Monday, January 5, 2015

New years prediction roundup

End of the year and the annual numbers are in.   How did we do in last year's predictions?

LeoKoozdraMarkoCaveat EmptorPatriotzReasonfirstACTUAL
Sales6200530064006000---61006699
SFH 6 month average$580,000$550,000$585,000$565,000------$609,342*
BoC Interest Rate1%0.5%1%0.75%---1.25%1%
Teranet June 2014128130132131129128136.2
Teranet Dec 2014124126131128124125TBD (Nov: 138.2)

* The 6 month average SFH price does not appear to be published anymore. This is the annual average.

Overall we all sucked.   Marko wins for being closest on every measure; that's why he gets paid the big bucks.

 Other predictions:
"House prices across the Canadian housing market may peak in 2014. Victoria's big price declines will likely begin after the Canadian housing market peaks and it is evident that house prices across Canada have begun to correct." - Info

"further controls will be added to the mortgage market but I think at least one of them will be head line grabbing. I'm going to go with regional caps re-established on CMHC insurance." - Koozdra  (some minor tweaks happened)

"I think we will see a drop in prices of approximately 5% by December (in Oak Bay)" - totoro

"In short, 2014 to early 2015 will see a sharp transition. This will result in either a significant increase in MOI or significantly lower prices; probably a combination of both." - LeoM

"MLS HPI (2014): - 4%" - Info (Actual: Up 2.1%)

"Any generalized market prediction would be meaningless in this market." - Just Jack

Assessments are also in and overall seem to be pretty flat except for in the periphery.

In important economic news, oil prices below $50 a barrel.  How long can the oil sands withstand operating at a loss before those camp jobs start evaporating?

187 comments:

dasmo said...

I guess I missed the prediction party!
I did my own little spread sheet on Gold Vs the Dow since 1975

Leo S said...

Yeah I didn't see a prediction from you in the original thread. I'll put you down as predicting a 20% drop.

caveat emptor said...

Predictions are tough - especially about the future!

Yikes - my assessment went up by 9.8%. There were a couple of really expensive sales of comparables in my immediate neighbourhood, so it's going to be tough to appeal the increase and I likely won't bother.

My current assessment is 2% above what I paid in 2008. Kind of supports Dasmo's halibut theory at least for the core districts. Six years up 2% nominal, down 7% inflation adjusted

Leo S said...

Some future facts about interest rates.
I'll bet rates stay at 1% for another year. The US might raise rates a bit but Canada will stay put.

SJ said...

I predicted condos would shine. Toot, toot. That's me blowing me own horn.

Condo Market on Big Rebound

dasmo said...


Put me down for rates going nowhere fast

Leo S said...

>> I predicted condos would shine

What in the last month? You only get credit for predicting the future.

Also looks more like the new condo market is doing well while the older market is slow.

SJ said...

I predicted it with my wallet a year ago. The best kind of prediction.

SJ said...
Congrats on the predictions Marko.

We just bought a condo for 227K, 104K below 2012 assessment. It should be fun to see and appeal the latest assessed once we get the number.
January 3, 2014 at 12:41 PM

caveat emptor said...

I'll predict BoC is at 1.25 at the end of the year

reasonfirst said...

I predict that I will be wrong with my predictions.

Leo S said...

I predicted it with my wallet a year ago. The best kind of prediction.

In that case I also predicted correctly.

Dustin said...

2015 predictions

1. 6,750
2. $619,000
3. 1.25%
4. 138
5. 138

caveat emptor said...

I bought 100 stamps the day before Canada Post raised rates. Clearly I am a predictive genius

Just Jack said...

I wonder if I should "out" myself this year?

patriotz said...

Well barring a last minute reprieve from the December 2014 Teranet, I got the direction wrong for the first time as well as the magnitude.

I think for 2015 Victoria as well as Southern BC ex-Vancouver is largely going to depend on what happens to oil. If it stays low, it's going to be a down year.

Tren said...

mark.

Phil said...

“depend on what happens to oil. If it stays low, it's going to be a down year.”

Victoria usually performs well when oil crashes and stays low. As you can see the only time it didn’t was during the Asian financial crisis (97-98).

It could be due to a lower petrodollar stimulating tourism, forestry, American buyers.

SJ said...

Speaking of american buyers, it wouldn't surprise me if 'climate migrants' as they're called, are starting to bid up our prices. It's only prudent to begin planning their escape from severe drought.

http://www.weather.com/climate-weather/drought/news/california-drought-climate-change-water
In British Columbia, the alarm is also rising. In "American Exodus: Climate Change and the Coming Flight for Survival," Canadian environmental writer Giles Slade forecasts vast numbers of Americans fleeing across the northern border.

dasmo said...

Our tech industry will also benefit from a strong US dollar... And Tech is our largest private industry....

dasmo said...

I wonder if we will hear talks of a pipeline from Alaska to CA delivering water again?

patriotz said...

Speaking of american buyers, it wouldn't surprise me if 'climate migrants' as they're called, are starting to bid up our prices.

If there are going to be 'climate migrants', they will move to the northern US states which have the same climate as the developed part of Canada.

And lower RE prices of course. I'm not taking credit for this idea, US futurists have been talking about it for some time.

Just Jack said...

Will low Oil be good or bad for Victoria?

It depends on what else is affected along with Oil. Low Oil can also be tied with lower demand for goods and services. If your income is tied to Oil you're more likely to be frugal when it comes to purchasing products and services. How much new "Tech" does a company need? A company can put off buying the latest phones, software or computer. The old stuff works just fine. Much easier to cut the Tech budget than employees.

I really don't know how it will play out. I have a feeling that it would economically be better to be an American than a Canadian in the days to come.

As for Americans coming to Canada. The Washington and Oregon Coast is exceptional and a lot cheaper for real estate with a lower cost of living than Canada. And a NRA membership isn't that expensive.

Of course this is just intended to stimulate conversation and may or may not reflect the actual views of the writer. (added - just in case I want to be a Dentist in Canada).

dasmo said...

definitely be better for Americans. They are a net importer and their purchasing power is increasing. I just think the goods of a high value US dollar will balance out the negatives of low oil here in Vic. OUR economy is not heavily linked to oil and our economy can benefit from from that increased US spending power.

