Monday, February 16, 2015

Feb 16 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.


Feb 2015
Feb
 2014
Wk 1Wk 2Wk 3Wk 4
Unconditional Sales118
226


412
New Listings352587

1064
Active Listings33243401

3770
Sales to New Listings
34%
39%

39%
Sales Projection--452


Months of Inventory
9.1


Relatively strong first two weeks with sales pace about 10% higher than last year.   Those interest rates might be luring a few buyers out of the woodwork.  

195 comments:

SJ said...

Oh ya baby, it's Feb days like these that I'm betting it more than 15% move here.
-30 degrees on the prairies.

report suggested 15 per cent of Canadian baby boomers plan to retire in Victoria. There is also increasing interest from out-of-country buyers —
http://www.timescolonist.com/business/capital/victoria-s-wow-factor-a-strong-draw-for-those-relocating-1.918451

Just Jack said...

You're not likely to pay below the market value range for a court ordered sale. You'll pay at the low end of the range but foreclosures are regulated and a lot of people have their fingers in the pie.

Your best bet is for an estate sale. Most relatives of the home owner just want to move on. And the person with the Power of Attorney doesn't tend to have an emotional attachment to the property. Especially if they live in another city.

And Victoria is the city to find a lot of estate sales.

Such as the top floor corner suite with 2 bedrooms (with closets) and 1 bath of some 898 square feet (should check that) in the Jubilee hood with an asking price of $174,800. Kids and pets are welcome.

With these low rates that becomes affordable for a single parent with a government job.

nan said...

@ SJ

Canadians plan a lot of things:

http://www.canadianbusiness.com/blogs-and-comment/retirement-lottery/

Just Jack said...

The Baby Boomer market is a narrow and limited segment of the marketplace. Historically they've wanted low maintenance properties that can easily be locked up and left so that they can leave for warmer and dryer climates four to six months of the year.

Back in 2000 when the first of the boomers were turning 55, the market for no step ranchers was outpacing all other types of homes. Then in 2003 condo sales for new units were a dominant market for retirees. Now with house and condo prices double that of 2003 I don't see any one segment being dominated enough by retirees to raise prices significantly.

It's just better business to concentrate on the local market these days without having to resort to fear factors. If Victoria is as nice as you say - you wouldn't have to put the spin on it. And why in the local rag newspaper. Are people in New Brunswick going to read it?

Personally, I'm tired of the spin doctors, spammers, pseudo reporters and telemarketers.

I don't care about another hi-rise being built by Bosa - I just want the pot holes in front of my house fixed.

reasonfirst said...

SJ - you really need to dig below the headlines.

The report doesn't even mention Victoria:

http://www.bmo.com/pdf/mf/prospectus/en/BMO_Retirement_Institute%20Report_En.pdf

SJ said...

nan,
Feb 10, 2015 McKinsey says despite dire headlines to the contrary, more than 80 per cent of Canadians are on track for a comfortable retirement...It's worth noting that the analysis didn't include real estate.
http://www.cbc.ca/news/business/retirement-on-track-for-83-of-canadians-mckinsey-survey-1.2951518

rf,
it's the first two sentences of BMO's press release. I'm actually surprised it's not higher than 15%, but then that was when our dollar was above par and many were thinking of retiring to US.
BMO Retirement Institute Report: Victoria, B.C. #1 Retirement Destination for Canadian Boomers
- 15 per cent of Boomers chose Victoria as top retirement destination in Canada

http://newsroom.bmo.com/press-releases/bmo-retirement-institute-report-victoria-b-c-1-tsx-bmo-201201040756208001

JJ,
If you had listened to the “local rag” a year ago when that article was written and considered buying something, you could have been patting yourself on the back by now.

patriotz said...

"With its mild climate, breathtaking scenery and outdoor lifestyle, it's no wonder that so many Canadian Boomers have chosen Victoria as the ideal place to retire,"

In other news, 75% of Canadian Boomers have chosen the Rolls Royce as the ideal car to buy.

reasonfirst said...

"If you had listened to the “local rag” a year ago when that article was written and considered buying something, you could have been patting yourself on the back by now."

Depends which index you chose to believe - brookfield says Victoria down YoY. Meanwhile my balanced portfolio is up 13%.

reasonfirst said...

Good one patz - and the word "plan" is non-existent.

Anyways, WTF is that when a press release has more detail than the report???

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

Sale Price, Median
Month 2013 2014 2015
Jan $540,000 $576,250 $535,000
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

Data is for detached houses in the core districts.

Just Jack said...

Sale Price, Median
Month 2013 2014 2015
Jan $232,500 $300,500 $265,000
Feb $269,000 $270,000
Mar $284,950 $290,900
Apr $275,000 $281,000
May $295,000 $272,900
Jun $272,000 $295,450
Jul $275,200 $268,500
Aug $277,500 $264,900
Sep $275,000 $289,900
Oct $300,000 $276,500
Nov $255,250 $275,000
Dec $256,250 $304,700


And for condos in the core

Leo S said...

Depends which index you chose to believe - brookfield says Victoria down YoY.

Far as I'm concerned Victoria is still flat. Teranet, while slightly more reliable than the monthly median, is still prone to large swings. YoY comparisons are essentially useless.

The trend is towards improving market though, so I'm not discounting the possibility of somewhat increasing prices in the future.

Just Jack said...

Meanwhile our months of inventory is up from last week to 4.3 in the core and in the Western Communities it's now 8.9 for houses.

And we haven't hit the Spring market when listings flower like Daffodils.

This is not a busting bubble. For that to happen listings in the core would have to double in a short time. I don't see that happening. And the western communities isn't likely to burst as it is supported by prices in the core as all real estate is intertwined.

I do expect investors to start dumping some of their rental properties and that probably means higher inventory and lower prices for condos. However condo inventory in the core is still well balanced at 5.5 months.

And my quick sale index still shows that half the condos in the core sell for more than their 2014 assessed value. So there isn't a panic at the exit doors of the real estate casino.

Just Jack said...

When it comes to real estate supply and demand are not autonomous. Increasing supply will have the affect of increasing demand.

More selection should stimulate more demand.

Marko said...

Coming across quite a few houses being sold via unconditional offer....at this pace we might get close to 500 sales for the month.

dasmo said...

perhaps the banks are already offering preferred clients 1.99%...

Marko said...

25 sales today vs 38 new listings, not often you see a ratio that high.

Marko said...

Make that 26 sales.

SilverSurfer said...

So sales accelerating in Victoria you say? Could these be the last fools in the greater fool theory? Garth's blog seems awash in oil crash contagion real estate doomer dreams come true.

So how long before all those $100K+ Albertan blue colour workers sell their Victoria houses because they can no longer exchange oil barrels for over priced wooden boxes?

I for one was thinking the Greek finance minister would prevail like a Spartan over the troika keynesians, but alas an 11th hour compromise seems to be in the works if the rating agencies don't classify the latest financial engineering schemes aimed to confuse the sheeple as an outright default. Maybe Japan is next at last? Or perhaps the US west coast union port shutdown cratering the Baltic index in great part due to China's GDP cliff walk.

Doomer porn for sure, question is which swan will break the camel's back?

Relax, drink more kool-aid and chant along... "EVERYTHING IS AWESOME!!!"

patriotz said...

It’s the first time in the seven-year annual survey that more respondents expect to be working full time (after 65) than retired.

The reasons for postponing retirement have shifted. Six in 10 workers now say they’re delaying retirement because they need to, while four in 10 say it’s because they want to.


More Canadians to consider delaying retirement past 65: poll

Dizzy said...

This is the mildest winter in many years here in Calgary. Very little snow and temperatures have broken warmest day ever a few times. Add to this the new stat that house sales are down over 30% year over year and you should be able to figure out that if the people in Calgary can not sell, they will not be buying in Victoria any time soon. http://www.creb.com/

Also with the fall in oil prices the retirement funds aren't look so peachy either. Don't bank on Alberta to prop up the BC market.

nan said...

Perhaps that McKinsey survey wasn't as sharp as we thought...and those plans to win the lotto are probably not doing much better...apparently not saving & investing & blowing your entire life earnings on consuming a house has a deleterious impact on your retirement- imagine that.

“Today’s workers have experienced a prolonged period in which low interest rates, volatile capital markets and a drop in employer-funded retiree benefits have combined to make retirement planning more challenging,” the report, from Sun Life’s “unretirement” index, said.

This could be interpreted as : today's workers have been exposed through massive globalization to the real world for a number of years for the first time and it isn't working out for them. Bummer.

Save your money, invest it wisely, don't spoil your kids.


Marko said...

Victoria has been the worst performing market in Canada since January 1st, 2008. For this reason, the scenario of the rest of Canada correcting a bit while Victoria stays flat is not out of the picture in my opinion. Toronto is up 45% in the same time frame, if Toronto gives up its entire gain (highly unlikely) I doubt Victoria drops that much from our flat baseline.

After 7 years of flatness and with the low new listing, higher sales start to this year and a drop in interest rates, a bit of inflation/income increase over the last 7 years I think the downsize risk is by far the lowest it has been in 7 plus years, in my opinion.

reasonfirst said...

Marko - I hate to admit it but I think I agree with you.

I still, however, standby the belief that, from an investment persepctive, there are better opportunities than a house...so I am still a bear!...a bear that may eventually buy for that "ownership" premium.

Chris said...

The 1986 version of this 2015 movie had Victoria rise 175% between 1986 to 1994. I’m not predicting the same outcome, however this time there is the added plot twist of a much larger retirement cohort as well as the much larger and mobile populations of neighbouring provinces. Alberta has 4.2 million people of median age 36.

- after remaining high & range-bound for years oil crashed for similar oversupply reasons to less than half its price in late 1985
- our currency tumbled from above par into the high 70 cent range, same as now
- most resource prices fell sharply between 1981-85, and between 2011-2015
- everyone thought recession as GDP growth dove in 1986, but then the currency kicked things into high gear like timber, tourism, et cetera.
- 1960-born BBs were turning 25 in 1985, their 1990-born BB kids are now turning 25. The difference this time is a far larger cohort of retirees.
- mortgage rates fell sharply during both 4-year periods, ‘81-85 and ‘10-14
- Victoria prices corrected from ‘81-85 and ‘10-14, possibly a greater -25% from ’81-85 as not many segments fell to that extent this time
- vacancy rates dropped here in the mid ‘80s as Albertans fled west, as they are now.

