Iraq, the USA has pumped a lot of Iraq's oil back into US oil fields to keep oil prices low longer than Russia has gold.

Or how about China with its "fake" economy based on land speculation. How many more Red Army captains will be allowed to immigrate to countries around the world to buy million dollar condos as strawmen for government officials. Only to be recalled 3 years later to Beijing while the assets are sold and the proceeds held offshore. How many more empty cities can China build before Adam Smith reaches out from his grave and gives them a rough Keynesian caning.

My end of the year rant.

dasmo said...

GLD is the only ETF I've ever owned. Sold last year. Something around 25% profit after 4 years. Pathetic... I have to credit Garth for influencing that move. Yes I too read his blog... I would make oil plays right now not gold....

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

What's on my watch list while I wait for the 5k to open up in the TFSA?

totoro victoria said...

Happy New Year - may you enjoy good health and good returns :)

kabloona said...


Looks like a basket of US stocks.... remember that you will lose the withholding tax on US dividends since US Gov't doesn't recognize the TFSA for tax purposes, only registered accounts such as RRSPs, RRIFs or LIRAs.

In non-registered accounts, at least you can claim the US withholding tax when you file you tax return....

I prefer to hold US investments in my RRSP and Canadian stuff in my TFSA and non-registered account.

I need that Canadian dividend tax credit....


dasmo said...

Good point kabloona. Still not sure of the math on that since all the dividend gains will be taxed as per normal from an RRSP, just later. Will look into it though...

Marko said...

new assessments are out @

Leo S said...

Up 0.9%..

Leo S said...

I like the new website. Much more useable.

dasmo said...

Up 9.8% on the fairfield house.
Down 7.1% on the VicWest House.
Mind you I think I would probably get 10% less on the fairfield house if I put it up and about 30% more for the VicWest property...

dasmo said...

I might add the devaluation was on the land portion on the VicWest property.

Leo S said...

Some properties have crazy swings for little apparent reason. The place we almost bought, 1762 Howroyd, was assessed over $600,000 in 2012, then sold for $500,000, and the assessment dropped to $510,000 for 2013. This year it's back up to $593,000 with no upgrades to the house.

Marko said...

Fri Jan 2, 2015 8:15am:

Dec Dec
2014 2013
Net Unconditional Sales: 389 355
New Listings: 419 437
Active Listings: 3,210 3,554

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

HachiRoku said...

Happy New Year everyone! Thanks for all of your efforts in making this blog so useful and entertaining.

Been reading this site since 2007 and looking forward to another year while house hunting in Victoria.

dasmo said...

@kabloona, tnx for the tax tip on withholding tax. Revised my thinking on the oil plays and made me delve deeper.
My two positions I have started so far are POT and TNK. Both should benefit by lower oil prices and both pay solid dividends.

Phil said...

How could our stock wizard not know he was losing the withholding tax with his US stocks in his TFSA? Just a thought for 2015, perhaps you should consider sharing your wisdom on some stock blogs rather than a real estate blog.

Phil said...

dasmo said new year‘s eve…
"I would make oil plays right now not gold"

XGD gold fund up 3.51% today!

You should be careful with your advice, some may actually follow it. I'm just razzin you cuz I know you can take it. Happy New year everyone.

dasmo said...

It's less advice as it is a sounding board. The only indication I have ever received about withholding tax was through my KKR holdings which I sold from my TFSA and kept in my RRSP. So I completely forgot about it. AAPL only recently started paying dividends but I have never received an indication of a tax being withheld. The other long term holdings that payed any dividend outside the RRSP is Scotia Bank which is Canadian. In the past I've been more focused on growth than dividends. So it has absolutely not been on my radar. It is now because of my posting here :-)

dasmo said...

I might also add the TNK is up 3.16% today :-p but who cares about a day. Let's compare in 5 years. I think gold is probably better than cash over the long term but the human race needs oil way more than we need gold....

kabloona said...

Glad I could help, dasmo....


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

Happy NY.
Condo median up 11.7% since last Dec.
House median up 1.4% since last Dec.