SJ said...

Cheaper gas is great, but I think the biggest benefit to Victoria is currency-wise. It will divert Canadian snowbirds/retirees back to the Island, at the same time as begin drawing in more Americans.

The reason Victoria had the weakest market in Canada for a few years was the draw of cheap US homes with a strong loonie. That's now reversed - weak loonie and US prices have been soaring for 3 years.

patriotz said...

Yet another "the big flood of retirees is just around the corner" post.

It's not going to happen.

The reason Victoria had the weakest market in Canada for a few years was the draw of cheap US homes with a strong loonie.

US properties are not really in competition with Victoria because Canadian retirees can't move to the US full time.

Victoria's weak market is simply due to weak population growth and that's mainly due to weak government spending and accessability issues and that's not going to change. Another blow is an Alberta/BC Interior RE crash which is almost a given now.

Tren said...

yet, immigration policy has tightened up leading less rich oversea buyers.

it is going to be flat for the next yr unless Canadian dollar bounce back.

SJ said...

Yeah, you're right. What was I thinking? Victoria has never been known as a top retirement choice. Those surveys done by banks & magazines are completely fabricated. No one has ever retired to Victoria ;)
And those rich boomers, they're fictitious too. I don't think there's another soul alive besides myself, who's between the ages of 50-70 in this or any other country.
Just a thought, after being incorrect on home prices for the past 6+ years, you may want to at least consider listening to the people who have a much better track record ;)

Just Jack said...

Victoria has changed considerably since 2000. Maybe its time to bury the idea that Victoria is a retirement community and face that we've morphed into a city with the same appeal as Surrey or New Westminster.

If you want to live in a retirement community - you'll find them up island.

Leo S said...

>> Victoria has never been known as a top retirement choice. Those surveys done by banks & magazines are completely fabricated.

People retire mostly where their family is. And yes, those surveys might as well be fabricated. Fact is, there is no rush of retirees coming here now (Sidney, which is built around retirement is declining in population) and no reason to think that's going to change

>> Just a thought, after being incorrect on home prices for the past 6+ years, you may want to at least consider listening to the people who have a much better track record ;)

And who do you imagine that is?

patriotz said...

Just a thought, after being incorrect on home prices for the past 6+ years, you may want to at least consider listening to the people who have a much better track record ;)

As a matter of fact I called the end of the bull market early in 2008 in this forum and I was right. Prices are lower today than then.

In recent years I have been more bearish than the actual numbers, yes, but being bearish has still been right, save the blip in the later part of this year.

SJ said...

They don't seem to think you're much of a visionary over on VCI.

We’ve seen patriotz buy. We’ve seen people abandon their crash theory and secretly and silently defect to the soft landing camp.
What we haven’t seen is people examining their assumptions and trying to understand why they were so wrong for so long. If your hypothesis lacks predictive power you need to revisit your hypothesis.


>>there is no rush of retirees coming here now

Once again, the loonie only recently fell hard as did US prices soar. That's one of the main reasons Vic prices have started to turn. Hence the TC article: Victoria Condo Market on Big Rebound. If you don't think the incoming boomers will have any effect on Victoria's market in the near future you may want to revisit your thinking. The vast majority of boomers are in their late 50s. Their peak birth year was 1959. I say no-brainer.

Leo S said...

>> That's one of the main reasons Vic prices have started to turn.

Not a chance. The market started to improve mid 2013 long before the loonie falling. Also for your theory to be correct the market would have to be driven by Americans. So the Victoria market has been turned around by Americans and no one noticed or mentioned it in the media?

Leo S said...

Retirees will have some effect of course. Victoria is a better place to retire than Regina for the climate. But the effect won't be huge. As JJ said, Victoria also isn't the same little sleepy retirement town it once was. If you want a nice town to retire in there are many up island that are quieter and cheaper than Victoria.

Just Jack said...

We've seen how age restrictions have had an effect on prices. But the contagion seems to be spreading to condo complexes that don't have age restrictions. Complexes that in the past have been orientated to more mature citizens and don't allow rentals.

For example a top floor 2-bedroom suite in Esquimalt originally bought in April 2005 at $127,000. Listed for sale in 2011 at $224,000 and just sold this year at $135,500. This building does have other issues, so it may not be the rental restrictions but it is an example of how a market contracts.

This is Darwinian economics at work. As the market contracts the weaklings are culled by the predators.

SJ said...

>>Not a chance. The market started to improve mid 2013 long before the loonie falling.

With respect blogmaster Leo, the loonie was around 1.04 in Sept 2012 and has been on a steady slide since. When the makret started to improve here at our Teranet bottom of Jan 2014, it was breaking into the high 80 cents range.

>>Also for your theory to be correct the market would have to be driven by Americans.

My 'theory' is not to do with Americans. It's to do with Canadians buying less US, and again buying more Canada, kind of like they did when the loonie was weak after the turn of the millenium with US prices soaring. And they continued to buy vacation/retirement homes in Canada until US prices crashed diverting their attention.
The difference I see this time is there are far more at retirement age. Think of the number of boomer millionaires in GTA & GVA alone at retirement. It would take the tiniest sliver of them to move our market if they decide to retire and bank half their wealth here. I agree with you most won't, but the tiniest sliver would move our relatively small island market.

dasmo said...

With this recent focus of mine on dividend investing I thought I would share an even more important detail on the subject!
"U.S. dividends don’t qualify for the Canadian dividend tax credit, so if you hold your U.S. stocks in a non-registered account, you’ll pay tax at your full marginal rate."
So in the end it's still beneficial to be in a TFSA even though you cant claim the withholding tax...

patriotz said...

Calgary home market suddenly cools; lags Vancouver, Toronto

Surprise! Relevance: last time Calgary took a dive was mid-2007.

koozdra said...

Simply put, debt levels are very high, and with sky-high home prices cooling off, we could see pressure on the Canadian financial system and labor markets.

koozdra said...

Some products offered by FCC, such as loans that don’t need down payments or repayment of principal, are similar to subprime mortgage loans, the C.D. Howe Institute, an independent Toronto- based research organization, said in a Feb. 6 report. Subprime mortgage lending fueled a U.S. housing bubble whose collapse triggered the 2008 financial crisis.