Leo S said...

After 7 years of flatness and with the low new listing, higher sales start to this year and a drop in interest rates, a bit of inflation/income increase over the last 7 years I think the downsize risk is by far the lowest it has been in 7 plus years, in my opinion.

Agreed. The market has massively derisked since 2008.

reasonfirst said...

another plot twist...

debt to disposable income at all time high

dasmo said...

I think Leo has turned into a Halibut!

Tren said...

mark

dasmo said...

Canada 162%
DK 360%
NL 260%
IE 220%
NO 200%
AU 175%
SE 165%
GB 162%

Houses and rents in Rotterdam NL are about the same as here in Victoria. A half decent town house costs:$396,000 ish CAD
NL median Income 36,885.27 CAD

We are not in that bad shape here...

dasmo said...

^ debt to disposable income

nan said...

"After 7 years of flatness and with the low new listing, higher sales start to this year and a drop in interest rates, a bit of inflation/income increase over the last 7 years I think the downsize risk is by far the lowest it has been in 7 plus years, in my opinion"

Maybe prices won't go down moving forward but I can tell you with relative certainty regardless of what prices do, at current prices and rents (which are controlled) you will not accumulate wealth at the same pace as someone renting and investing in today's Victoria market.

My wife and I just looked at this again after interest rates went down and all in it is virtually impossible to get wealth accumulation from housing anywhere close to the stock market without >4.5% annual price increases and a less than 4% after tax real return. Neither of these things are very likely over the next 5 years.

Prices are still incredibly high relative to rents and incomes - maybe you'll feel good when your assessments and sales data rolls in at or above what you paid but your renter/investor neighbor will be retiring and driving a Tesla before you will.

Marko said...

Prices are still incredibly high relative to rents and incomes - maybe you'll feel good when your assessments and sales data rolls in at or above what you paid but your renter/investor neighbor will be retiring and driving a Tesla before you will.

Or maybe I'll feel good driving my Tesla right now, charging it with a high-speed charger because I pre-wired my personal house for such, and parking it on my porcelain tiled garage floor, instead of waiting 30 years for retirement living in a rental where the landlord is too cheap to replace the 25 year old garage opener/door.

Renting and owning are not equal experiences.

Above is hypothetical...I did pre-wire my house for a Tesla charger but Honda Civic is what I drive currently :)

Seth Perry said...

@nan

My wife and I run similar calculations and renting always comes out on top financially.

I'm curious if you factored in $ returns vs % of returns. A large asset like a house returning 1% annually would be more than a %4 return on $50,000 in the markets. I'm sure you have factored this but I'm just curious. With a house there is also the cost of ownership (taxes, maint, interest). Plus the time / cost to sell it.

Makes a lot of sense to me, not so much for others.

Seth Perry said...

Basement dweller story time

We currently rent for $1 per square foot (all inclusive). We've been there for 6 years with no rent increases. We are in a 2 bedroom and have been looking for a 3 bedroom for a year now. I was convinced that we would find the same deal but after a year of looking I changed my mind. I couldn't find anything under $1.25 / sq foot that wasn't a total dive.

We hung in there for a little longer and then it popped up, a 3 bedroom for $1.08 a sq ft. We've moved from a lower to upper for (very close to) the same costs per sq / ft. We are considering it a nice upgrade. It's going to cost me $60 (Truck rental) to move.

Now the rent vs. buy is coming up again and I'm going to do a comparison of our rent vs buy situation from our old place and then to our current. Let's see what is cost us to rent vs buy over the past 6 years.

I'll sure this with HHV when I have time to do the calculations.

reasonfirst said...

Marko - apsiring to materialitic crap isn't on my radar.

dasmo said...

Renting and investing sure helped me! That said I was single (as in no serious relationship) living with a roommate so my rent was $425/month. I didn't buy my first house until I was just over 30. I would recommend the same thing to anyone in their 20's no matter what the market is like. Having money in the banks when you go to get a loan will get you preferred rates too. To me you should be able to make at least 20% down payment with your own money in order to consider buying. At these rates I would put as little as possible down still but having that amount of liquid is key and a sign that you are able to accumulate money and thus take on more expenses....

I am going to be moving soon to NL for a while and I will be renting there... That said the Euro is going down and interest rates there are going negative so we will see...

Leo S said...

I think Leo has turned into a Halibut!

Well I've been drifting there for years. As of 2013 when we bought I was expecting another 5% decline because of the market conditions at the time. That didn't happen and the market recovered significantly so now I expect flat.

Marko said...

Marko - apsiring to materialitic crap isn't on my radar.

I was only reply to the comment made by the previous poster....

but your renter/investor neighbor will be retiring and driving a Tesla before you will.

nan said...

@ Marco - The owning experience isn't that attractive to me - the only thing I need from a property is enough space to put my family in and have access to the facilities & amenities we want. Don't get me wrong we rent nice places, we just consume them for 50% of the price of owning them and invest the balance. Custom things like porcelain tiled garages seem pretty frivolous to me - like gold plated faucets and the like, but to each their own. Personally, I'd never build that, so I don't really understand why that makes owning better.

Everyone makes their choice though and we did - my wife and I prefer the security of a capital gain and dividend yielding investment portfolio and the freedom to do as we please when we please over a house we can show off and a pile of debt that we have to service every month. It would hurt even more if we were paying for space we didn't need...or Tesla equipped carports we had no use for...maybe I'll rent your place when I get mine!

Also, I didn't say anything about 30 years - I'm about the same age as you and I'm on track to making work optional by 45, sooner if a few things work out in my favor.

@ Seth Perry - yes, leverage is factored in. My model is similar to the New York Times Rent or Buy calculator. I am not one to rely on the calculations of others though so I took parts of their approach and Canadianized it with CMHC, 5 year terms with estimated interest rate curves, etc.

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

The thing with leverage is that it really works really well (or really poorly) in the early, high debt years of ownership - as you pay down principle, the effect decreases as time goes on. i.e. a 10% swing in price in year 1 would increase a 5% down payment by 200% but the same swing in year 25 would only result in a 10% swing in invested capital. Once you factor in the compound growth of the early payments as invested capital even though they are smaller at first & the leverage lower, the higher & compound rate and persistent contributions eventually surpass the leveraged gains on the house as you get further out in time.

Just Jack said...

Here's another way to take a look at prices in the core districts for single family homes. You can block the sales in groups of 500 and not by month. That's a lot of data which removes most of any skewing of high or low end sales.

In blocks of 500 they are:
$572,000
(from 10/10/2014 - 02/18/2015)

$579,950
(07/15/2014-10/09/14)

$591,750
(03/03/2014-07/14/2014)

$570,000
(10/17/2013-03/02/2014)

You can see the seasonal fluctuation in house prices in the core of less than 4% over the last year.

Marko said...

I've been renting for almost two years now and there are many circumstances in which renting makes perfect sense for various reasons; however, comparing owning vs renting/investing the savings just doesn't make sense as I personally don't see a principal residence as an investment at all. It is a place to live first and foremost.

There is a difference between a principal residence and a real estate investment. For example, last year I completed on my Promontory condo. I put approximately $50,000 down and I took out a variable $144,000 mortgage and I rented it out for $1,150. My expenses are my mortgage, strata fees, rental dwelling insurance, and an extra key fob which leaves me a few hundred bucks cash flow positive each month. In the first year I'll pay off about 4k in principal and from there I can compare that $50,000 investment versus $50,000 in my RRSPs or TSFA to draw a conclusion on whether I should buy another condo or whether I should dump the next $50,000 into an investment portfolio. I think maxing out RRSPs and TSFA makes sense but I am not convinced that outside of those I am better off in the markets versus the real estate.

On the other hand, do I care if a spend an extra $50,000 on my home build that I never see back? No.

I could always make the argument that my Honda Civic is more practical, cheaper, better on gas, less expensive to maintain, etc., than my friend's 911 Carerra S, and that I could invest the difference. Not a great argument as cars aren't investments.

I think where many people run into trouble is they buy their principal residence thinking it is an investment when it shouldn't be.

My philosophy is buy something you can comfortably afford and can see yourself in 10 plus years at least.

Leo S said...

My primary residence is more investment than luxury good. It's not a great investment and there are almost certainly better places to invest, but it's still an investment.

I care about a fancy house about as much as I do a fancy car (i.e. hardly at all) so spending money on much beyond function seems frivolous. Rather make work optional (I like that expression nan!) a couple years earlier than have a slightly fancier house.

Marko said...

Can't justify my house as an investment....I'll be going from renting a condo at $1,350/month all in other than hydro to a house where just the property taxes alone will be in the $5,000/year ballpark....pretty crappy investment.

You don't want to pay $600,000 for a $500,000 home so from that perspective there is an investment component but I wouldn't buy a principal residence home for $500,000 hoping it will climb to $600,000 in 5 years.

Marko said...

I care about a fancy house about as much as I do a fancy car (i.e. hardly at all) so spending money on much beyond function seems frivolous. Rather make work optional (I like that expression nan!) a couple years earlier than have a slightly fancier house.

You are echoing nan and reasonfirst; yet the most discussed neighborhood on the blog over the years has been Oak Bay. The most expensive, least convenient neighborhood in the Victoria core :)

dasmo said...

Definitely an invested portfolio will do better. You are making say $185 pre tax a month with a cap rate of about 3.5% assuming a 1% appreciation for the next while... Not really bad at today's interest rates so you are building equity for free and potential the building will last long enough you might even have income for retirement. Just don't get hit with a 50k bill to replace the windows in 20 years. As long as money is free you are all good.
OR
You could invest the 50k in a lazy portfolio (@7%) with no effort and have $100,500 after ten years.
If you are lucky and rates stay at 3% for your renewals over ten years you would have 95,000 in equity. However you would still have 98k in debt with on older beaten down condo that is harder to rent for top dollar....
I think investing in a boring balance portfolio still wins. Investing in a cavalier well picked all equities portfolio will win hands down...

Marko said...

You could invest the 50k in a lazy portfolio (@7%) with no effort and have $100,500 after ten years.

