Monday, February 23, 2015

Feb 23 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
396
412
New Listings352587877
1064
Active Listings332434013448
3770
Sales to New Listings
34%
39%45%
39%
Sales Projection--452528

Months of Inventory
9.1


Strong week so expect over 500 sales for the month.  If this week matches last we could hit almost 570 sales which would be the highest since 2010.  

156 comments:

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

Interestingly enough we have not had a February between 500 and 600 sales since 2003.

Of the last 10 years 5 years have been below 500 and 5 years have been above 600 sales (2005-2008, 2010).

Justsilver said...

come across two reports on the home-heating oil contamination on the Gorge waterway. Just want to share with my fellow blog readers

1 Former homeowners must pay upwards of $120K to clean up neighbour's property contaminated by oil tank

2 saanich neighbours at odds over source of oil spill on Adelaide avenue

I was quite surprised that the previous owners are all on the hook.

dasmo said...

It's the wave of 20 something retired tech billionaires hitting Victoria's Housing market....

Tren said...

mark

Numbers Hack said...

Wealth in Victoria...

Funny reading all the anecdotes regarding people purchasing $1MM homes in Victoria. Here is my view from someone who grew up in Victoria and moved away to work and came back.

Essentially in the OB neighbourhood that we live in, the average house price is 800K$ to 1MM$+, not counting the old timers; here are the following demographics from the people we know:

1) Transported Wealth, average age 50+, usually from Alberta/Sask and their homes are up in the 1MM$+ and are either new builds or substantially renovated. Almost all are at the top of their professions or are entrepreneurs.

2) Working professionals, 40+ with young children, house is a little renovated, and they usually have a suite, as you can tell by the number of cars on the street at night. Guestimate is that more than 50% are local.

3) New Wealth, late 30s to early 40s, really nice homes, nice cars, and really low key. All are NOT from Victoria and have done some interesting things in their lives that they have been able to parlay into wealth.

We rarely or have never ran into young 20ish people; perhaps they are too busy working inside on their new tech start up :)

Take it for what is worth; but seeing is believing.

Numbers Hack said...

One more thing, for the analysts on this this blog, Canada has been printing money like crazy. There is a 34% increase M3 Money Supply in the last 5 years; and it is a guarantee that is not a reflection of our GDP growth to justify that much money in circulation. Compared with the US, we are almost on par with them in terms of printing money! And guess where that goes, stock markets and real estate!

M3 Money Supply:
http://www.tradingeconomics.com/canada/money-supply-m3

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/econ07-eng.htm

BTW, my opinion only: SFH in core will go up 10% over the next 3 years. Money needs to be parked somewhere. Sales if BOC rate stays constant will see next 6 months = very strong. Subsequent 30 months = moderately weak and bottom quartile of historic 10 year sales trends. That is the trickle down effect.

Bottom line, if you are rich now and diversified, you will likely get richer.

If you are starting off right now...good luck! It will not get any easier.

Just Jack said...

Condo sale volumes are up, in almost every price range for 2015, in comparison to the same period in 2014. Only in the 200K to 300K range has the number of sales declined.

Sales, Number of
Sold Price 2014 2015
$0 - 200 27 35
$200 - 300 71 52
$300 - 400 34 44
$400 - 500 10 16
$500 - 600 8 9
$600 - 700 3 3
$700 - 800 3 6
$800 - 900 3
$900 - 1,000 1
$1,000 - 1,250 1 1
$1,250 - 1,500
$1,500+ 2 1


core districts only

Just Jack said...

Sales, Number of
Sold Price 2014 2015
$0 - 200
$200 - 300 3 1
$300 - 400 18 24
$400 - 500 41 38
$500 - 600 59 59
$600 - 700 34 41
$700 - 800 21 21
$800 - 900 18 13
$900 - 1,000 5 3
$1,000 - 1,250 8 8
$1,250 - 1,500 5 4
$1,500+ 3 6


For detached homes, sales activity has mostly increased in the 300 to 400K and 600K to 700K range. And declined in the 800 to 900k range.

Just Jack said...

Sales, Number of
Sold Price 2014 2015
$0 - 200
$200 - 300
$300 - 400
$400 - 500 1
$500 - 600 5
$600 - 700 8 12
$700 - 800 6 4
$800 - 900 4 2
$900 - 1,000 1
$1,000 - 1,250 1 4
$1,250 - 1,500 4 2
$1,500+ 3 4


And since everyone seems to be fixated on the Kardashians, I mean Oak Bay, here's the data for the rich and famous.