CS said...

How long can the oil sands withstand operating at a loss before those camp jobs start evaporating?

Plants already built and paid for may be losing money now, but they lose even more if they shut down.

It is the new plants, such as Suncor's Sun Hills project that are threatened by low prices. That's $13 billion in construction/engineering work that's threatened.

The break-even oil price for new plants is said to be around $75 a barrel.

patriotz said...

Subprime mortgage lending fueled a U.S. housing bubble whose collapse triggered the 2008 financial crisis.

In fact the degree of price declines in major US markets (which ranged from over 60% to just 6%) was not well correlated with the amount of "subprime" lending. It was certainly a factor in the bubble, but not the only one.

dasmo said...

I dunno... It doesn't look so alarming when you look at it as
debt to assets.

Also not so bad when you look at the same stat in a more global perspective vs just the US...

dasmo said...

It's painful watching my watch list climb! At least I in on it! Don't have the cash for more and I just can't go the arbitrage root. UN, POT and TNK will have to do for now... Still betting on Gold?

Just Jack said...

The Oil companies are probably quite quick to reduce labor costs, since some will be subcontractors rather than employees.

All they have to do is hit SEND and labor costs drop significantly. Not like the old days when you had to look someone in the eye and lay them off with severance pay.

They'll be a lot more empty seats on the plane from Victoria to Fort Mac.

caveat emptor said...

re US stocks

If you have the choice I'd put US dividend stocks in the RRSP (no withholding tax at all). Next best would be the TFSA. Least good is non-registered.

I'd argue that the TFSA is better than a non-registered account for virtually every asset since once it is in there you don't pay tax on anything (interest, capital gains, dividends). The benefit of tax-free capital gains in the TFSA far outweighs the fact that you can't claim the occasional capital loss in a TFSA.

The only exception to "better in a TFSA" is for Canadian dividend stocks if you are in a low income bracket. At that point a dollar of Canadian dividends actually decreases your taxes! However even in that bracket the sheltering of capital gains might argue towards putting those assets in a TFSA as well

reasonfirst said...

I'm thinking if oil stays low for a while, suburbs and commuting may rise in popularity.

Phil said...

Unfortunately it won‘t stay low for long. The U.S. production surge responsible for the price declines is already peaking this year in the major plays like the Bakken and Eagle Ford. If interested, Page 61 of this report shows for example the EIA’s production peak for one of their largest fields the Bakken.

http://www.postcarbon.org/publications/drillingdeeper/

Seth Perry said...

Made the headlines today but I wanted to share anyway.

'Canada Is In Serious Trouble' As Debt, House Prices Climb, Deutsche Bank Declares

and

9 Signs Canada Has Epic Housing Bubble

Da Bears!

Leo S said...

With respect blogmaster Leo, the loonie was around 1.04 in Sept 2012 and has been on a steady slide since. When the makret started to improve here at our Teranet bottom of Jan 2014, it was breaking into the high 80 cents range.

Ok you have a point there. I still don't think the dollar significantly affects our real estate prices but it does match up somewhat to our market so it's a possibility.

The difference I see this time is there are far more at retirement age. Think of the number of boomer millionaires in GTA & GVA alone at retirement. It would take the tiniest sliver of them to move our market if they decide to retire and bank half their wealth here.

Given the rate of die-off in our market it will take quite a few. In Sidney they are dying off faster than they are moving in.

So if we are about to be swamped with retirees, how about a prediction for the year? Condo boom? Let's hear some numbers.

SJ said...

I don't see a boom quite yet. I'm still waiting for Marko's and your numbers so I can put mine near ;)

dasmo said...

I don't see a boom... More flat this year...

reasonfirst said...

Alberta Money Anecdote Alert (first hand):

Frinds of mine who have worked in the oil patch their entire career retired to Qualicum about 2-3 years ago. Their investments include rec property, house they live in, 2 condos and the rest in oil. They have said their income has been cut in half and are a little ditressed. Draw your own conclusions.

SJ said...

BC is now the only province with an unemployment rate moving in the right direction (previous month in brackets).

Ontario 7.0 (7.0)
Manitoba 5.2 (5.1)
Saskatchewan 3.6 (3.4)
Alberta 4.7 (4.5)
British Columbia 5.4 (5.8)
http://www.timescolonist.com/opinion/quicklist-canadian-unemployment-rates-for-provinces-in-month-of-december-1.1725783

I think the migration outflows that BC has endured in recent years will soon reverse course.

koozdra said...

The booms are behind us.

Homes are 63 per cent overvalued and Canadians are falling deeper into debt because of it, according to a report from Deutsche Bank AG’s Torsten Slok. That puts Canada ahead of second-place New Zealand (56 per cent) and Belgium (53 per cent).

mooselessness said...

Would you buy a 700K house that was occupied by tenants with a lease?

Do the tenants hurt the price, because most buyers in that price range are looking for somewhere to live, or help it, because an investor wouldn't have to find her own tenants?

(Let's say a full year fixed-tenancy lease.)

reasonfirst said...

"BC is now the only province with an unemployment rate moving in the right direction"

Unfortunately, total employed has been moving in the wrong direction. Down by 1000 from November and average for 2014 down by 3,700 from 2013. Total employment has not been this low since 2006. Also, average unemployment for 2013 and 2014 was identical at 5.2% so no real change.

Perhaps migration will change but it is a long way off the peak year of 2008 - 190.6K- now at 180K (annual averages).

http://www.bcstats.gov.bc.ca/StatisticsBySubject/LabourIncome/EmploymentUnemployment.aspx

dasmo said...

Why pick on Canada? Denmark's Debt of households as a percentage of net disposable income is 317.23! Or the Netherlands at 281.81! Or Norway at 215.21!
Canada's is 165.97 which isn't good but the fact our rents are cheap doesn't actually make the problem worse...

dasmo said...

speaking of rents... what is the 700k house renting for?

mooselessness said...

@damso, $2550/month

dasmo said...

If I was an investor I would rather spend 100k more and slum lord it in Fernwood for a much higher cap rate.
http://www.icx.ca/PropertyDetails.aspx?&PropertyId=15123478&PidKey=498469284
Probably better to try and sell it to someone who wants to live in it. They will want vacant possession.
Unless it's an amazing lot that can be subdivided and developed. Then having it rented out could be a benefit....