Not including positive cash flow (over $2,000/year) and rent appreciation my principal in 10 years at current rates will be approximately $95,000 or $49,000 less.

Yes, the condo could need new windows in 20 years but it could also be worth 50% more.

The "no effort" of the portfolio I have to weight with the extremely low risk of rental revenue compared to risk in a portfolio.

That being said, I disagree with the "no effort" too on investing....when I was investing actively 5-6 years ago I was watching BNN daily. When I was buying up shares of Coastal Contacts on a regular basis I was calling into every single quarterly conference call, etc.

dasmo said...

^ that's not a low effort portfolio. Thats cavalier poor picked equity investing....

dasmo said...

Here is the Dasmo lazy no effort portfolio:

60% in these:
A Canadian stocks based fund: https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9554
An S&P-500 fund:https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9563
A dividend fund: https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9566
An REIT fund (real estate investment trusts. like the companies that own malls and large apartment blocks etc). https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9559

40% in these:
Canadian Bonds: https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9552
US Bonds https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9567

Marko said...

7% return with 40% in bonds?

dasmo said...

US Bond ETF was 7.75% last year.
Can Bond ETF was 5.20% since it's inception

Canadian stocks based fund since it's inception: 9.52%
S&P-500 fund since it's inception: 32.07%
dividend fund since it's inception: 24.70%
REIT fund since it's inception: 9.51%

So ya, 7% overall easy....

dasmo said...

If you go for more "risk" then you will most likely have higher returns. Heck just go all equity ETFs and it's still pretty lazy. Then the math will weigh more in favour of investing. Using the S&P 10 year annualized return your 50,000 would turn into 201,000 after 10 years...

dasmo said...

@20 years using the S&P 20 year annualized rate your 50k would be $544,627. Plus no chance at a 50k bill for new windows and a much better tax advantage.

Chris said...

“Using the S&P 10 year annualized return your 50,000 would turn into 201,000 after 10 years…”

Unless of course you pick the wrong 10 years,
A few examples:
1922 the return was only 0.4% per year for the next 10 years
1928 was -1.3% return for next 10 years
1964 was 0.3% for 10 yrs
1999 was 1.3% for next 10yrs

In such a case your 50,000 in index ETFs would be worth far less in real terms after 10 years.

dasmo said...

^you could just as easily cherry pick the big ten year stretches and say you might pick the right ten years and get a 20% return...

Leo S said...

Realistically you will be investing continuously over time so you can't hit the worst 10 year period with more than just a bit of your money.

nan said...

On the stock market, this is one of my favorite pages and one I use to help my friends understand how stock market investing works:

http://www.getrichslowly.org/blog/2008/12/16/how-much-does-the-stock-market-actually-return/

This article does a spectacular job of helping individuals reconcile what they see in the stock market on a daily/annual basis (volatility) with what is actually happening (long term wealth creation). I mean when was the last time you saw a news report or read an article about stock market returns over the last 30 years to date?!

The part I focus on is the series of charts near the bottom of the article just above the comments, you can see how volatile the stock market can be on a year after year basis but how consistently the stock market returns an annualized 10% to 13% over a 30 year period. Pretty much clockwork.

This is the main reason the stock market kills real estate in my analyses because over a 30 year + length of time, housing has historically returned only 3-4%. The relentlessness of that return makes it hard to beat.

Marko said...

since it's inception

Doesn't mean anything going forward. My RRSP holdings are price paid/current

RCI.B 30.48/46.35 + dividends
TRP 30.60/56.40 + dividends
BMO 54.39/77.57 + dividends
etc.

Do I think TRP will double in the next 6 years + dividends? Not betting on it.

With investing I believe you have to eliminate MER fees and do it yourself but I just don't buy a 7% lazy portfolio.

If I could dump my money into something that was guaranteed or close to 7% with no effort I would sell all my investment properties, I would max out my principal residence low 2% mortgage and dump my downpayment into the portfolio etc., and in a few years with a bit of compounding I would be a multi-millionaire.

Common sense says if you can go out and get a mortgage for 2.1% there will be significant risk chasing a 7% portfolio.

What's Garth saying these days is reasonable easy return? 9%?

Marko said...

The part I focus on is the series of charts near the bottom of the article just above the comments, you can see how volatile the stock market can be on a year after year basis but how consistently the stock market returns an annualized 10% to 13% over a 30 year period. Pretty much clockwork.

This is the main reason the stock market kills real estate in my analyses because over a 30 year + length of time, housing has historically returned only 3-4%. The relentlessness of that return makes it hard to beat.


The stock market is great in theory but I just don't come across too many average working middle class Joes that have created a huge amount of wealth in the markets. Problem is average Joe goes to Bob's investors shop and pays a 2.4% MER year after year after year.

I've seen a lot more wealth create in Real Estate....average Joe buys house in 1987, buys second one 1989, house prices go up, in 1993 they use equity in the first two to buy a third and in 1997 the buy a forth. By 2015 they have four houses in Fairfield paid off, the rents are huge, and they have $3.0 million.

There is no way one will be able to do this going forward as I think real estate will not see much appreciation in the next 10-15 years.

But just saying, don't come across too many people that bought Microsoft shares at the right time and made $3.0 million.

Marko said...

1999 was 1.3% for next 10yrs

and a house in Victoria 225% or close to a 1000% return for those with a small downpayment :)

Marko said...

Tax free return too.

dasmo said...

That's principle residence only. We aren't talking about that. Best thing I ever did was buy a home that I could afford. Biggest bullet I ever dodged was in real estate. It's like leveraged investing. Your losses can magnify.
I think im an average Joe so you know one person that's created wealth in the stock market....

dasmo said...

Man nails it. It's a benefit of my style of investing. You go shopping in those downturns and shave of some cheddar on the upswings. I've been invested since the 90's and have done just that.

Phil said...

When all is said and done, real estate has made more millionaires than the stock market. Part of the problem is people end up jumping in and out of the market at bad times.
Ie.
dasmo said
Boring... Me? I'm re balancing after the blowout Apple quarter +7.8%! Pulling out some cash... Starting a position in Bombardier.... No cleaning involved....
January 28, 2015 at 11:11 AM
Apple's up a bunch, Bombardier down a bunch since Jan 28. I don't think Dasmo would mind me using as an example since he's up a bunch long term.

Another is the get rich quick mentality of investing in stocks that often fall to zero. Ie. chasing a 7% portfolio.

dasmo said...

I only carved off about 5% of me total apple shares and have been taking my position in bombardier slowly. I am also taking a position in TD. If bombardier hits 2 I'll buy more and finish my position. I will do just fine. I'm patient and just wait and when BBD releases the c series...

Marko said...

That's principle residence only. We aren't talking about that.

Well we are and we aren't. Individuals are comparing buying a principal residence vs renting/investing.

I am coming from an angle that I don't think a principal residence should be considered an investment but I think people are disagreeing with me on this.

dasmo said...

I beleive its called buy low sell high.... When I bought my apple shares the entire financial world thought they were dead. I fought off years of my financial advisor advising me to sell apple. I'm fine with my judgement and am ok with shaving off some edges of Apple as it continues to go up. Taking some profits helps me rest easy...

Marko said...

Inspectors not benefiting from the influx of unconditional offers...

1839 Teakwood listed for $569,900 and gone for $602,888....0 days on market.

Leo S said...

>> With investing I believe you have to eliminate MER fees and do it yourself but I just don't buy a 7% lazy portfolio

Except the last 100 years of stock market shows exactly that (actually more than 7%), whether you believe it or not.

dasmo said...

^ pretty popular area. I have friends that bought there recently. Lot's of good things about it for sure.

Marko said...

Except the last 100 years of stock market shows exactly that (actually more than 7%), whether you believe it or not.

History also shows some large returns on home downpayments if you bought prior to 2007....doesn't mean it will happen again.

For example, prices were flat from 1993 to 2001 and then more than doubled.

Are we going to have flat prices from 2008 to 2016 and then see them double? Not a chance.

The one thing with real estate is only 22-25% of buyers in Victoria buy with cash. The other 75% are see better returns when real estate appreciates secondary to leverage.

You can't get that kind of leverage investing in the market without massive risk.

In the last 27 years in Victoria we've had a drop in single family home prices 7 years with the biggest being 5.47% in 1995 and the second 2.55% in 2011. The other 5 years have all seen drops of less than 1.75%.

Leveraging real estate is not as risky as buying on margin in my opinion.

dasmo said...

Leveraging on real estate has wiped out many people. It has full on risk. You buy a condo in the early 90's. it's leaky, 9 years later you get a bill for 50k to redo the envelope. You don't have the ability to come up with that because you are over leveraged. You are forced into foreclosure and the place is sold at a loss since there was no appreciation and it has the burden of being under wraps and having a 50k bill along with it.... You can Build just as much wealth or more with less risk by investing in the stock market. No one is going to trash my stocks, No one is going to move next door to my stock that has a crazy barking dog, My stocks are not going to need an update every ten years.... Also with stocks I can carve off the edges to take profits. I can invest across many classes and adjust and balance at will with a click of a mouse and a $9.99 cost. With RE it's all or nothing and a lot more costs associate with selling. Odds are it will also take a few month to sell.

I think one can make money in RE through value added. Buy and hold will simply not beat the stock market unless oil is discovered and someone wants to drill on your land....

reasonfirst said...

Don't forget that when you buy equities you are automatically leveraging yourself as the companies you buy are leveraged (large caps have na average of about 1.8 debt to equity over time). If you buy on margin you are doubling down on leverage so of course that is very risky.

dasmo said...

you are not leveraging yourself. Shareholder are not beholden to any debt...

patriotz said...

you can't hit the worst 10 year period (for stocks) with more than just a bit of your money.

On the other hand, you can hit the worst 10 year period for RE with 2000% of your money.

reasonfirst said...

"Shareholder are not beholden to any debt..." No but your stock value is.

Just Jack said...

The months of inventory for housing in the core has slipped under 4 today with the number of current listings remaining stagnant. There certainly doesn't seem to be a flood of listings coming to market. As demand leads supply and we head into Chinese New Year. This March could be more lion than lamb for house sales in the core.

And since we're talking about risk....

Coming along the rails on the inside is Saanich West as buyers search for better deals at 3.12 months of inventory.