Just Jack said...

Saanich East is the most interesting as its the heart of the middle income marketplace.


Sales, Number of
Sold Price 2014 2015
$0 - 200
$200 - 300
$300 - 400 1 3
$400 - 500 11 14
$500 - 600 26 30
$600 - 700 19 19
$700 - 800 10 6
$800 - 900 8 6
$900 - 1,000 2 2
$1,000 - 1,250 4 1
$1,250 - 1,500 1 2
$1,500+ 1


The high end range for housing seems to have declined. While activity in the lower value ranges has increased.

SJ said...

BC to lead Canada
http://www.cbc.ca/news/canada/british-columbia/b-c-to-lead-canada-with-3-growth-this-year-1.2967473

it's been a while since we could say that ;)

Just Jack said...

Detached home sales in the core are up some 17 per cent from this time last year.

The median price has also increased by almost 1 percent from a year ago.

And the median Sales to Assessment ratio has incrementally increased from 104.4% to 104.5%.

My guess is that low Oil has not had a significant affect on middle income buyers. The low interest rates may have stimulated this late winter buying spree but doesn't seem to be raising the overall market price. Only in select market price ranges has there been more activity.

I would have expected more of an increase in prices given the short supply and increased demand. Stronger demand is suppose to increase prices.

I wonder if this increased velocity of sales can be sustained into the spring market? It may mean that middle income households have little wiggle room left in financing a middle income house. As the middle income family may be tapped out.

Ours is a local market driven by local economic conditions. That a few expensive properties sell to the uber riche seem to have minimal effect on the rest of us mortals.

SJ said...

Interesting how Seattle and San Fran are leaders for the US similar to Vic and Van now leading gains in Canada. Case-Shiller released today showed both jumped 1.2% last month.
Seattle home-price gains strengthening
http://www.seattletimes.com/business/real-estate/seattle-home-price-gains-strengthening/

SJ said...

I guess it makes sense when you consider retirement wave, tech growth, and far east influx.

Just Jack said...

Do we really have enough sales each month to support the high prices being paid?

Last month Oak Bay, population 10,000 had 17 houses sell.
17 .... 17.... really that's all.

Victoria with a population of 80,000 had 19 sell. 19....19...

Less homes sold in Victoria and Oak Bay, in January, than the number of people on a morning commuter bus.

We aren't Vancouver, Seattle or San Francisco.

dasmo said...

I guess they really want to know the boomers savings situation now. CRA this year want to know investments sorted by country, then the market value at Dec 31 plus the highest monthend market value during the year, investment income earned during the year, and capital gain/loss during the year. In Canadian dollars, by country.

OR...They want people to say fuck this! I'm putting my money into real estate....

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

We have seen every single house within 3 blocks of our house sell the day of listing for exactly asking price. All houses are over 800k and all of them most likely will be fully gutted/reno'd or new builds. I would say 80% of all for sale signs I've seen last couple weeks have sold signs on them.

3 more tech companies (gaming) including the 3rd largest Facebook gaming company moved back to Victoria from Cali this month. Victoria has a huge gaming community growing here. That is around 90 high income 20-32 year olds looking to buy homes.

Oak bay in certain areas is the exact mix that the person above described, however, I don't believe they live in South Oak Bay. Most likely off oak bay ace within 2-3 blocks. That's where that mix happens. The deeper you go into south oak bay you will see the young money. 800k gets you an older house a couple blocks from oak bay ave, 1.2+ gets you southern oak bay off the main busy streets in new builds that they tend to like.

Lots of Chinese buying near us, lots of Range Rover evokes with 22" shiny rims. One of them cut down 20+ arbutus trees recently, it's in the news.

victoriaislands said...

Another thing that no one really takes seriously is all those American tourists that come here, fall in love, come here to get married, and dream of retiring here. Well, they now have 25% discount on all real estate here right now! I also know of retirees that are looking to buy condos here and Air BnB when they are not here. Come here 6 months when it's actually nice, and cover the costs the rest of the time. Baby boomers are all over Air BnB, it's a huge thing. 40k USD gets you a down payment on a new one bed condo here, and it will pay for itself. No brainer! Have you seen the USA lately?? It's like GTA down there, the disparity gap is causing a huge amount of issues, which we don't have here, we are like the gates country club of N America. No diseased animals, no humidity, clean water, safe, easy to drive, lots of world glass doctors and skin injection specialists.