Leo S said...

The reports that point to Canada being wildly overvalued all seem to use the methodology of current price/rents and price/income ratios versus long run averages. I'm not convinced by that method, as it doesn't explain why some countries have a long run price/rent that is higher and yet are supposedly not overvalued. One would think the absolute values are more interesting than the relative ones, although I understand that a rapid change would be cause for alarm.

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

Maybe they are focusing on Canada instead of their European peers because of carry trade issues as the EU interest rate comes close to zero... "Investors are also buying the traditionally higher-yielding New Zealand, Australian, Canadian dollars and the Norwegian crown among actively-traded currencies, funding these by selling the euro"
Also note in the lead up the the financial crisis:
"As the carry trade gained momentum, a virtuous circle developed, whereby borrowed currencies such as the yen steadily depreciated, while the demand for risky assets pushed their prices higher."
So better start making those other countries look like they are also on the edge to help stop a carry trade run on the Euro?

LeoM said...

MLS 344845
1035 Oliphant Ave

Almost complete 4-Unit Strata Conversion in the heart of the Cook St Village

Being sold as is, where is.

Anyone know what happened here? This conversion has taken forever and now it's being sold "As is"

What happened?
I've been watching this reno drag out for a couple years now, then when it's almost finished it's being sold "As is"

--------------
On another topic:
Predictions for 2015?

If interest rates go up, then prices will go down.

dasmo said...

"Opportunity knocks" Not at 1.3 million it doesn't!

Tren said...

just my own curiosity:

I heard some trade ppl or contractors during Christmas lunch that they've been flipping fixer-upper and made a fortune last year when the market was not strong.... so here my question--what return rate they are looking at for 4-6months project would be called a reasonable one? lol.

w

Marko said...

I heard some trade ppl or contractors during Christmas lunch that they've been flipping fixer-upper and made a fortune last year when the market was not strong

I did not come across too many successful flips last year in my real estate travels.

I think there is money to be made in construction right now but just not in terms of flipping homes.

New high end custom builds and high-volume lower end spec builds in areas like Happy Valley seems to be where some of the money to be made is.

Marko said...

For 2015 predictions should we post them in this thread or we'll we start up a new one?

SJ said...

Flippers who lowballed last Fall/Winter and sold by Spring/Summer made good return.

SJ said...

Unfortunately, total employed has been moving in the wrong direction. Down by 1000 from November and average for 2014 down by 3,700 from 2013.

It was actually up from November "with the province adding 2,200 jobs, mostly in full-time positions." And total employed for 2014 is up by 38,500 from 2013, not down by 3700.

http://www.vancouversun.com/business/Canada+loses+4300+jobs+December+mostly+part+time+unemployment/10715286/story.html

dasmo said...

It's all in how you spin it. It's actually good news nationally because full time jobs are better. If you looked at employment hours and wages it would be up....
"The economy’s gain of 53,500 full-time positions last month was more than offset by a drop of 57,700 part-time jobs."

Marko said...

Monday, January 12, 2015 8:00am

MTD January
2015 2014
Net Unconditional Sales: 83 342
New Listings: 286 1,090
Active Listings: 3,020 3,489

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

reasonfirst said...

SJ - re: unemployment

Sorry - I meant to refer specifically to Victoria CMA.

reasonfirst said...

To rephrase:

Unfortunately, total employed has been moving in the wrong direction IN VICTORIA. Down by 1000 from November and average for 2014 down by 3,700 from 2013. Total employment has not been this low since 2006. Also, average unemployment for 2013 and 2014 was identical at 5.2% so no real change.

Spin that Dasmo :-)

SJ said...

Victoria's a retirement town. People don't come here to work ;)

I can't believe people are paying over developer's asking price for a new "1407 sf, 2 bed, 2 bath & den. Perfect for downsizers" not top floor, no view, not on ocean, 302-1014 Park Blvd, $674,900! Worse, the building is already sold out! Maybe this is a bubble, lol.

SJ said...

All joking aside, total employment (or labour force) should contract as boomers continue to retire.

reasonfirst said...

Disagree, boomers retiring would certainly put downward pressure on employment but that is only the supply side. If there were jobs in Victoria, people would come....

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

"Spin that Dasmo :-)" Sure....
Run the stats for 25-54 years.

The unemployment rate goes like so:
2009:5.5
2010:5.2
2011:5.4
2012:4.6
2013:4.3
2014:4.2

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

And I recall showing you on a past post that total population for that group in Victoria has been dropping for the first time in 25+ years. Where are they going?

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

Vic CMA 25-54 toal popn

2009: 147301
2010: 147534
2011: 146960
2012: 145669
2013: 144055

Down she goes.

Phil said...

Vancouver prices could go ballistic again as their main industry is going ballistic - It helps that 5 year interest rates are breaking to new lows.

Gold NUGT is up about 60% this year in only 7 trading days. Meantime oils are down about 20%. It would be an easy switch for the workers we lost to Alberta to go from mining tar back to metals.

dasmo said...

^
"Leveraged ETFs purport to give investors two or three times the return of the underlying indexes on which they’re based. Inverse leveraged ETFs let you do the same thing on the short side.

The problem is, these instruments are designed to be used as daily hedging and trading vehicles, but investors are holding them much longer than a day, which is particularly dicey in today’s volatile markets.

That’s why I think these are the single worst product for individual investors I’ve seen in two decades of covering markets."

Just Jack said...

Any sales information from pre-construction condominiums that occur prior to a Title to the property being issued should be verified if it was at market value. Pre-construction prices are contract prices made between one seller (the developer) who controls all the asking prices.

A contract price to purchase a pre-construction condominium may or may not be at market value. The contract prices may not be at "arms-length". Such as an agent "buying" several units in the complex to get exclusive rights to sell. Sometimes it's just a matter of "salting the mine" to get some action started. You should also check to see if it is a licensed real estate agent selling the units. An agent does have guidelines they have to follow in marketing units so as not to misrepresent what is being sold. In contrast the developer could have their own "sales team" and there are no rules to selling then.