Followed closely by Saanich East at 3.8

And in third place is Victoria paying at the window 4.05 MOI

Also rans include:
Oak Bay at 4.1 as bloated prices slowed her down

Leaving VicWest, Esquimalt and View Royal at 4.14 which are lead off to the knacker's wagon.

Phil said...

Holy sellers market Batman! That's nearing 2002 MOIs.

caveat emptor said...

"Except the last 100 years of stock market shows exactly that (actually more than 7%), whether you believe it or not."

Past performance is not necessarily predictive of future returns. Most people quoting such statistics are looking at the US, arguably the world's most successful country.

How many times can the US rise from a mid-tier power to globally dominant super-power?

How many times can the world as a whole transition from total war between advanced countries to peace in almost every globally significant country?

How many countries 100 year stock return matched the US?

7% is not an unrealistic target for investment returns, but it is not exactly guaranteed, baked in the cake.

Matching historic returns from today will be challenging given record low bond yields on the fixed income portion of a portfolio and above average starting valuations on the equity portion.

I am not arguing against investing in the stock market, just think that people should have realistic expectations

Just Jack said...

I know that it's customary to use phrases like "buyers Market" and "sellers market" and I use them myself.

It never felt right to say it's a buyer's market when it meant the economy was really crappy. Why would you want to buy when you're likely facing a layoff? Calling it a buyer's market would just be cruel then.

Now I think of them more as bullish and bearish. And the very extremes as irrational exuberance versus shallow and dysfunctional.

Back in 2002 the market was irrational exuberance with double digit inflation in house prices. Today's market is just fence sitting between balanced and easing into a bull market with prices (accounting for seasonal fluctuations) remaining stable.

A lot of things locally were happening to stimulate our local economy around 2002. Highway and sewer expansion opened up new areas for land development drew people from rural BC to the cities for jobs.

We don't have those mega projects anymore. Instead we have developers going boobs up on big projects.

In 2002 "Synergy" was a new way to do business and today it might mean a couple of years in a penitentiary. Ghomeshi was cute and cuddly like a teddy bear and now those that saw the bear are testifying. Going to the dentist was nerve racking back then and now it seems dentists have been checking out racks themselves. And that's worrisome since I have both a female dentist and man boobs.

Back in 2002 all we had to worry about was some guy name Al Qaeda and now it's some Egyptian Goddess with wings.

patriotz said...

I am not arguing against investing in the stock market, just think that people should have realistic expectations

A realistic expectation is that it should continue to do better than RE. Yes all the concerns you noted have some merit, but they apply just as much or more to RE - which has to be paid for from workers' incomes. Whether by owner-occupiers or renters.

Stocks represent ownership of production not ownership of a consumer asset tied to one location.

dasmo said...

How has the dasmo portfolio performed? My bank has added some new tools so now we can all see:
just click here

Leo S said...

History also shows some large returns on home downpayments if you bought prior to 2007....doesn't mean it will happen again.

100 years of history for the entire market is much more telling than half that in only some select markets. Many very long term data sets on real estate show it only pacing inflation, or appreciating about a percent.

The stock market is great in theory but I just don't come across too many average working middle class Joes that have created a huge amount of wealth in the markets. Problem is average Joe goes to Bob's investors shop and pays a 2.4% MER year after year after year.

Sure. Just like average joe rents their place out with negative cashflow thinking themselves a landlord. Meanwhile the smart investors pick properties carefully or create sweat equity.

Do I think TRP will double in the next 6 years + dividends? Not betting on it.

Maybe not but the whole market will very likely continue to appreciate.

Leo S said...


How many countries 100 year stock return matched the US?

7% is not an unrealistic target for investment returns, but it is not exactly guaranteed, baked in the cake.


Sure, nothing in guaranteed, but history shows it has been remarkably consistent if you can hold on for the long term and not panic in the downturns.

Leo S said...

Holy sellers market Batman! That's nearing 2002 MOIs.

Not even close. MOI in January was 9.3. MOI in January 2002 was 3.8.

Leo S said...

"According to the Credit Suisse Global Investment Yearbook, stock markets in the developed world delivered an annualized return of 8.5% over the last 112 years."

Maybe returns going forward won't match this, but I'm not about to bet against human ingenuity just yet.

http://www.moneysense.ca/columns/what-are-normal-stock-market-returns

Phil said...

Leo said
“Not even close. MOI in January was 9.3. MOI in January 2002 was 3.8”

I believe Just Jack, as he has access to the latest numbers.
“The months of inventory for housing in the core has slipped under 4 today with the number of current listings remaining stagnant.”

Phil said...

The sales I'm seeing come in lately are selling full price, with a couple over ask.

I think it's going to be a full blown sellers market this spring.

Phil said...

In the core that is.

Leo S said...

I believe Just Jack, as he has access to the latest numbers.

Won't be much different in Feb. Not anywhere near 2002 levels, in the core or otherwise.

Leo S said...

The average MOI in Jan 2002 was 3.8. That means the core was likely at 1 or 2.

Phil said...

I highly doubt the core was anywhere near 2 as early as Jan 02.

Regardless, with MOIs now in the 3s for the core, it's a sellers or bullish core as Jack puts it.

Marko said...

Sales aren't actually that great...I don't know if we'll even beat out 2011/2012 February sale numbers but new listing count is the lowest it has been since 2005. It is making for slim pickings.

Throw in the fact that the PCS system is now by far the number one way buyers find their home you see a lot of homes going over asking price despite it not being a hot market.

Last year I listed homes in the core with a suite under 600k that would get sent out to 1,300-1,400 pcs accounts. If it is attractive someone jumps on it.

Just Jack said...

The months of inventory is important and so is the sales to new listings ratio. In the last month, back dated one week, 279 houses were listed for sale in the core. In that same time 116 houses sold. That's an SNL% of 42% or 2.4 new listings for every house sold. That seems to still indicate a balanced market as inventory is keeping up with sales.

The other thing is the days-on-market (DOM). This one gets played around with by some agents in order to freshen up a listing. However, if the DOM is under 30 days then the market is favoring sellers. Greater than 90 days and the market is bearish.

The MOI, SNL% and DOM taken together provides a good indication of where the market is now and for the next 90 days. You can then break the marketplace down into condos, starter homes, mansions, middle income housing, etc in the core.

That's good information if you're relocating to another city as you want to put your home up for sale at a time the market favors you.

It's also good to know if your bidding on a property and you want to know how strong the competition is for that specific type of home. If the market is bearish and favors the buyer then you may chose to bid at the lower end of the market value range. In a bull market that heavily favors sellers you might have to go in at the high end of the market value range to get the property.

If the market is irrational, then as a buyer you're just hooped and it becomes a bidding war.

Leo S said...

I highly doubt the core was anywhere near 2 as early as Jan 02.

That's nice, but the reality is MOI for the entire market is currently 244% higher than 2002.

SJ said...

I had to chuckle at the whopping deal someone got on this foreclosure (mls346615... 4k off the list price of 559k, 1060 sq ft.

The other most recent 4 condos also I've seen went full price.
213-225 Belleville sold $440k, 67k over assessment
201-949 McClure sold $419k, 103k over assessment
305-2580 Penrhyn sold $729k
847-203 KIMTA RD, very nearly full price @ $788k, 273k over assessment

Phil said...

Leo said
“That's nice, but the reality is MOI for the entire market is currently 244% higher than 2002.”

Did you happen to mean 145% higher?

Not that I believe it’s as high as 9.3 today, however if as you claimed “MOI in January was 9.3. MOI in January 2002 was 3.8.” then that’s only 145% higher.

Phil said...

Someone told me today active listings in Vancouver are down almost 20% from last year.

victoriaislands said...

I personally know 5 people in their late 20s that are looking in the core/costal areas for decent renovated houses. General budgets are around the 850-1.2 range. There is not much out there this year.

dasmo said...

A 20something buying a 1.2 mil house? Crazy....

Leo S said...

>> Did you happen to mean 145% higher?

Yes sorry MOI is currently 2.45 times the level of same month in 2002.

>> Not that I believe it’s as high as 9.3 today

Fortunately the VREB publishes statistics so we don't have believe. In the last full month of stats there were 351 sales and active inventory 3283. That is an MOI of 9.35.

If we get to 450 sales in February and active inventory of about 3600 that is an MOI of 8. Or 2 times the level of 2002.

Al + TOH said...

We have a friend (husband and wife) who lives in Calgary but want to buy a house and move here after retirement (in 4 or 5 years), they ask us to keep an eye for them in the neighborhoods near UVic.

We just saw this house (http://www.realtor.ca/propertyDetails.aspx?PropertyId=15326488) , which we walked by multiple times before and always admired, for sale yesterday. It is a special and beautiful one. but the Realtor said it is sold (probably in just 3 days). So good houses and priced right always move very fast.

dasmo said...

Ok....you should really advise your rich friends not to go balls deep at such an early age. It a bad idea. That's 120k in a mortgage payments of over 5k plus big tax bills and a much bigger price to fix anything. I beleive rates will be low for a while but I wouldn't bet 1.2 mil they will be as low in 5 years. if they have that kind of money ease in the market. Diversify. Sheesh. I'm surprised they can even get a mortgage like that based on age alone....

Phil said...

I should change my original statement from MOIs of 2002 to MOIs of Jan 2001.

We will have to wait and see if they are nearing 2002 MOIs by the end of this year.



Phil said...

I will bet you the 1.2 mil dasmo that rates will be higher in 5 years along with prices. The only magic required is some inflation.

nan said...

"I personally know 5 people in their late 20s that are looking in the core/costal areas for decent renovated houses. General budgets are around the 850-1.2 range. There is not much out there this year."

Given their age, they do not have any equity accumulated from previous houses. Even @ 29, they would have still been just finishing University when the last run up ended in 2008.

These folks are either
1. born with a silver spoon in their mouths
2. Have extremely above average jobs that will pay a lot more later(In Victoria, Medical Specialist is really the only one that has any guarantee)
2. Incredibly bad at math/ disproportionately obsessed with what they "think they should have"

Usually, I come on here and talk about investing but that isn't a part of this analysis.