Vic is seriously undervalued if you look around the world at high quality places like this, we are 30-40% undervalued, we should have gone up like Toronto, which is a muggy, stinky, expensive dump of a city.

Numbers Hack said...

VictoriaIslands

You would make a great poster boy for VREB. Some quick facts:

1) Van Island is NOT a hub for gaming, 10 smallish companies with staffs of 10ish people does not make us a hub.

2) Young programmers don't want to be on Vancouver Island, they want culture and a life, something we cannot offer

3) it is easier to setup and attract talent in Portland and Seattle, not to mention work Visas for programmers.

4) also as these "startups" are not cashflow positive and take investor funds to operate, these guys don't make big salaries. 5 year programmer in Victoria commands at most 250,000$ CDN. Where they make money is if their is an "end event" like they get bought out or go public via stock options/grants. BTW none of which is going to happen to any of these island companies soon. 99.5% end up bankrupt in 36 months.
***************************
With that said, you might want to re-look at your assumptions of young 20ish people driving the high end of the market.
***************************
JJ is right, this is a local market driven by local forces and people that want to be here.

If you are of working age, then in most instances, you are making SIGNIFICANT economic concessions to live in Victoria, as there are not many opportunities nor the scale/professional infrastructure to incubate truly global companies from Victoria.

dasmo said...

sounds like we should buy now or be priced out forever!

Numbers Hack said...

******************
Just Jack said:
Do we really have enough sales each month to support the high prices being paid?

Last month Oak Bay, population 10,000 had 17 houses sell.
17 .... 17.... really that's all.

Victoria with a population of 80,000 had 19 sell. 19....19...

Less homes sold in Victoria and Oak Bay, in January, than the number of people on a morning commuter bus.

We aren't Vancouver, Seattle or San Francisco
******************
JJ, just note, the smaller the market the more pronounced the data.
It is a daily occurrence in real estate, commodities, goods, etc...where small data drives the market. Google "potash prices" and "Saudi Crude to Asia prices".

Not legal in Canada, but knew someone who crossed (sold to an friend) 5 units in a 130 unit complex in Asia priced 35% more than market (a mature one with few sales). End result? Limited supply and he got his premium and lifted the prices in the area.

Marko said...

Range Rovers with 22s sounds like want to be gangster not young entrepentures.

dasmo said...

OK...that's a bit negative Numbers Hack.... We do have some global players here. Did you know the largest online book retailer was founded and lives in Victoria?

Numbers Hack said...

Dasmo, Victoria's market IMO does not have much upside if you look @ income/prop value metrics. Another few percentage points, but not a double, unless the government prints 100% more C$.

Want to see a fire sale? Vote a government to loosen up the ALR. Build SFH or townhomes @ behind McKenzie and off the Pat Bay Hwy to the ferries OR:
Double the size of the Malahat, so it would take only 20-30 minutes to get to the WC and why pay some stupid price in the core when you can get something much nicer with a short commute?
AND: invest some monies in schools outside of the core.

Government needs some forsight!
Oops, I forgot we live in lalaland. :)

Numbers Hack said...

Dasmo:

Abebooks:
$30 million USD in revenue (commissions)
$190 million USD in receipts
*****************************
likely sold to Amazon for $100M in 2010 with 120 employees, mostly in the warehouse. Owner likely walked away with the lions share of the sales price.
******************************
How does that compare? Amazon did $90 Billion USD in revenue in 2014. Which means if my math is not incorrect, it take Amazon 2 hours in a normal day to do the revenues done by Abe Books.

Solid company = yes
World Class = far from it :)

They could have been if BC Pension Funds put in a large chunk to expand...haha

But again, we need fast ferries more.

Just Jack said...

It's like the antique collector who gets a pair or rare matched vases valued at $100,000 each. On his way out he drops one and that makes the remaining one worth $500,000.

The point I was making that the volume of sales in Victoria doesn't come close to that of Seattle or San Francisco. Our volume of sales is closer to Bellingham than Seattle.