Even the date of sale can be misleading. As it isn't necessary the meeting of minds, subject removal or date the title is registered.

For example, I've been reading a class action suit in the USA where a developer building in City X markets the condos in China. A condo that would typically sell in city X for $500,000 is sold in China at $700,000. The price at $700,000 is recorded in City X's data system.

Is it accurate - yes.
Is it market value - no.

Does it inflate prices in City X and influence other prospective purchasers - I think so.

Does it cause appraisers to use the inflated price in their analysis for re-financing existing condos - most of the time yes.

If I can't verify the contract price - I don't use the sale. And I will never use contract prices in the same complex to verify a value in that same complex. In fact - I won't use pre-construction prices as primary evidence of value - ever. However other appraisers do.

Having an appraisal done before you buy - isn't going to help you either. The developer isn't going to accept it when he can just wait for another buyer. All the appraisal would do is show you how much over market you'll have to pay for the condo.

dasmo said...

25 to 29 years:25,807 26,309 25,971 26,356 26,900
30 to 34 years:21,910 22,762 23,422 24,130 24,723
35 to 39 years:22,218 21,906 21,454 21,554 21,697
40 to 44 years:23,059 22,825 23,033 22,958 22,856
45 to 49 years:27,319 26,789 25,847 25,044 23,923
50 to 54 years:27,275 27,301 27,200 27,229 27,263

So the only age group to drop significantly was 45-49 year olds. 25-34 is up and up. 40-44 and 50-54 is pretty much flat...

reasonfirst said...

and...?

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

"Vancouver prices could go ballistic again as their main industry is going ballistic"

Gold mining is Vancouver's main industry?

dasmo said...

"Gen Y: The Next Generation of Spenders"

dasmo said...

NUGT is a Leveraged ETF... Far from an indicator of any Van industry...

Phil said...

I was using NUGT for dramatic effect, not to mention I sold some of my new year NUGT today after a very tidy profit. I could have said remember when dasmo said "I would buy oil, not gold" on Dec 31st.

Gold stocks are up over 20% since then.
Oil stocks down 20% since.

Phil said...

"Gold mining is Vancouver's main industry?"

There are literally hundreds of gold and silver mining companies in Vancouver, some employing in the thousands.

patriotz said...

There are literally hundreds of gold and silver mining companies in Vancouver, some employing in the thousands.

I don't think all those miners working in Africa or other 3rd world locations - or in North America for that matter - are going to be buying RE in Vancouver or Victoria.

Also I think you're engaging in a bit of category stretch. For example, Teck Cominco mines silver and employs thousands, but it's not really a silver miner.

SJ said...

And I recall showing you on a past post that total population for that group in Victoria has been dropping for the first time in 25+ years. Where are they going?

I think they were going to Alb & Sask. Now it looks like they're coming back. You can tell from our vacancy rate falling from 2.8% to 1.5% over the past year. 2013 should turn out to be a population low...as now it's exploding forth with retirees madly scrambling to bid their battered loonies on a piece of our paradise... oh wait, that was my dream last night ;)

dasmo said...

From the NUGT site
"These leveraged ETFs seek a return that is +300% or -300% of the return of their benchmark index for a single day. The funds should not be expected to provide three times or negative three times the return of the benchmark’s cumulative return for periods greater than a day."

I didn't mean buy OIL... Buy stocks that will benefit from low oil. So mix it up. Risk with some direct oil since they are low and low risk with companies that have direct benefit from low oil prices. UN, POT and TNK for example are not buying oil... (TNK is up 30% so far). Me I'm pretty long on things. Best I could say is I'm a month trader so the long term picture is what I'm interested in. I'm willing to risk a little for a bigger potential pay out longer term. but risk a little is the key. Otherwise I would be suicidal right now with the plummeting of SDRL which would be the risky direct OIL play. The mistake there was not predicting the slide in oil... Most of it's initial decline from the dividend suspension was priced in. $40 Oil was not....

Leo S said...

was gonna wait with a prediction until the teranet numbers are in but probably doesn't make a difference.

dasmo said...

I think a dedicated thread for predicting 2015 is a good idea. Easier to find and just tell people to put predictions there...

CuriousCat said...

Here is a flip for you: MLS 345212 on 528 Lampson. It sold in July for $425,000 and it's currently listed at $698,888.

CuriousCat said...

Would it be fair to compare 3020 Quadra mls 342990 listed at 879 with 948 Old Esquimalt rd that sold for 710 Oct 3rd? And what is the deal with the strata for the Quadra listing? I would think that would deter buyers.

Marko said...

I think a dedicated thread for predicting 2015 is a good idea. Easier to find and just tell people to put predictions there...

Sounds good. Let's go with dedicated threat. I think this year will be a tough one to predict. Previous two years I found relatively easy to predict as we were coming out of such poor years as small uptick was a pretty safe prediction.

Marko said...

Here is a flip for you: MLS 345212 on 528 Lampson. It sold in July for $425,000 and it's currently listed at $698,888.

$425,000 sale was never on MLS®?

Secondly it hasn't sold yet so not a successful flip, yet.

Marko said...

Would it be fair to compare 3020 Quadra mls 342990 listed at 879 with 948 Old Esquimalt rd that sold for 710 Oct 3rd? And what is the deal with the strata for the Quadra listing? I would think that would deter buyers.

Slightly different areas but I see what you are getting at...big solid character houses on busier streets.

Regarding strata...3020 Quadra is part of a unique sectional strata which consists of the 4 character homes on Quadra.The yard is listed as LCP.

If interested would definitiely get a lawyer to review the strata plans as it is a unique setup.

Dustin said...
This comment has been removed by the author.
Marko said...

I wonder when condos in Langford will bottom out. It has been 7-8 years of down.

105 - 1395 Bear Mountain Pkwy sold today for $210,000.

In 2010 it sold for $220,000

In 2008 it sold for $250,500+GST

CuriousCat said...

The sale is listed on bc assessment. Maybe a change in title or a private sale? Might not be a successful flip, but it's a flip nonetheless lol

CuriousCat said...

I would be interested at 750 perhaps but that's pretty far off the sellers expectations. So instead I will just watch and see what happens.