Prophecy unfolding nicely ;)

CS said...

do you think Gold is going to get a good drubbing if or when the Russian's sell off their 93 tonne Gold reserve to stabilize the Ruble?

According to Bloomberg, Russia had not 93, but over 1100, tons of gold in December, worth a bit less than $50 billion, or about 15% of Russia's total reserves of $388 billion — not bad for a country with virtually no foreign-held government debt and a top tax rate of 15%.

For comparison, Canada's reserves, totaled a mere $79 billion as of December 23, 2014, with foreign debt running at $1.377 trillion as of March 2014.

Meantime, Canadian household debt is said to be at an all time high, which does not seem a bullish indicator for RE. Prices in Victoria have been flat for a while despite exceptionally low interest rates, suggesting that most of those who were anxious to to buy and had the means to do so have now bought. So it might not take much to start a downward slide that, once started, would find little resistance.

dasmo said...

Sounds like the price of gold has further to slide....

patriotz said...

about 15% of Russia's total reserves of $388 billion — not bad for a country with virtually no foreign-held government debt and a top tax rate of 15%.

Russia's problem is not foreign-held government debt, but foreign-held USD and EUR private sector debt, which is huge. Including mortgages.

For comparison, Canada's reserves, totaled a mere $79 billion as of December 23, 2014, with foreign debt running at $1.377 trillion as of March 2014.

That is total foreign debt, not foreign held government debt. Also governments in Canada issue virtually no debt outside of CAD, which means it really doesn't matter if it's foreign held or not. As for the private sector, more is in USD, but the CAD has been doing a lot better against the USD than the ruble has.

Russia is heading for a typical 3rd world currency crisis where it cannot refinance its foreign currency debt. Well not really typical, because IMF and company are not going to come to the rescue because of sanctions.

dasmo said...

If I was to give "advice" it would be this: if someone thinks they know it all, they are a fool. If you think someone knows it all, you are a fool....

CS said...

Russia is heading for a typical 3rd world currency crisis where it cannot refinance its foreign currency debt. Well not really typical,

If Russia is headed for a typical 3rd world currency crisis, with total foreign debt equal to 23% of GDP, where is Canada headed with total foreign debt equal to 64% of GDP, or Britain with total foreign debt equal to 406% of GDP?

With only $77 billion of foreign debt to be rolled over in 2015, talk of a Russian currency crisis sounds like wishful thinking.

The ruble has decline substantially because the decrease in oil price has reduced Russian exports by six or eight percent of GDP. The devaluation of the ruble provides Russia with the equivalent of a high tariff wall that is expected to cut German car sales in Russia by $18 billion in the next 12 months, while boosting sales of Ladas and other great Russian automobiles!

Actually, I wouldn't turn down a Marussia for a BMW.

patriotz said...

I told you that Russia's foreign debt is in hard currency (USD, EUR), while Canada's (and the US's) is in their own currency.

That's the crucial difference.

CS said...

I told you that Russia's foreign debt is in hard currency (USD, EUR), while Canada's (and the US's) is in their own currency.

That's a crucial difference.

It's not particularly crucial when the debt Russia has to roll over in the next year is less than 20% of Russia's central bank US$ dollar and gold holdings. In any case, rubles still buy oil and gas and people will exchange Euros and dollars for rubles at a price, currently 55 to the dollar.

If some companies are forced into bankruptcy as a result of the unexpected increase in the cost of debt repayment, some foreign creditors will suffer, but the important players in Russia will be bailed out by the state as, already, in the case of Rosneft.

The US-inspired financial attack on Russia has failed, and will lead to a stronger Russian economy more closely linked with China and other Asian economies than with Europe. It may also finally loosen the US grip on its European vassals, as they count the cost of Zbigniev Bzrezinski's failed plan for the dismemberment of Russia.

CS said...

In fact it is almost totally irrelevant in what currency a country's foreign debt is denominated. Consider the US: half a trillion in foreign currency reserves, eighteen trillion in foreign debt. If the US was required to pay its debts in a hurry and tried to do so by printing dollars, the value of the dollar would go to something almost indistinguishable from nothing.