Small data does drive the data when the product is homogeneous. Except in some cases, most real estate is never identical but may at best only be described as similar.

If you live in a starter home on Bay Street and a million dollar home is sold on Howard Avenue, that sale will not make your home worth more.

dasmo said...

Size doesnt negate class. This is Victoria. Lots of small companies. It's also what diversifies us. Don't get me wrong. I understand our market. I hire people. It's tough sometimes because you attract the people that want to be here. It's hard to attract carreer focused people because their options are limited here... You have to want to live here first.... This is why we have a tech scene here though. People want to live here and as a necessity an entrepreneurial backbone was required. As a result we have lots of small companies. I was surprised the other day after using a pixel union skin for a tumblr page that they were a victoria company. They are the top selling provider of tumblr skins... Not earth shattering but indicative of our tech scene.

reasonfirst said...

"Size doesnt negate class."

but class has no impact on real estate.

dasmo said...

Nope... I'm still a halibut when it comes to real estate. Still feel like we have resistance at these prices for a while still. That's exactly why. Whe are no awash in millionaires like Palo Alto...

victoriaislands said...

Abe Books sold for more then 300m USD. I know the founder personally. You should see his 18 mil house in Saanich.

3rd largest FB gaming company is here, has 35 employees and is growing 20% a year. http://www.kanoapps.com

Lots of other examples, but obviously Numbers Hack is probably around 40, huge debt, and lives 2 blocks off Oak Bay ave by the description of his neighbours. And yes, the younger workers have a life and are super busy so you won't see them puttering around their yard or going for walks in the neighbourhood.

victoriaislands said...

If you actually follow whats happening in tech in this city, there is news like this all the time. Yesterday MediaCore, a local company with over 10 years of growth is being valued at over 100 million.

http://www.betakit.com/mediacore-lands-4-5-million-to-help-transform-how-people-teach-and-learn-using-video/

HachiRoku said...

@victoriaislands

There are gaming companies expanding AND there are those that are contracting: http://techcrunch.com/2015/01/13/kixeye-layoffs/. I believe Kixeye Victoria laid off 12 staff as a part of the bigger layoffs.

dasmo said...

"I know the founder personally" which one?
If you are so in the know of Victoria's tech industry who was Contech's original founder? And what happened to the family connection?

Quick! no googling!

victoriaislands said...

Cherry picking the negative news to match up with your inability to own a home is what made me finally comment on this blog. Vic is the best place to live that I've been to in the world hands down.

House prices here will rise 10% or more in the next year or two at a min.

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

"House prices here will rise 10% or more in the next year or two at a min."

I swear - you are either 23 years old and have more money than sense or you are a realtor. Which is it?

victoriaislands said...

@dasmo, so you own two houses in expensive areas of Victoria, yet you come here and constantly point out how everything is going downhill and our market will crash??? That is interesting to say the least.

dasmo said...

You are even full of BS that you have been reading this blog for 8 years...

dasmo said...

Halibut is a flatfish, genus Hippoglossus, from the family of the right-eye flounders (Pleuronectidae). Other flatfish are also called halibut. The name is derived from haly (holy) and butt (flat fish), for its popularity on Catholic holy days.[1] Halibut are demersal fish which live in the North Pacific (Pacific halibut, Hippoglossus stenolepis) and the North Atlantic oceans (Atlantic halibut, Hippoglossus hippoglossus). They are highly regarded food fish

patriotz said...

Another thing that no one really takes seriously is all those American tourists that come here, fall in love, come here to get married, and dream of retiring here.

Why would an American dream of retiring in a country that is colder (for most), more expensive (especially for RE), and has higher taxes? Why not just move to the San Juans or Puget Sound area?

Not to mention you can't immigrate as a retiree in the first place. Wealthy Americans might be able to immigrate as investors, but again, what's in it for them?

Dustin said...

Anybody know the deal with 1360 Finlayson St ?

List Price: $489,900
Sold Price: $620,500

MLS: 345867

reasonfirst said...

Insecurity and name dropping go hand in hand....

dasmo said...

1360 Finlayson St for $620,500 is impressive. Good for the seller. Top dollar for the place that is for sure!!!

SJ said...

House prices here will rise 10% or more in the next year or two at a min.