CuriousCat said...
This comment has been removed by the author.
Curly Fry said...

fernwoodurbanvillage.ca
Any thoughts on this? Seems like nice concept, but predicting strata fees very difficult?

dasmo said...

I like the concept but marrying 32 strangers...not for me.

patriotz said...

Dec 2014 Teranet 138.17 which makes 3.17% y/y, the first up year since 2009 I think. Ominously Calgary is down -1.08% m/m.

Just Jack said...

Since most of us are only concerned with houses in the core these monthly medians may be more helpful than the Teranet #'s which is for all housing in all districts.

Sale Price, Median
Month 2013 2014
Jan $540,000 $576,250
Feb $590,000 $579,000
Mar $574,750 $568,950
Apr $610,000 $599,450
May $551,250 $609,450
Jun $585,000 $583,000
Jul $570,000 $576,000
Aug $556,100 $595,000
Sep $575,000 $585,000
Oct $579,500 $570,000
Nov $555,500 $569,000
Dec $571,750 $561,250


Jan 2013 to Dec 2014
Single Family Detached
Victoria Core Districts
Results calculated from 3,661 listings

caveat emptor said...

Are fixed mortgage rates going to go even lower?

Currently 5 and 10 year bond yields are below where they were in Spring 2013 when they hit ultra low levels and everyone said there was only one direction to go.

So far mortgage rates aren't quite as cheap as they were then. The difference is very minor for 5 year terms, significant for 10 year terms.

Thoughts?

SJ said...

Yes. I'm hoping to renew my 5-yr for around 1% ;)

Ominously

Calgary has fallen the last 3 Decembers in a row, so I'm not sure I would yet call it ominous. Amusing how Edmonton again led the way in Dec gains. People forget how diversified Alberta's economy is. Alberta industries doing very well right now include chemicals, machinery, aerospace, agriculture, manufacturing, tourism, livestock, biotech, finance, forestry. Say Alberta to someone, and all they can think of is duh "oilsands".

The good thing about the oil job losses is if they don't choose to fill the many other openings there in desperate need of workers, then maybe they'll move to our fair city with unemp rate of only 4 something %.

dasmo said...

"everyone said there was only one direction to go"
Except me....

SJ said...

Are you adding to your positions on any of these dasmo? Some are starting to look interesting to nibble at now that they've fallen so hard.

BNS
IRBT
IMO
TSLA
NFLX
GPRO
CAT
RSI.TO
SDRL

I especially like the looks of imperial oil as it's now a third off its summer highs, and you know it aint going out of business.

dasmo said...

It's times like this that the sociopath part of being a good investor is handy. No cash to add, otherwise I would. If there is a 2009 repeat I might borrow to invest for the first time. I'm staying tuned. If it's the end of the world I might want to pull out my cash to try to build a bunker as fast as I can....

SJ said...

Lol.. I'm feeling pretty smart already on Imperial... since I bought my 200 shares 45 minutes ago, it's already up over 2%!

dasmo said...

Even IMO can benefit from low oil. It costs energy and labour to build infrastructure and they are building out a huge natural gas export facility in BC. Now they will be able to get labour from AB and it might be cheaper to build it out... IMO would be a good investment right now. better than gold that's for sure. A bet on gold is a bet that India is going to get rich. A bet on oil is a bet that the human race will continue. A bet on IMO is a bet that Canada will continue....

koozdra said...

"The potency of a bubble is its plausibility, to laypeople and experts alike, right up until the moment the game is over," the Economist writer said in an elegant turn of phrase.

dasmo said...

I guess those AB jobs are moving here... The bust will have to wait...
http://ca.finance.yahoo.com/news/exxon-says-prince-rupert-lng-plant-worth-25-195645860.html

Phil said...

World's largest gold mining company up 11% today, headquartered in Vancouver. As strange as it may sound, it's time to buy some land in Van.

reasonfirst said...


"Forestry, Fishing, Mining, Oil and Gas" accounts for 0.7% of total employment in Vancouver.

Fill yer boots Phil

reasonfirst said...

"I guess those AB jobs are moving here... The bust will have to wait..."

Lots of demand for pipe-fitters and welders in victoria.

dasmo said...

I'll give you this Phil, If you are into Gold now would be a good time to invest in it...

CuriousCat said...

Canadian home sales slow in December, prices still up from a year earlier: CREA

http://www.canadianbusiness.com/business-news/canadian-home-sales-slow-in-december-prices-still-up-from-a-year-earlier-crea/

Marko said...

Consumer Demand in 2014 Strongest in Five Years
Vancouver, BC – January 13, 2015. The British Columbia Real Estate Association (BCREA) reports that a total of 84,049 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in 2014, up 15.2 per cent from 2013. After lagging for several years, BC home sales eclipsed the ten-year average of 82,000 units and the 15-year average of 83,600 units. Total sales dollar volume was $47.8 billion, an increase of 21.9 per cent from 2013. The average MLS® residential price in the province rose to $568,405, up 5.8 per cent from the previous year

- See more at: http://www.bcrea.bc.ca/news-and-publications/news-room/news-releases/2014-12-statistical-release#sthash.gCyaF9cn.dpuf

Phil said...

It has more to do with what gold is signalling.

dasmo said...

What's that? The end is near?

reasonfirst said...

Phil - I'm still stuck on your comment about gold being Vancouver's main industry.

But to be honest, I am more into demographics and don't get what gold is signalling re: Vancouver real estate.

dasmo said...

I think he is saying that G.TO will become wildly profitable and this will have a big effect?

dasmo said...

"demand is so strong in Palo Alto, and inventory so lean, that homes that look more like bungalows are now selling for millions.

For example, a home at 151 Kellogg in Palo Alto with two bedrooms and one bathroom, and only about 990 square feet of living space, recently sold for $3 million.

That's not unusual."

Small homes sell for big bucks in Palo Alto

dasmo said...

The median home value in Palo Alto is $2,136,000. Palo Alto home values have gone up 15.4% over the past year and Zillow predicts they will rise 5.7% within the next year.

Leo S said...

Median family income is also $163,000 there. That said I can't imagine how a doubling in home prices in 4 years is sustainable.

Leo S said...

Ha. Two weeks ago it was a certainty that rates are going up. Well I guess not then.

dasmo said...