Taking on a small mortgage with rich parents is one thing. Nothing wrong with that if the parents don't mind, I have a friend that has this exact scenario in Vancouver. He is humble and laughs about it but he bid a lot for a house nonetheless.

In my opinion, taking on a >$750,000 mortgage at these rates while exposing yourself to more than one interest rate reset (i.e. you can't pay it off in 10 years) is utter lunacy.

Even well earning couples in their late 20's could only be 5 years max out of learning whatever they do. There is the odd outlier but even on the outermost extremes, any one of these couples are not earning more than $200,000/ year max.

$100,000 each = $150,000 after tax assuming they both make the same amount & have the best possible after tax circumstance.

Principle to pay the $750,000 = $75,000 per year, leaving us with 75,000.

Interest = about $20,000 per year on average leaving us with $55,000 or about $4,500 per month to pay everything else. $2,000 for all the living expenses and maybe $500 for a car payment $2000 for savings.

Still a pretty meager life that doesn't get much in the way of investing and no vacationing to speak of, but this is a minimum risk profile for a very high income.

Ignoring the massive opportunity costs of committing this much capital to a consumable this early in life, the interest rate risk is simply too high in my opinion at less income/ longer interest rates.

Those folks looking for a house @ $1.2MM are probably totally out to lunch. another $350,000 = $35,000 per year + interest, totally destroying the very well to do couple I just went through.

reasonfirst said...

"Someone told me today..."

My, that's useful....(and not true).

Just Jack said...

The months of inventory, high prices being bid and a couple of days being listed that's all within a 10 mile radius of city hall.

Victoria's market is concentrated in that small of an area.

In the Western Communities and Saanich Peninsula it's different. With 611 houses for sale and only 99 sales in the last 30 days. 6.2 MOI

The Gulf Islands with 250 homes for sale and only 12 sold. 20.1 MOI

The Malahat with 126 houses for sale and 19 sold. MOI 6.6

Compared with the core districts with 439 listings and 126 sold. 3.5 MOI

Our marketplace is so heavily weighted on so very few buyers in such a small geographical area that general or overall medians, averages, are not very credible and can be subject to a lot of volatility.

And isn't this the way you would expect a market to correct. From the outside first and then into the core.

If it were anything else but real estate, I think most prospective purchasers would say it's too risky to invest in.

Riley Jones said...

It is great to see that real estate is going up. It is hard to be in the real estate business sometimes. I hope that I will be able become a great real estate agent in the future. I cannot wait to get started on my future. http://www.rellapaolini.com/residential_and_commercial_real_estate_development.html

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

A 20something buying a 1.2 mil house? Crazy....

If you play the markets and buy low, sell high, make a few good picks don't see how 1.2 million would be that much.

dasmo said...

I could do it. I've had time to buy low and sell high, understand how shit works, have a family and thus a reason to do it and the assets and income to support it. I own almost a mil in real estate right now.... My point is a 20somthing doing it is a mistake. At that age you should have maximum mobility and flexibility. You don't go all in on your first hand. Odd are your are out of the game...

Marko said...

So good houses and priced right always move very fast.

The PCS system in my opinion has changed the game a bit.

10-15 years ago buyers potentially interested in a home would have to find it, now the email is forced through to them as the listing is uploaded.

What I find funny is the public is still paying REALTORS® traditional commission rate models only to have houses sell in a matter of days, sometimes unconditionally, at or over asking price.

Phil said...

I checked for you, listings are only down 15% in Van since last Jan. Interestingly, the hottest area of East Van, listings are down 30% since last Jan.

Here’s the average detached gain in East Van from Jan 13 - Jan 15.
867895
1108035 -

240140 $ or 27.7% in two years and building momentum

The trick here for the next two years as things ripple out, is to find our ‘East Van‘. Maybe it’s Fernwood and Marko’s about to hit the jackpot.

caveat emptor said...

"but I'm not about to bet against human ingenuity just yet"

A belief in human ingenuity (which I share) doesn't tell you whether stocks are going to do well or poorly over the next 20 years. Human ingenuity didn't go on vacation from 1929 to 1942 and the Japanese sure didn't stop being ingenious in 1989. Are the Americans (6.5 % long term annual return) 10 times more ingenious than the Austrians (0.6% long term annual return)?

The global investment returns yearbook is a brilliant resource. Among other things it cautions against too much reliance on the historical performance of the US as one of the world's most successful markets.

US real returns 115 years = 6.5%
World ex US real returns = 4.4% (well below the US but still decent as that is inflation adjusted).

For the world including US real returns are equities = 5.2% and bonds = 1.9%. For an 80/20 portfolio (my personal allocation) 4.5%. Subtract 0.5% for expenses (lower is possible but that it is approximately my reality including commissions, bid/ask spreads and MERs for a few mutual funds. Add back 2% for inflation and I'm back to 6%. I'd subtract 1% off of that thanks to stock market above normal valuations and bonds below normal yields. So I would reasonably expect to achieve 5% nominal (3% inflation adjusted) returns going forward from here.

Which is a long winded way to agree with patriotz that - yes - a reasonable equity weighted portfolio should outperform generic Canadian real estate investments over the next 20 years or so.

Marko said...

My point is a 20somthing doing it is a mistake. At that age you should have maximum mobility and flexibility. You don't go all in on your first hand.

Your are making the assumption that the late 20s individual buying a $1.2 million home is putting all their marbles into the home.

I see this happen more in the $600,000 to $800,000 price range when two couples have well-paying institutional jobs and they just max out the payments, RRPS aren't maxed out, TFSA isn't maxed out or nothing in it, and they probably don't know the difference between the two but they can afford the dream home. However, I should point out that this isn't the norm. Believe it or not, the majority of younger buyers I work with come to me with, "bank pre-approved us for $850,000 but we don't feel comfortable spending over $650,000 and we want a suite too."

It's been years since I've personally had a deal for a buyer collapse on financing as the majority of people I work with play it safe.

When you get to over $800,000 I find usually the late 20s/early 30s individual is in some sort of business or quite saavy to get to that point in the first place.

I have two late 20s friends with houses in the $1.3-$1.6 mill range and both are late 20s and in IT. By no means are all their marbles in the house. Not only are they good at IT but they also understanding investing, etc.

Marko said...

Fernwood and Marko’s about to hit the jackpot.

Absolutely love Oaklands/Fernwood. As I kid I walked to Oaklands/Lansdowne/Vic High, saved my parents a ton of time...then after that when I worked at the Jubilee and walked to and from work. Walking distance to downtown. Almost all the streets have sidewalks plus a lot have boulevards too. Easy to commute to place, just go down Shelbourne or Hillside.

$100,000 to $300,000 cheaper than Oak Bay depending on the house.

Just Jack said...

I suppose an argument could be made that the core is transitioning from detached homes to condominiums and you should consider condominiums as a alternative to houses. Most prospective home purchasers buy condos because they can't afford houses. Condos in the city being the equivalent of starter homes in the western communities.

Condos are challenging to figure out what's going on. When you look at the 118 condo sales last month, about 20 percent of them were full price offers on new or not built units. That just doesn't happen in the re-sale market. That brings into my mind, if these contract prices from the developer are at fair market value? When you have a few sellers controlling the marketplace that isn't a free market but an oligopoly. And oligopolies have a history of price fixing.

And I'm not suggesting that's happening. Its just these contract sales might not make the definition of Fair Market Value. So why use them in your analysis and just concentrate on re-sales of pre-owned condos. It's a debatable point to use or not to use new condo sales.

For the pre-owned condo market there are some 474 listed in the core with 91 sold. At 5.3 months of inventory the market is well balanced between buyer and seller.

The median price paid is $250,000 for an early 1990's built 975 square foot condo with a median days on the market of 53. I don't expect any changes in this market for the next 90 days barring some black swan event. On average, for a reasonably priced condo in a balanced market that might be 3% off asking price or around 96 to 97% of the condo's assessed value.

dasmo said...

"bank pre-approved us for $850,000 " unbelievable! I guess if your are dumb enough to put your head through the noose you deserve the outcome.

for interest sake... I was 31 had about 80k to my name and no debt. I had my own business going for two years giving me an income of 75k/year.... I was approved for a 220k mortgage.... I was looking for a SFH in Vicwest for 180k or under.... I guess times have changed...

Just Jack said...

That's the reason why Oakland/Fernwood is popular. The neighborhood is $100,000 to $300,000 cheaper.

The surrounding hoods have to increase so that Oaklands and Fernwood can rise. Unless there is a major city infrastructure change that would make this hood more desirable relative to the surrounding hoods Oaklands and Fernwood will always be the bridesmaid and never the bride.

Personally, I would like to see the City pay more attention to these neighborhoods.

I've lived in a lot of cities and Victoria is the worst for maintaining its streets. The only city that I've seen that solves the issue of cracked and uneven sidewalks by painting a white line across the crack. I guess it's your own damn fault if you trip and break a wrist or a hip. Not that you can see the white strip when you're walking or jogging at night as the street lamps aren't bright enough to light a Firefly's butt.

victoriaislands said...

Sorry to burst your preconceived bubble that adults near 30 years old are by all accounts fairly successful.

Only 1 of the 5 went to University, which he said was a total waste of time, but he finished his degree at 21.

All of them are in the tech fields, all of them make 500k plus a year and have enough to 'retire' already. This is pretty common in the tech scene. I know about 30+ retired 20 somethings. There was 3 BILLION in fresh minted money created from nothing/tech in Victoria in the last year alone.

The 1.2m is actually on the low end of what they can easily afford. These are not flashy guys/girls. You would never guess that they are that successful by looking at them.

Non of them had a silver spoon, these are your regular gordon head lower middle class kids that had basement suites in their houses growing up, or grew up up island in almost poverty levels.

Sorry to let you know that these guys had it just as hard as you, or most likely harder, so you can't blame them to avoid the fact that you didn't or can't jump online and do well for yourself.

victoriaislands said...

Oh and maybe some of you don't know this trick, but these guys are planning on buying the houses with cash, then getting a HELOC at 2% on the majority of the funds, then investing that money back into a balanced portfolio and writing off the 2% interest.

Free money.

dasmo said...

^ Calling BS on the above.... First no one has a salary job for 500k in Victoria. Second, no 20something would have stock options in any Victoria company that would create that type of salary. Third, any entrepreneur in the tech field that age and that successful at that young an age we would know about the company... What's your angle victoriaislands?

nan said...