The latest sales listings data are starting to point to significant price gains. I don't know when 10%, but I'm betting on a double for my property within 10 years.

On the tech talk, 4 studios to 19 is impressive.

An economic impact study released in 2014 by the Victoria Advanced Technology Council found that Victoria’s video-game industry boasts 19 studios…There were just four studios in Victoria in 2008.
http://www.timescolonist.com/news/local/b-c-video-game-makers-power-up-with-tax-credit-1.1766348

SJ said...

I'm still unsure about Tech hub, but imho we're on the verge of becoming more like Van and SanFran in one aspect - lack of land. Vic is surrounded 270 degrees by ocean - View Royal to Mt Doug park.

Here's one of the few options for a vacant building lot in Vic or Oak Bay. $889,000 and it's a strata lot.
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15257804

DavidL said...

In spite of all the talk about high tech companies with young, rich employees ... Victoria remains the home of the "newly wed, nearly dead and barely fed".

Leo S said...

>> House prices here will rise 10% or more in the next year or two at a min.

Finally something concrete. We'll review that this time next year.
Not out of the question though. Market still improving so +5% is within the realm of possibilities

Leo S said...

>> I'm betting on a double for my property within 10 years.

So you expect condos to go up 7.2 percent per year for the next 10 years. No way in hell that will happeen

SJ said...

^No, but I'm already up ~40%. I know cuz the exact same unit just sold for 43% more than I paid. And mine's better ;)
You have to be on the ball and time things well to get smoking good deals ;)

Just Jack said...

Just because a unit sells for 40 percent more than what you paid does not necessarily mean yours has risen by 40%. At this point it is just as likely that they may have over paid for the condo.

When one unit sells it sells at market price. Group a lot of similar condo sales together and you get market value.

One sale does not make a market.

SJ said...

Leo knows. He's the master of timing. I think he timed his house buy almost perfectly at the bottom in 2013.

CuriousCat said...

"I also know of retirees that are looking to buy condos here and Air BnB when they are not here. Come here 6 months when it's actually nice, and cover the costs the rest of the time. Baby boomers are all over Air BnB, it's a huge thing. 40k USD gets you a down payment on a new one bed condo here, and it will pay for itself. No brainer!"

A Canadian cannot get a mortgage on a US property, so I assume an American also could not get a mortgage on a Canadian property. So, unless you have the funds to pay full price in CASH, a foreigner is not buying property in Canada. Someone could correct me if I'm wrong.

CuriousCat said...

On further research (mild googling) it appears that the issue is that an American would not have sufficient Canadian Credit history to satisfy a Canadian bank to finance property. I guess they could always refinance their own residence in the states to purchase here.

Leo S said...

Leo knows. He's the master of timing. I think he timed his house buy almost perfectly at the bottom in 2013.

We'll see.. Also we didn't buy because I thought it was the bottom, in fact I expected another 5-10% decline at the time. Several factors came together to cause us to buy, none of which was a belief I could time the market bottom. However the market had de-risked enough for me to feel comfortable with it.

Marko said...

Just admit it, you pretty much perfectly timed the bottom.

Marko said...

Anybody know the deal with 1360 Finlayson St ?

Most likely a typo as it is back on market.

Marko said...

To see any kind of upward pressure on condo prices we would need a very large jump in sales. When new inventory isn't being absorbed its puts pressure on re-sale.

For example, condos at the Era are cheaper than condos at 834 in 2009 and the Era is a better location, better building, better finishing. This kills re-sale at the 834, for example. Condo sales would need to increase to the point where new builds are selling out and developers are increasing prices which is not the case currently.

I will continue to real estate invest purely in condos but I think they will under-perform single family homes in terms of appreciation.

Numbers Hack said...

QE (printing money) effects on Real Estate.

http://www.desjardins.com/ressources/pdf/pv140526-e.pdf?resVer=1401111569000

http://www.integratedmortgageplanners.com/blog/monday-morning-rate-update/why-quantitative-easing-should-make-canadian-mortgage-borrowers-nervous-monday-morning-interest-rate-update-november-25-2013/

Numbers Hack said...

Real Estate and Tech Jobs:

Lots of jobs, great weather, and comparably cheaper real estate vs. Victoria. Not to mention a lower tax rate.