Still... Homes in Vancouver cost just under 10 times median income Palo Alto is 13 times.... But no mention of the US being 65% over valued right now....

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

Palo Alto has a population of 63000 in a country of 323 million. It's a super concentration of wealthy tech company bigshots. Not even a drop in the pan as far as national housing values go.

patriotz said...

It's quite likely that given all the bonuses in Silly Valley over the last few years a disproportionate number of sales in Palo Alto have been at the high end, which would make comparison of the median sale price with median income (the latter including everyone) less valid.

It's only 4% of Santa Clara Country, never mind the whole Bay Area. Case-Shiller says the metro is up 50% over the last 4 years - and still quite a bit below the peak of 2006.

dasmo said...

I would hardly call 151 Kellogg high end...

dasmo said...

I would call it cute...for 3 million
...



patriotz said...

I would hardly call 151 Kellogg high end...

The lot and location are.

dasmo said...

That would be like calling Fernwood high end...

nan said...

I'm in Palo Alto about 4x a year- there are as many teslas there as there are civics in victoria. Those prices are supported by high incomes and a high Nasdaq and lots of private equity money. Victoria's carmanah tech or Pareto logic is palo altos Amazon, Verizon, Google, Facebook or Apple. We interviewed a guy whose combined salary + stock grants from Google totaled $2mm/ year. There is truly no comparison here and as a consequence real estate is beyond crazy ( but just in Palo Alto- you don't have to go far for things to get more reasonable)

dasmo said...

You guys are the ones rationalizing 3mil for a 900 sqft bungalow on a city lot in an average neighbourhood, not me....

patriotz said...

You guys are the ones rationalizing 3mil for a 900 sqft bungalow on a city lot in an average neighbourhood, not me....

The guy who rationalized it was the guy who paid $3mil. We are just explaining where the money is coming from.

dasmo said...

The bank of dasmo declares Palo Alton 300% over valued....

CuriousCat said...

Why are we even talking about Palo Alto? Something obviously weird happened with that listing. If you scroll down to the history, it shows it was listed for 2,295,000 Sept 10, then the listing was removed on Sept 21 then it "sold" 4 days later for $3,000,000. We don't really know what happened, it's not even comparable to other listings in the area. For example, 136 Kingsley Ave, 5 beds 4 baths 3,346 sqft in the same neighbourhood sold a month later for $3.2 million.
http://www.zillow.com/homedetails/136-Kingsley-Ave-Palo-Alto-CA-94301/19496963_zpid/

dasmo said...

Ok.... That place is onlyb100% overvalued. We are talking about it because the U.S. is being held up as an affordablity benchmark...

patriotz said...

We are talking about it because the U.S. is being held up as an affordablity benchmark...

No, that's why you are talking about it. The rest of us are talking about it to explain why such a place cannot be held as representative of US affordability. You'd might as well use Beverly Hills, which is about the same size.

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

True...Beverly Hils is also about 100% over valued...

Just Jack said...

That's the tricky part when you get into calling one area overvalued. Overvalued to what? Victoria is overvalued relative to Hope BC, but not to Palo Alto, Ca.

I'm glad that I don't have to deal with such things as overvalued, fundamental value, lending value, etc.

Since most of real estate is simply Market Value. An individual can over pay for a property, but a market can't be overvalued or undervalued since it's the baseline that you compare individual properties to.

Comparing different markets is just mental masturbation. Fun to do, but you don't want people seeing you do it.

Palo Alto and say Vancouver are like the towns of the old west when gold was found. Real Estate along with other commodities spiraled up in price during the gold rushes of the Yukon and California. But all these rushes do end and those areas that went the highest also fell the most.

These areas have yet to have an economic recession as there seems to be no end of venture capital for IT and construction.

But how long can will investors bank roll IT companies that never get a product to market or buildings that don't sell out?

dasmo said...

Good thing I wasn't comparing just declaring! Whew....

Marko said...

I just ran the HPI for a benchmark single family home in the Victoria Core.

January 1st, 2008 = $558,500
January 1st, 2015 = $558,500

Bottomed out at $519,800 in March of 2009 and topped out at $603,000 in March 2010.

Above $590,000 was only shortly sustained from Jan 2010 to June 2010.

Basically 7 years of flat with a bit of noise here and there.

dasmo said...

░░░░░_///_░░░░░░
░░░░/00___\/░░░░░
░░░░> ))___/\░░░░░
░░░░░<░░░░░░░░

Marko said...

Monday, January 19, 2015 8:00am

MTD January
2015 2014
Net Unconditional Sales: 165 342
New Listings: 541 1,090
Active Listings: 3,121 3,489

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

dasmo said...

the bank of dasmo declares Honolulu 50% overvalued....

dasmo said...

Rates have nowhere to go but up?
"The Danish bank today cut its deposit rate to minus 0.2 percent, matching a record low, from minus 0.05 percent and lowered its lending rate to a record 0.05"

dasmo said...

"The IMF advised advanced economies to maintain accommodative monetary policies to avoid increasing real interest rates as cheaper oil heightens the risk of deflation."

koozdra said...

The household debt-to-disposable income ratio in Canada increased from 110 per cent in 1999 to
127 per cent in 2007. This increase has raised questions about the ability of households to service
their increased debt if faced with a negative economic or socio-economic shock.


2008 - 127 DSR
2015 - 163 DSR
2020 - 200 DSR ??

Economic shocks don't happen any more. The new normal.

Marko said...

Decent sales volume last two days given the time of year. Seeing some long DOM properties move.

LeoM said...

Victoria is the second least affordable housing market in Canada and the 34th least affordable market in the world. Who knew?

Times Colonist

dasmo said...

Meaningless...

dasmo said...

"These surveys are part of Demographia’s political agenda to support land use policies that favor lower-density urban fringe development. Their main conclusion is that smart growth policies that encourage compact development are the main constraint on housing affordability. There are good reasons to question both the surveys' methodologies and conclusions."

More on that here

caveat emptor said...

^Yes Demographia has a serious ax to grind so I discount their report accordingly. That said Vancouver is still bloody expensive no matter how you look at it.

caveat emptor said...

Speaking of Vancouver - Can anyone provide a reccomendation for an appraiser in Vancouver - Just Jack or anyone else?