@ Victoria islands - I have the VIATEC salary survey right here in front of me:

The highest paid surveyed (out of 56) Hi-Tech CEO in the city makes $280K. Sales & Marketing a little more than that and Finance a little less. Keep in mind these are maxes, averages & medians are much MUCH lower than this.

I can think of one group of guys I know that might be able to fit that bill, but they all work for the same company whose success has been again, nothing like average and not even close to indicative of the per capita success in hi-tech.

You might have disproportionately successful friends but not many make $500k regularly in Victoria (or anywhere else for that matter).

Come to think of it, with a story that outrageous with the only possible outcome being to get people scared that "the tecchies are coming so you better buy quick" you might even be a realtor...? Just a guess...

victoriaislands said...

You think that these guys are 'salary?'.

These are all well known in the tech world here.

If you think that 280k is the highest income in the tech scene in Vic you are out to lunch. I know at least 10 companies with over 20 employees making 120-150k a year, and you are telling me the owner of that tech company only makes 280k tops?

There were about 30 tech businesses bought last year from 2.5 to 300 million here in Vic.

Just Jack said...

An accountant working acting for the insolvency of a tech company explained this one to me.

In this case, the entrepreneur raised investment capital of $10,000,000. Rented the best and most expensive office space, leased the best equipment and hired a dozen programmers to design programs. Never brought anything to market and in 3 years had to close the company because he couldn't get any more investors.

I look at that and I say that's not a tech company - that's a ponzi scheme.

You can't tell the difference, except maybe if the CEO is drawing a half million a year in salary plus expenses. "Synergy"

SJ said...

Chamber of commerce has it as an already 4-Billion sector in Victoria. It wouldn't surprise if 20 year-olds are making that kind of money here. Tech sure is minting a whack of teenage millionaires in the States. I could see Vic & Van becoming Canada's silicon valley for the same reason the nicest part of the States did so.

TC
survey of the top-25 local tech firms showed they had grown 20 per cent compared with 2013, and that seems to be on the menu for 2015
That's big time growth.

nan said...

"I know at least 10 companies with over 20 employees making 120-150k a year"

First, 120-150k is pretty standard for mid career in high tech in Victoria. This is miles away from $500k.

Second, Unless you work for VIATEC or StatsCan or some other data collection agency, you probably don't know this because you can't know this. Having accurate information about "more than 10" private companies in the highly competitive Victoria labor market is unlikely if not impossible. And if you have it, you are part of an organization where you shouldn't be talking about it.

Regardless of where you get your info, I consider a survey of people who actually work in high tech more reliable than the conjecture you seem to be relying on.

Data frequently reveals those who "live large". Big hat, no cattle one might say. Maybe your friends are lying to you? Or do you estimate what they're worth/make based on their car and house?

I also work in tech at a company with a similar wage cost for programmers. And yes, the CEO costs somewhere between the Average and Max in the survey I mentioned.

Frankly, you sound like an 8 year old telling a story about the fish he caught on the lake last weekend.

The number that comes out of his mouth is more about getting a reaction then conveying accurate data.

Sure 20lb fish exist, but there are far fewer of them than there are 5lb fish. No one would question whether a 20lb fish exists, but one would certainly contest the assertion that the ocean is full of them.

Tren said...

well said Marko.

one guy(in early 30s) brought 980k home in GH recently. he is in small business.. but quite savvy about investing and definably has unique understanding of business sense.

dasmo said...

"these guys are planning on buying the houses with cash, then getting a HELOC at 2% on the majority of the funds," another sign of BS. HELOC are prime plus so 3%+. Also they are more than a simple mortgage so this makes no sense. I can see minimizing your capital input so you can invest the rest....

reasonfirst said...

"I could see Vic & Van becoming Canada's silicon valley for the same reason the nicest part of the States did so."

I worked on contract for Cisco in Silicon valley and it is definitely not the nicest part of the states - hated it - parking lots and boring buildings one ginormous tech park.

Leo S said...

All of them are in the tech fields, all of them make 500k plus a year and have enough to 'retire' already. This is pretty common in the tech scene.

Funny stuff. Not common at all, you just happen to know the crowd that makes the top money. One look at the cars in Victoria vs Vancouver will tell you the difference in how much money floats around.

Never mind the income stats. If the number of people making huge incomes was significant it would show up. Obviously it isn't.

you are telling me the owner of that tech company only makes 280k tops?

So now the couple dozen tech company owners are having any effect on a real estate market with 7000 yearly sales? You're hilarious.

victoriaislands said...

You don't get a 2% HELOC from a bank, you do it via your holding co through a trust and loan yourself the money via your shareholder loan, it costs about 2% in the end.

There are SO many complex ways to move money around, and the smart ones know that making money means shuffling it around.

Sorry to hear its hard for a couple people on this blog to digest the fact that an adult in his/her 20's can make a certain number that doesn't jive with your life views that numbers are 'hard' to reach. The internet is huge, and you just need a little online business to easily make a ton of money, and invest in AAPL alone for the last few years and you have a few mil.

I've been coming to this blog for 8 years and never commented, but was getting tired of the same ol negative views... bought and paid off a house in the 8 years have been reading this blog and am pretty much retired at 32.

As hard as it is to believe, there are a 'ton' of well off tech people in Vic, we are the San Fran of tech for Canada. I had 2 employees get hired by Facebook a couple years ago, its a very interconnected industry, Vic and San Fran are very close with a lot of the purchases of businesses here coming from San Fran w the strong dollar.

You wouldn't know me or most of my friends by the cars we drive, most of them are from the late 90's to early 2000's... you rent new cars for trips to Whistler or Mt Washington, but just driving around Vic, why bother w a new car??

victoriaislands said...

I also have a lot of friends that are in the constructions type industries.

Plumber, runs his own biz, wife is a nurse, they make around $220k combined, and their tax rate is lower do to self employment etc. They are early 30s, 2 kids, own a 950k house in Langford in a nice area (kind of gated community). They owned a house and fixed it up west Jubalie area and made a nice profit and their mortgage payments are really low, like $1600 a month including prop tax.

Another friend is lawyer, w wife that is lawyer, both are 26 years old, make around 150k combined, bought a house in Vic West for 460k and fixed it up, its super nice now and valued at around 680k. Their mortgage payments after reassessment is around the 1400 mark.

I also have friends that rent and don't mind it at all, but they generally live kind of month to month and dont think about the future, happy people, but just don't care to go back to school to get a better job. Lots of disposable income though, so lots of trips to Hawaii/Mexico in the winters and toys. Both have very nice pensions.

dasmo said...

So they made 650k profit on their fixer upper and put it into a 950k house in Langford? That's wrong on so many levels....

Leo S said...

Yep, Victoria is teeming with super rich 20 somethings that are also super modest and drive around in 97 corollas and yet buy wildly expensive houses, because, you know, they're so modest.

Boring troll is boring.

dasmo said...

"There were about 30 tech businesses bought last year from 2.5 to 300 million here in Vic."
I would like the list of names please....

totoro victoria said...

"You don't get a 2% HELOC from a bank, you do it via your holding co through a trust and loan yourself the money via your shareholder loan, it costs about 2% in the end."

Hmmm..

So what you are saying is that folks are operating as a personal corporation, saving money in the corporation, transferring it to a holding company and then the holding company buys the home for cash with retained earnings?

You are then saying that the holding company takes out a HELOC-like loan on the property for 2 percent somehow and loans this money to the personal corporation? The personal corporation then provides the individual a shareholder's loan at the minimum prescribed interest rate?

Maybe this scenario works in some way but you lose your capital gains tax exemption and shareholder's loans must be repaid within one year from the end of the year in which the loan was made or they are deemed as taxable personal income.

Do you have a source information for this "trick"?
http://www.taxplanningguide.ca/tax-planning-guide/section-1-businesses/loans-corporation/

nan said...

One more observation- the tech sector generated 3.15$$ in revenues last year with 23000 employees/ contractors. Assuming 100% of the revenue was paid out in wages ( which it wasn't) the is an average of about $135,000 per employee. This is a great number but no where near the $500k. I would estimate wage cost for a typical tech company at somewhere around 50-60% of revenues MAX landing average tech wages in the neighborhood of about 70-80k which is about right. There might be some $500k guys out there but simple math precludes them from being common.

Equity is another thing entirely, but you were talking about annual income so there it is.

As far as the $ that might have come to vic via liquidity events, well that is another thing entirely.

Marko said...

Unless there is a major city infrastructure change that would make this hood more desirable relative to the surrounding hoods Oaklands and Fernwood will always be the bridesmaid and never the bride.

Not sure what you mean by infrastructure? The Oaklands area for example has wide streets on average, sides walks on both sides, boulevards on some streets, you have the 4 public tennis courts right in the middle of Oaklands, super nice playground, etc.

Walk-ability is where it is at. If you live on a nice street like Roseberry/Avebury in the Oaklands area you are less than a 30 minute walk to Harris Green Village downtown, Hillside Mall, Camosun College, Jubilee Hospital, etc., etc.

If you are in South Oak Bay the Jubilee would really be the only walk-able place.

Same goes for commuting. Doesn't matter if you need to go to the Peninsula or the Westshore leaving from Oaklands you are saving at least 5 to 8 minutes versus Oak Bay.

Have to give Oak Bay the notch for being closer to the water but my impression is a lot of the $100,000 to $300,000 premium is for the exclusivity of Oak Bay.

Marko said...

I think the late 20s discussion is missing the concept that the average late 20s person is not buying a $800,000 plus home.

When I look at my 2004 Victoria High grad class the average grad, now 29, is not doing too hot.

Then in my early 20s as I moved to working at VIHA as a respiratory therapist I made friends through school and work with individuals my own age making $65,000-$85,000/year. At least three of my friends have married or are engaged to nurses so right there I know three couples pulling in a very secure approximately $150,000 per year.

Then I went on to do my master in health administration at UBC and my cohort of 30 students had 4 doctors, two pharmacists, a dentist, nurses, etc. I have a 29 year old physican friend who flys up north for work and his wife has a solid job too, they pull in over $300,000/year.