Leo S said...

The proof is in the pudding. Ruble is imploding, the dollar and pound aren't.

CS said...

Ruble is imploding, the dollar and pound aren't.

the ruble is off 40% and stable whereas the C$ is off nearly 20% and still falling, reflecting relative magnitude of the dependence of Russia and Canada on export of oil.

The pound is also falling as North Sea oil become uneconomic, and the Euro is falling because Europe is a money-printing economic basket case with 50% plus youth unemployment in greece and spain and 25% unemployment overall in Spain.

The US$ is rising for the obvious reason that as the world's largest importer of oil it is the greatest beneficiary of $50-dollar oil.

These are the adjustments in currency values necessary to bring trade into balance. if oil stays thirty dollars or more below the cost of tar sands production, expect the C$ to fall further another ten of twenty percent.

dasmo said...

Tar Sands are just not that critical to Canada. In fact, what is the exact contribution to the GDP of AB even?

dasmo said...

Russia: "As of 2012 oil and gas sector accounted for 16% of the GDP, 52% of federal budget revenues and over 70% of total exports."

CS said...

Tar Sands are just not that critical to Canada.

Oil and gas are quite critical to the value of the C$. With oil exports of 2.9 million barrels a day, the fall in the price of oil makes a hole of around a billion a week in Canada's trade balance. Then there's gas, the price of which is now at rock bottom.

Reflecting in large part the loss of oil and gas revenue, the C$ has fallen by 18% and will likely continue falling if the price of oil continues downward.

CS said...

"As of 2012 oil and gas sector accounted for 16% of the GDP"

The gas sector is still doing fine.

Despite American efforts to sabotage Europe's gas supply thereby creating a market for US liquified natural gas at twice the price, Europe continues to import gas from Russia on long-term fixed price contracts. In addition, Russia has signed 30 year contracts for the export of something like $800 billion in gas to China, with tens of billions paid up front.

The loss of oil revenue due to the plunge in price is about $3 billion a week: three times Canada's loss but only 70% of Canada's loss per capita.

CS said...

Incidentally, Russian index funds invested in, among other things, the oil and gas sectors have made gains since the ruble touched bottom last month. Both ERUS and RSX are up around 20% from the lows of last month.

CS said...

Russia also makes and exports stuff, particularly nuclear power plants (with an $8 billion contract just signed with Finland, a contract with India for ten plants, with Hungary for two plants and and several recent deals with Iran) and rocket engines, which Nasa buys by the dozen to power the Atlas rocket.

dasmo said...

OK to compare...
Canada total mining, quarrying, oil and gas exports is just over 8% of GDP.

You go ahead and invest in Russian index funds... Even I'll call that gambling...

dasmo said...

Plus the more important stats on Russia were
"52% of federal budget revenues and over 70% of total exports are oil and gas."
I suspect they are going to be a lot less aggressive this year....

Leo S said...

Russia also makes and exports stuff, particularly nuclear power plants

Yes yes Russia is a picture of economic health we should all aspire to.

dasmo said...

Or this on Canada:
"in 2010, the GDP of Canada’s energy sector accounted for 6.8 percent of Canadian GDP. The oil and gas extraction industry accounted for about half of this amount"

So around 3.4% for Oil and Gas.

CS said...

the more important stats on Russia were
"52% of federal budget revenues and over 70% of total exports are oil and gas."

It'd be cool if 52% of Canada's Federal budget was covered by oil and gas royalties, especially if Canada's top tax rate was only 15%, as in Russia.

The fact is, Russia has huge capacity for adaptation to fluctuation in commodity exports. But when the Anglo-US financial establishment are trying to destabilize your government while neo-Con Nazi backers like John McCain are promising a Moscow Maidan, yeah, you experience some turbulence.

I suspect they are going to be a lot less aggressive this year....

For a country that lost 28 million citizens to the Nazis, the Russians are taking US and Canada-backed neo-Nazis in Ukraine pretty calmly. Currently Russia is supplying Ukraine with 50,000 tons of coal a day and gigawatts of electricity, all without pre-payment from a regime with a poor record for paying its bills.