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

There is no argument against Van being expensive...

Just Jack said...

I know several appraisers that work in Vancouver. They are all competent but I rarely refer people as I have not seen the quality of their work.

It depends on what kind of an appraisal you're wanting to get.

A mortgage appraisal is usually "cheap and dirty" since all you want is a loan. This is the kind most real estate agents and brokers see, and then judge the rest of us by.

Then there are appraisers that specialize in litigation, foreclosure, estates, etc. That's when you want a thorough appraisal. As an inaccurate value will cost you money.

What I have found is that there seems to be a correlation between quality and how many appraisals are performed by the appraiser and who are most of the appraisals performed for.

The cost of the appraisal is not the best indicator of quality. If you're looking for quality work you're less likely to get that from an appraiser who is doing a lot of assignments from brokers and Appraisal Management Companies. They're more orientated to pushing out a large volume of appraisals than checking and cross checking value conclusions.

How do you know if it's a good or bad report? Boiler plate comments used to fill in space are a give away. Comments that are general and have little to do with the property and very little reconciliation and discussion about the final estimate of value. Appraisers that ask you, what you think the property is worth should be avoided.

The bad thing about most appraisals is that the appraiser uses a small judgement sample of 3 similar properties. A poor selection of these few comparable sales will have an adverse affect on accuracy. There are ways around this problem by using a larger sample size and statistics that would support the comparable selection and judgement sample.

Only recently has it become mandatory for an appraiser to have a university degree which includes courses on statistics, linear regression and probability. I believe the appraiser of tomorrow will be better equipped at providing opinions of value than most of the older appraisers practicing today.

But that's not going to help you today. You're best to speak with the appraiser who will be doing the assignment and explain what your concerns are about the property and have him/her address these concerns in the report.

caveat emptor said...

JJ
Thanks for the general comments and I understand the reluctance to refer. Is it reasonable to ask an appraiser for a sample of their work (perhaps with names blacked out)? Seems like that would be the best way to compare?

The need for an appraisal is based on a family member who owns there and is selling. There is a possibility of a private sale so they want to be armed with a good appraisal.

The unit they are selling is slightly unique in that it is one of the nicest units in building (top floor, water view), but also hasn't had any updating other than paint since the mid 70's

caveat emptor said...

Whoa BoC rate cut. Poloz must be pretty worried

http://www.theglobeandmail.com/report-on-business/economy/bank-of-canada-rate-cut/article22548417/

Just Jack said...

I'll put together a check list of questions you could ask the appraiser about condominium appraisal reports.

dasmo said...

I guess I'm less of a Halibut and more of an oracle...

CS said...

Whoa BoC rate cut. Poloz must be pretty worried

As I said, there won't be a crash before the election!

dasmo said...

I'm curious to see Garths post tonight...

Marko said...

My two variable rental condo mortgages are now 2.05% and 2.15% :) Just picked up an $20 extra positive cash flow on each condo I can save or throw onto the principal. I wonder what I'll get for my Era condo coming up for completion in April? I am see some decent discounting off prime on ratehub.ca.

My house mortgage more importantly, as it is much larger and not interest tax deductible, is now 2.15% as well.

Time to buckle down and use this opportunity to save some cash for a rainy day when rates reverse.

caveat emptor said...

^Marko
has your lending company/bank already cut their prime rate in tandem with BoC?

So far I haven't seen the big banks doing that. CBC was reporting that TD ISN'T going to cut its prime, though that will change quickly if others do

Marko said...

I probably jumped the gun a bit, but it is quite likely that the big banks will be moving down to 2.75%. I would be very surprised if they did not but I guess crazier things have happened.

Marko said...

I'm curious to see Garths post tonight...

Love watching his YouTube interviews dated 5-6 years ago where he is predicting huge interest rate hikes in 5 years.

Just Jack said...

There are 576 condos for sale in the core districts today. With only 75 sales in the last 30 days, things don't look rosy for strata properties this year. For the last month, the market has been adding two new listings for every sale. And some of those sales look a bit dodgy as developers attempt to create some sizzle.

At almost 8 months of inventory, the market for condos is pushing into bear territory - and its only January!

Will we hit a thousand condo listings by Spring?

In contrast there are only 376 detached homes for sale or about 5 months of inventory. Which is a lot better than a month ago when we had a real shortage of listings. So I'm seeing the housing market shifting from a sellers market to a balanced market as listings are coming onto the market at a rate of 2 new to 1 sale.

That war shack fronting onto a busy street just got a bit tougher to sell.

dasmo said...

Successful pundits aren't accurate they are confident....

patriotz said...

As I said, there won't be a crash before the election!

It's already underway in Alberta, but they don't have to worry about losing seats there. :-)

Well not more than a few seats.

CS said...

Re: Garth

Love watching his YouTube interviews dated 5-6 years ago where he is predicting huge interest rate hikes in 5 years.

All such predictions are essentially worthless. If they were not, then someone who was good at predictions would have got all the money by now. (True, some people have a lot, but successful gamblers often finish broke — more or less: Nelson Skalbania, Robert Campeau, Con Black being some Canadian names that come to mind.)

What it may be possible to predict is what will happen if x or y. For example, right now the US dollar is rising because the Fed has stopped QE while the Euro Central Bank has just started, so naturally US treasuries are pulling in the money right now as investors downsize there Eurobond holdings. That's an outcome that was perfectly predictable and I bet some people made a bet on what was announced well in advance.

But what when the ECB stops printing, the Eurozone has fragmented and the resurrected drachma, peseta, lira, etc. have all been devalued as necessary? Then we could see a run on the dollar as hot money flows reverse. This would likely send interest rates up far enough to truly crush the RE market, with perhaps, some spillover effect here.

Question is, how long before the deluge?

CS said...

As I said, there won't be a crash before the election!

It's already underway in Alberta, but they don't have to worry about losing seats there. :-)


Good point. The price of oil is sadly beyond Canadian government control. However the rapid decline of the C$, hastened by the reduction in prime rate, will soften the effect of low oil prices.

Just Jack said...

Wonderfull graphs

Is it possible to put months of inventory, Sales to New listings ratio and median price on one graph?