In my mid 20s after I finished my masters, quit VIHA due to lack of opportunity and moved into being self-employed I made a lot of acquaintances and a few friends (seems to be harder to make friends as you get older) with individuals with similar interests (business, investing, construction/real estate, etc.). It is from this group that I know a lot of couples pulling in over $200,000/year.

The discussion on the blog always seems to revert to average. The average Vic High grad, even the average Uvic grad is not the one buying the $800,000 home. The harsh reality is the average [exaggeration] Uvic grad took a few years off to travel and work in Whistler, is graduating balls deep in student loans, and having issues securing a job with a degree in economics or English. This person is likely not in a position to buy a $800,000 home.

You have a very small subset of individuals who can afford a $800,000+ home in their late 20s, but none the less the subset exists. My impression is a big portion of this small subset is also not buying until their early/mid 30s as they are fairly fresh in their careers/business and they want flexibility before settling down.

Marko said...

Sorry to hear its hard for a couple people on this blog to digest the fact that an adult in his/her 20's can make a certain number that doesn't jive with your life views that numbers are 'hard' to reach.

It can be a bitter blog and it is not just limited to well to do late 20 years old discussions. Other groups as well have seen their share of bitterness thrust in their direction such as successful trades people with constant jabs at their trucks, etc.

Why be bitter over your plumber/electrician/random dude working up north in camp neighbor making $100,000/year driving a nice truck? I've never understood this......let's be bitter towards the one group of people who actually produce something.

I can understand bitterness towards me, a REALTOR®, all I do is flip paper on my desk and I take money in return. No real contribution to the economy, but trades people...doesn't make sense.

Marko said...

Back to the real estate market.....starting to see single family homes bought in the last 3-4 years without large improvements re-selling for more.

1578 Oakland purchased last year in February for $540,000 just re-sold yesterday for $580,000.

The percentage of properties going over asking price is high. Of the first four sales reported this morning one is at asking and two over asking.

Just Jack said...

Those are all valid points about Fernwood/Oaklands that have been the same for the last 50 years. Nothing has changed to make this hood more or less desirable relative to the surrounding area.

All of the neighborhoods have suffered deferred maintenance equally with this area. And all have been "gentrifying" along with this area.

As the downtown core expands this area will become less owner occupier and more rentals suitable for those that work in the service industry that supports the downtown core. It's the modern day equivalent of the worker's village that built the Pyramids. In fact the price differential between Oak Bay and this hood has been growing not shrinking.

I spoke with one mid 30's couple with two kids in that neighborhood about building an addition onto their home. They like the neighborhood and Oakland school but not Vic High. Both are government workers advancing in their careers.

I asked them where they saw themselves a decade from now in their jobs. They then could envision how in ten years they'll have outgrown the neighborhood and would be looking at an area of better quality and larger housing like Maplewood, High Quadra, Lakeview, Gordon Head or a list of others. Given a choice between Lansdowne and Royal Oak middle schools they would chose Royal Oak.

Fernwood is bohemian in nature. A place for the unconventional to own and to rent. That's what makes it attractive to the 20's and 30's somethings. It also has a high turn over rate as people outgrow the neighborhood.

In order to turn this around, city hall would have to spend gobs of money updating the streets and neighborhood commercial. And that's not a good idea, as you'll drive the downtown service workers out of this area.

In contrast, if I were to pick a neighborhood that had all of what you said plus an upside of improving it would be Camosun. Close enough to the downtown but just far enough away too. And the bonus score is that it isn't administered by Victoria City Hall.

SJ said...

The percentage of properties going over asking price is high. Of the first four sales reported this morning one is at asking and two over asking.

I wonder if the following has anything to do with our recent market strength as Marko mentioned Teakwood went for 602,888
Chinese visa applications soar on cheaper loonie
In January, Chinese applications for visas to Canada climbed 51 per cent over last January, rising to roughly 15,000 in a month that is typically among the year's slowest for visa requests. The rise comes as a sudden boost in Chinese buying power combines with domestic economic weakness to prompt growing interest in Canada from Chinese tourists, investors and homebuyers.

Just Jack said...

Well how many are buying those expensive houses. Here's the data by price range for the last 12 months for the core districts calculated from 1907 sales.


Sold Price Sales, Number of
$0 - 200 1
$200 - 300 9
$300 - 400 120
$400 - 500 378
$500 - 600 524
$600 - 700 328
$700 - 800 206
$800 - 900 131
$900 - 1,000 46
$1,000 - 1,250 70
$1,250 - 1,500 44
$1,500+ 50

This compliments Marko's observations of the market. The mode is $500,000 to $600,000.

SJ said...

I think Fern/Oaklands is a shoe-in as you can see the ongoing transition from shabby to chic.

To the victoriaislands techie, don't let these negative ninnymuggins get to you. Most here could never believe something like this 3yr price graph could happen in 2012.
http://www.zillow.com/palo-alto-ca/home-values/

Marko said...

They like the neighborhood and Oakland school but not Vic High.

I don't know if the Vic High I went to in the early 2000s will be the same as the Vic High the kids of people currently in their late 20s/early 30s will go to. Vic High has become the catchment area for the most expensive neighbourhoods in Victoria (Fairfield, James Bay, Rockland).

I could be wrong but I would think young families buying in the Vic High catchment area are of a different socioeconomic status than those of 30 years ago. I know when my parents came to Canada Oaklands was all they could afford initially on a housekeeping + stone masonry job. Can't see a housekeeper + stone mason being able to afford a $500,000 Oakland special any more, let alone Fairfield.

In my opinion other than the socioeconomic component there is nothing different between Vic High and any other public highschool in terms of education. I remember I had a friend scoring 95%+ on provincials, but he applied himself. If your weren't outside smoking enough education to succeed was delivered by the teachers.

I don't have kids yet so I probably can't speak on the same level as parents but I think I would be more inclined to send my kids to Vic High (diversity+) than St. Michaels (diversity-). I must admit I have freinds who have said the same thing and then when they've had kids they've gone private school.

Leo S said...

Why be bitter over your plumber/electrician/random dude working up north in camp neighbor making $100,000/year driving a nice truck?

I don't see people being bitter. More like skeptical about claims of Victoria being awash in 20 something's making 500k a year. These stories get trotted out all the time but don't represent the typical buyer. It's just a meaningless anecdote. Just like the story of people on the verge of bankruptcy are meaningless to the overall market. The median buyer household in Victoria makes about 90k most likely and is highly leveraged but not at the teetering edge.

Marko said...

by diversity I mean socioeconomic, not race.

Marko said...

I don't know Leo S....I've definitely sensed a bitterness undertone over the years towards trades people, oil money, younger families buying expensive homes (assumption is usually that they leveraging to the max), etc...

The median buyer household in Victoria makes about 90k most likely and is highly leveraged but not at the teetering edge.

It is interested how close the numbers are in terms of leverage the last 3 years...almost not change. The picture is not that grim. There is more people buying with cash than a highly leveraged mortgage.

2014

Conventional mortgage (20% or more down payment) 1248 52.9%
High ratio mortgage (less than 20% down payment) 510 21.6%
All cash 603 25.5%
Total Responses 2361 100.0%

Compared to 2013

Conventional mortgage (20% or more down payment) 662 52.6%
High ratio mortgage (less than 20% down payment) 274 21.8%
All cash 322 25.6%
Total Responses 1258 100.0%

Compared to 2012

Buyer Finance
Value Count Percent
Conventional mortgage (20% or more down payment) 572 52.7%
High ratio mortgage (less than 20% down payment) 239 22.0%
All cash 274 25.3%
Total 1085 100.0%

Marko said...

I don't know Leo S....I've definitely sensed a bitterness undertone

Just to add, not from you, but certain individuals.

Marko said...

Enough with the blogging...gotta go show some houses :)

Leo S said...

I don't know Leo S....I've definitely sensed a bitterness undertone

Could be. I'm with you on that. The response to people who make money should be "how can I do that?" (assuming you want to make more) not "damn rich people".

Just Jack said...

That are core market has been flat for so many years and that I haven't seen any effect on prices due to low oil leads me to believe that our marketplace is almost entirely driven by locals.

That should make the bulls happy that we have a stable market.

Yes we have seasonal fluctuations in price of less than 5 percent. As we are now having as we start to enter the spring market. This is to do with a shortage of supply not necessarily increasing demand.

We live in a world of spin doctors. We don't need people to spin how great our city is. We already know it. We are bombarded weekly by telemarketers, spammers and Nigerian con games.

Maybe it's time to stop selling a dead parrot.

https://www.youtube.com/watch?v=Oj8RIEQH7zA

Curly Fry said...
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Curly Fry said...
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dasmo said...

I certainly wasn't arguing against a 20something being successful. I was first trying to give some advice. Your a young man Marko. Even you didn't cut your teeth on a million dollar home. I bet the house your building now cost you less than 800k. I was calling out what was a obvious load of hogwash... I'm usually the one promoting the tech industry here. In in it. We have some real successes here but palobalto we ain't...

dasmo said...

Sorry for the spelling....in the line at the grocery store....

Just Jack said...

But let's look at some good news. Like a property that sold over asking price in Oaklands after being listed 12 days.

Asking $399K and sold at $410 or 90% of its assessed value. Which is roughly 2.36 times the price it was bought for in late 1996. That's a good deal for a split entry home with a basement suite. If it hadn't been on Bay street it would have sold for $75,000 more. Economic rent for the two floors of about $2,500 a month.

In contrast a home along Henderson that was previously bought in 1997 just resold a 1.95 times its original price for $647,000. And I figure this was a good deal for the buyer too.

The same for a starter house in South Oak Bay along Brighton that sold at $650,000 or 2.25 times its original 1999 price. It would be interesting to see if this one-storey home gets demolished. As I suspect the building adds less than 10 percent to the value of the entire property.

Three sales, that would suit an investor, a home occupier and a developer. All good deals.

caveat emptor said...

but I think I would be more inclined to send my kids to Vic High (diversity+) than St. Michaels (diversity-).

+1

I don't get the hate that some parents have for Vic High. Maybe they think that low socio-economic status is a communicable disease?

Plus I have friends that are looking to spend 250K per kid at SMUS K-12 but then complain that every trifling purchase is "too expensive".

Marko said...

I was first trying to give some advice.