How much more unaggressive do you expect the Russians to be going foreward?

CS said...

Yes yes Russia is a picture of economic health we should all aspire to.

Comparing Putin's popularity at 81% with Harper's (48 percent say he'd taking the country in the wrong direction) suggests you may be right!

The Russians export of arms exceed those of the US, while Canada does not seem to rate.

Perhaps treating the Russkies like crap isn't so smart.

dasmo said...

Russia doesn't touch the US as far as Arms manufacturing... That data is an estimate of volume not an economic measure. So Russia is dumping a lot of old armaments into the market? Show me a list of the Russian Manufacturers compared to the US...

Leo S said...

Comparing Putin's popularity at 81% with Harper's (48 percent say he'd taking the country in the wrong direction) suggests you may be right!

Wow! Even Kim Jong-Un has an approval rating of 50%. It must be a veritable paradise there compared to Canada.

CS said...

So Russia is dumping a lot of old armaments into the market?

Yeah, I expect you're right. The Russians are probably just dumping a few billion dollars worth of rusty WW2 rifles on the Chinese.

Plus a few of these.

As for showing you "a list of the Russian Manufacturers compared to the US," may I refer you to Google.

CS said...

Wow! Even Kim Jong-Un has an approval rating of 50%.

Yes, and 50% may not be an overestimate since the number is based on the testimony of North Korean defectors, who presumably are not among KJU's warmest admirers.

That KJU is more popular than Obama perhaps reflects the number of wars each of these leaders has started.

dasmo said...

That link is from the same source that again warns the reader they are making the numbers up... "Importantly, SIPRI's totals don't measure the cost of the transaction but the cost of the weapons' production. The numbers are listed as the production value of the weapons sold rather than the amount they were actually sold for. In addition, SIPRI does not track the transfer of certain small arms."

dasmo said...

When it comes to actually making money from arms, Russia isn't even in the top ten... This is from your same source...

CS said...

When it comes to actually making money from arms, Russia isn't even in the top ten...

I'm not sure what this has to do with my original point that the Russian Central Bank holds more than eleven hundred tons of gold, not the 97 tons or whatever it was that Just Jack said. But in any case the source you are quoting states:

"Overall, the U.S. sent more than $26.9 billion in weaponry to foreign nations [in 2013], while Russia sent weaponry exceeding $29.7 billion in value around the globe," which confirms what I said, namely that Russia sold more weapons than any other country on earth in 2013. Moreover, they are bringing many new weapons systems into production and are said to be shooting for $50 billion in annual sales."

That Russian arms producers earn a lot less than Lockheed Martin and Boeing is hardly surprising since Russia's military budget is only 5% of America's.

CS said...

Oops, the closing quote should come before the word "moreover."

dasmo said...

So what is your point? Russian has huge stockpiles of Gold and vintage weapons that they are selling to India? And?

SJ said...

high-pay medical jobs + retiring boomers = Victoria BOOM

CS said...

So what is your point?

That JJ was incorrect to state that the Russian central bank held only 97 tons of gold, when in fact it held more than eleven times as much. How many times do I need to repeat it for you to understand a simple correction to a statement of fact?

And the Russian CB isn't selling any gold and driving down the price (a possibility JJ raised), but rather, in 2014, bought 150 tons, thereby supporting the price in the year Russia overtook the US to become the World's third largest producer.

Just Jack said...

CS seems not to be able get past my error of 93 tonnes of Gold. The amount is estimated, by some sources, puts the Russian Gold reserve at closer to what CS has written.

The question was not about actual tonnage but rather what Russia might do with their large gold reserves.

And I'm not the only one who is pondering this question.

Would you buy or sell gold today?

dasmo said...

Try to sell your gold jewelry on eBay and you will find out just how valuable gold really is...

Phil said...

Would you buy or sell gold today?

Since dasmo’s call “I would make oil plays right now not gold.... “,
gold is up couple percent while oil is down almost 10%.
We should be asking our guru where we go from here?
( it’s all for fun dasmo, besides you seem to enjoy setting yourself up for some ridicule)

dasmo said...