I went back through your posts and I am not sure what you advice is?

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

"Ok....you should really advise your rich friends not to go balls deep at such an early age. It's a bad idea. That's 120k capital locked in a mortgage. Payments of over 5k plus/month. Big tax bills and a much bigger price to fix anything. I beleive rates will be low for a while but I wouldn't bet 1.2 mil they will be as low in 5 years. If they have that kind of money ease in the market. Diversify."

So to summerise. Don't go all in on your first hand and diversify...

Marko said...

It isn't good advice as you are making a lot of assumptions such as small down payment, buying something at the top of the affordability scale, you don't know whether they are buying something with a suite or not which effectively takes a million dollar house down to $700,000-$800,000 in terms of a monthly cash flow basis.

My 100% anecdotal observations are those in their late 20s dropping big money on a house are a lot more diversified and buying more within their means than those purchasing a $600,000 home.

My theory on these anecdotal observations is those buying the more expensive homes in their late 20s are more likely to be self employed (business, physician), etc., and when you are self-employed you end up exposed moreso to finances. At VIHA I worked my shifts picked up my T4 and that is pretty much it. With a business you have to worry about a business plan, expenses/revenue, your taxes are usually more complicated, you need to think about structuring under a corporation, as you start making more RRSPs become more important, etc.

Concepts you learn in business you can apply to your principal residence. My first thought with my house was, hmm, okay....I can deduct the interest on my three investment properties but not my house. In that case, I'll keep my revenue properties leveraged and I'll pay down the mortgage on my house if I feel I can't do anything useful with the money outside of RRSPs/TSFA.

My advice, buy something you can comfortably afford whether it be $200,000 or $2 million given your financial circumstances and where you see yourself living for at least 10 years.

I wouldn't hesitate to buy a million dollar property just because it is a million.

dasmo said...

Don't go all in on your first hand and diversify isn't good advice????

Marko said...

^Just that alone is good advice. Your earlier comments seemed to be geared more towards the concept of a late 20 year old buying a $1.2 million dollar property as crazy....but right off the bat it isn't that crazy as we know based on the price tag alone that they most likely have at least 20% which can't be said for those buying under a million.

LeoM said...

Home heating fuel leaks are now the responsibility of former owners according to this Times Colonist story. This could mess-up everyone's plans for profit from real estate. This ruling could probably be applied to anything an owner does to a house that is later found to be done by a homeowner. Faulty renovations, faulty wiring done without a permit... An endless list of potential liabilities years after you've sold the house.

http://www.timescolonist.com/news/local/former-homeowners-must-pay-for-oil-tank-leak-in-saanich-1.1770366

kabloona said...

Funny....

Press Pass: NDP MLA says she can’t afford to buy a house in her riding

:-)


http://www.timescolonist.com/news/local/press-pass-ndp-mla-says-she-can-t-afford-to-buy-a-house-in-her-riding-1.1770816


“HOUSING BLUES — If NDP MLA Jane Shin ever moves out of her Burnaby-Lougheed riding, it won’t be for political reasons. It will be because she can’t afford to buy a house there. Speaking during debate on the budget last week, she told the house: “I’ve given up on Burnaby, as much as I’m a resident of Burnaby. I can’t find a house that I can occupy for anything less than $800,000.” Shin said she’s in her mid-30s and has a big greyhound she’d love to see running in a fenced backyard. “I might be the member for Burnaby-Lougheed, but I might need to get a place out in Mission or Maple Ridge or Chilliwack.” Shin said she has a friend who is a nurse and whose partner is an accountant and they’re moving back to Taiwan because “B.C. is a place where you make six figures and you live poor.” MLAs make $102,000 a year in base salary.”

Marko said...

greyhound she’d love to see running in a fenced backyard.

What does a greyhound cost per year in terms of food and vet bills? Must be $2,000 to $3,000.....how about buy the dream picket fenced backyard house first, dog second?

Reminds me of an acquaintance who owns two horses and complains about the price of acreages close to town. Well yea, if you weren't spending $1,000/month boarding your horses maybe one day you could afford an acreage of your own.

Love animals, nothing wrong with spending money on pets if it derives pleasure/enjoyment but complaining about the type of property you need to accommodate your pets being too expensive is just ridiculous in my opinion.

Have to hand it to her, very very smart political move though. Lots of dog owners out there and lots of them can't afford the white picket fence.

dasmo said...

@ Marko it was crazy because it was being said as if it was a normal thing. Multiple friends in their twenties looking to buy their first home int the million dollar range...that's not normal....

CuriousCat said...

A Greyhound would need a PRETTY BIG yard in order to be happy running around! Of course it's gonna cost her big bucks. Maybe she should take her dog to the dog park like the rest of us. (Even my tiny 15 lb dog can run a circle in my fenced in backyard in about 2 seconds. And it's a standard 6000 sq foot lot.)

CuriousCat said...

You guys sure have some well-to-do friends! And you sure know a lot about their financial situations!

My friends are all in their mid-30s and to be honest, we do not discuss finances. I have no idea what they paid for their houses, whether their parents helped them with the downpayment, whether they received an inheritance, whether they have a large amount of credit card debt or if they have hundreds of thousands in RRSPs.
But in my job, I DO get to see how many people live. How much they spend on restaurants, and cash, and renos, and cars and vacations. And I can tell you, there are a LOT of people that are living beyond their means. The only ones that even seem to care about RRSPs and TFSAs are those that are 50+. The younger ones are too busy living fast and high on the hog.

dasmo said...


"My friends are all in their mid-30s and to be honest, we do not discuss finances."
This is normal...

dasmo said...

"I know about 30+ retired 20 somethings."
This is not...

Marko said...

Multiple friends in their twenties looking to buy their first home int the million dollar range...that's not normal...

It is not normal in terms of the average Joe but could well be a normal situation for a young physician, IT entrepreneur, business person, etc.

For example, if you just spent 10-14 years in school/med school/residency odds are you made some friends that are physicians?

Odds are you made friends with like-minded physicians. If you are taking extra certifications for Botox injections to make some extra cash your friend is probably obtaining training to do private varicose vein treatment.

Odds are you both are looking at million dollar houses.

I know about 30+ retired 20 somethings.

I don't know anyone retired under 40 years old....quite the opposite actually. My observations are if you want the million dollar house you need to be in the $200,000/year plus income bracket and this doesn't exist in terms of a salary for younger people. Most people need to hussle and work 60+ hours/week to get to this point.

dasmo said...

" if you just spent 10-14 years in school/med school/residency odds are you made some friends that are physicians?" I'm pretty sure none of them would be in their 20s ;-)

Marko said...

Huge surge in sales last week. We'll have the highest sales total for the month in 5 years and the lowest active inventory in 5 years as well.

Monday, February 23, 2015 8:00am

MTD February
2015 2014
Net Unconditional Sales: 396 412
New Listings: 877 1,064
Active Listings: 3,448 3,770

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

dasmo said...

But I will give you that would be normal if their peer group was child geniuses with wealthy parents that started their path to med school at 15 and graduated debt free. Then it would be perfectly normal for all your 20 something friends to be shopping for 1.2 million dollar homes fresh after their residency....

Marko said...

I'm pretty sure none of them would be in their 20s ;-)

That is some sort of average, physicans in their 20s is not totally unusual given that 70% of admissions are those aged 23 or less and then you always have the 3-5% of keeners that are admitted to med school that are in the 18 to 20 age category.

Add 3 or 4 years for med school plus residency which is short for family.

If you are a specialist you won't get there until early 30s but then you are in the 200k-500k bracket.

Marko said...

I don't think you have to be a genius to be well off by your late 20s. What do I do? I work in real estate with an incredibly low barrier to entry and I offer the same services the other 1205 licenced people in Victoria do. My brilliant idea has been to do it for less....not what I would consider a genius. A bit of common sense and hard work helps if getting ahead financially is something of interest to an individual. If I was genius and good at IT or something I would probably be a lot better off.

Last weekend I went to someones birthday party and me and two other guys started discussing, for over 30 minutes, if Lebron could defend and shut down prime Jordan (91-93)....then we got into another 30 minute discussion of whether Gary Payton should have guarded Jordan in the 1996s to start the finals. yea, safe to say none of us live in 1.5 million dollar homes.

I've been at other social events where a girl and guy physician where discussing how much a bottle of Botox is and how many injections they can get out if and how much to charge...both of them are in over $1 million homes with their significant other.

The world of well off 20 years olds is not mythical, but not average by any means.

dasmo said...

you need a BA before you can get into med school. So 4 years there. 3 if super keen. Another 4 for the Med degree. a minimum of 2 year residency after that for a family doctor, and up to 5 for more advanced practice.... so let's just say 9-15 years...

dasmo said...

" you have to be a genius to be well off by your late 20s."
Where did I say that?

SJ said...

It's motivating to read how teens are making millions before age 20.
http://www.businessinsider.com/40-young-people-who-became-millionaires-before-turning-20-2014-9

Two of my highschool friends were practicing doctors before 30. Just barely though.

Marko said...

you need a BA before you can get into med school. So 4 years there. 3 if super keen.

Every year UBC accepts 3-5% of students in the 18 to 20 year old bracket so either they are starting university at 16/17 or doing it in 3 years.

I thought about doing med school before I horribly failed out of organic chem and I remember seeing 19 year olds a few times on the UBC admission statistics. Not the average but it can be done.

Another 4 for the Med degree.

4 years is the standard but my girlfriend has a friend that is a specalist in Vancouver and I am pretty sure her friend told me her med school was only a 3 year program in Calgary or Edmonton, I forget which. They were practicing stiching on animals a few days into the program :)

We are picking small points here :)

dasmo said...

...3-5%...

CuriousCat said...

Marko you are a realtor so you tell us, are you selling million dollar homes to 20-somethings? A rough guesstimate 'cause now I'm really curious.

Just Jack said...

https://www.youtube.com/watch?v=mrERtikdPus


....then buys house in Oak Bay.

dasmo said...

^ nice one JJ :-)

Marko said...

You have to remember only 3 to 4% of properties sell over 1 million in Victoria. I've had couples come to me with budgets over 1 million but most have settled out on homes in the 800s and the 900s range.

reasonfirst said...

...end of conversation about rich twenty somethings...I hope.

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