I very much set myself up. If I wanted to be a guru I wouldn't come here telling the truth. Like I said this is a sounding board. No one here agrees with me and there is a decent range of backgrounds and opinions so its a damn fine place to argue....and learn.

Some stocks on my watch list are looking rather attractive right now so I am sticking with my oil play. Buy low sell high as they say and the low zone is beginning... Patience is key...

As far as Gold. Tough call. It's down a lot from it's high but if I was to guess I think it will be down some more still. Russia can't buy as much with the price of oil going down ;-)

CS said...


CS seems not to be able get past my error of 93 tonnes of Gold. The amount is estimated, by some sources, puts the Russian Gold reserve at closer to what CS has written.

The question was not about actual tonnage but rather what Russia might do with their large gold reserves.

It seemed to me it was Dasmo who was having difficulty getting the point at issue.

As for what the Russian CB does with its 1100 tons of gold, yeah, they might sell it, but they have no present need to, since they have over US$300 billion in foreign currency if they need to bail out Russian companies with foreign currency denominated debt (of which only $70 billion has to be rolled over this year).

The Bloomberg article you mention, which raises the possibility of Russian CB gold sales was published on December 19, only a day or two after the ruble hit bottom. Since then, the Ruble has gone nowhere, being at 59 to the dollar today as on December 19.

More interesting, as Phil remarked, is oil — that's if you like volatility. And it seems an interesting question how this will affect RE.

Canada exports 2.9 million barrels of oil or equivalent per day. The plunge in price means a loss of export income of about $1 billion a week, or annually, about $1500 per capita, which is equal to about 13% of total export revenue.

If the slump in oil price continues for long, there will have to be substantial adjustments to the Canadian currency and economy. The loss of oil revenue would be compensated by, for example, a doubling of Canada's export of cars (most unlikely), or the termination of Canada's import of cars, trucks and computers (impossible)!

To achieve the necessary radical adjustment in the volume of trade would likely require further depreciation of the C$ versus the US$.

According to Just Jack, most high end home sales in Victoria are to out of towners, many presumably, foreign. How will the continuing slump in the C$ affect such buyers. On the one hand they see prices are lower now than they were. On the other hand, they must fear that prices could go even lower.

And how does the reallocation of resources within the economy affect domestic demand for housing?

The effects would not be felt uniformly across the country. Alberta would likely suffer a recession, Ontario's auto industry and the BC forest sector might see a boom.

dasmo said...

@CS, I was responding to your suggestions that Russia was somehow a rising economic power house...
This, however I can agree with: "The effects would not be felt uniformly across the country. Alberta would likely suffer a recession, Ontario's auto industry and the BC forest sector might see a boom."

CS said...


I was responding to your suggestions that Russia was somehow a rising economic power house...

Please try to refrain from misrepresenting me. I merely disputed the suggestion that Russia was headed for a "typical Third World currency crisis," and pointed out that it had great financial capacity for adaptation to a collapse in commodity prices.

And it is not sensible to talk of Russia as a Third World nation: first because the Sukhoi T50 is arguably a better fighter jet than Lockheed Martin's F35 (almost twice as fast, much greater range, more maneuverable, and not much easier to track by radar) but because, by definition Russia is not Third World.

The term Third World was coined by Mao Tse Tung, who called the American-dominated West the First World, Russia and its empire, the Second World, and what is now sometimes called the Rest, which includes China, the Third World.

dasmo said...

Gotcha, I guess I misunderstood your strong defence as promotion.

CS said...

That link on the T50 versus the F35 doesn't seem to work. And I am wrong about the speed of the T50, although it is faster than the F35. Here's a link that works, maybe.

dasmo said...

"A dollar invested in bonds in 1801 would be worth nearly a thousand dollars by 1998, a dollar invested in stocks that same year would be worth more than half a million dollars in real terms. Meanwhile, a dollar invested in gold in 1801 would by 1998 be worth just 78 cents"

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