Austin Tx: median real estate purchase price of ($216K)

Dallas Tx: low median real estate purchase price ($197K)

Seattle: median real estate prices ($440K)

Chicago: Another draw is the low median real estate price – ($220K)

Miami: real estate prices median prices have remained relatively low ($225K)

caveat emptor said...

The mcmansion is back (in the US)

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/26/the-mcmansion-is-back-and-bigger-than-ever/

Chris said...

Metro Vancouver real estate bidding wars spreading to suburbs
“Vancouver's real estate market appears to be heating up again, but this time real estate agents say the bidding wars are spreading to the suburbs as well.
Real estate agent Nicola Campbell, who specializes in home sales on the North Shore, said this year's market is the busiest she's ever seen.
Last month, there were 50 listings in North Vancouver for under $1.2 million. Of those, 44 sold, and most within eight days, she noted.
Campbell said its a complete turn around compared to a year ago, when there were more than twice as many listings, but fewer sales.”

Just Jack said...

Chris, that seems to parallel what I'm seeing in the current market. A shortage of listings. That should lead to higher prices. However, I'm not seeing any significant increase in prices.

For the last several years we've had dropping demand which moderated home prices. A demand-driven downturn. Now it seems we have supply-driven stagnation.

In my opinion, sellers are not that willing to put their homes up for sale as there is so little to move up to. Think of it as the property ladder with a couple of missing rungs.

If you can't bring buyer and seller together that leads to a shallow and dysfunctional marketplace where houses that HAVE TO sell set market value.

This may be one of the more interesting spring markets this April.

dasmo said...

Especially when the banks roll out the 1.99% mortgages...

Jack and Cate said...
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Jack and Cate said...
This comment has been removed by the author.
Jack and Cate said...

SJ, vitoriaislands, Dustin....wow such hyperbole! You're in the wrong age demographic if you think you can post "Hype" crap about wealth and old stories on a non descript bidding wars created by Realtors etc.

This is why blogs like this eventually go the way of the dodo bird after losing the focus of the original blogger who has lost interest. Maybe you should post your comments on ol' Garth Turners greaterfool.ca website and see how long your tail lasts before it is between you legs or in flames....

People on this site are a bit more educated than you think.

CS said...

The mcmansion is back (in the US)

The MacMansion, or envelope home, comes to OB, changing the character of an old-establisehd and otherwise appealing Oak Bay block.

"Ensuite Bathrooms in every bedroom are consistent with the private yet enviting [sic] nature of the home."

Great copy writing!

Introvert said...

I chose to move to Victoria as a young adult knowing full well that I would earn significantly less in my field here as compared to my hometown of Calgary. Because I love it here, and because I so detested most aspects of Calgary, I'm certain that I have improved my quality of life more than any extra cash in my jeans ever could.

I understand that, for others, money is more of a motivator. And I've even heard of people who think Calgary is pleasant.

Leo S said...

It's called hedonic adaption. Generally people return to a baseline level of happiness whatever their situation. Day to day happiness is likely not different between Victorians and Calgarians controlling for other factors.

In other words, if you're miserable in Calgary that's probably because you're a miserable person. If you're happy in Victoria it's likely you'd be happy in any number of other cities as well.

dasmo said...

Can't be too hot a market if the Promontory is holding RedTag sales to try and move those remaining 10 units...

Introvert said...

In other words, if you're miserable in Calgary that's probably because you're a miserable person.

Are you having a bad day, Leo? Is that why you're lashing out?

reasonfirst said...

Hedonic adaptation - I agree as you wouldn't see smiling faces in 3rd world slums without it...but it also suggests that getting the location, location, location you want is a waste of money and time when it comes to maximizing your happiness!

caveat emptor said...

"Generally people return to a baseline level of happiness whatever their situation."

You'll certainly find credible critics of that view without trying to hard. A literal interpretation would suggest that there is no point doing much of anything, since nothing will make you lastingly happier!

Here's a more nuanced view of what does and doesn't make you happier - http://www.artofmanliness.com/2010/09/27/where-is-the-grass-greener-the-economics-of-happiness/.

One thing that DOES make people happier is feeling that they are better off than others. So if you truly believe you are one of the lucky few through having a great life in the "best place on earth" that belief will tend to make you happy whether or not it is objectively true.

Introvert said...

For some people, "place" seems to matter quite a bit. For others, that does not seem to be the case.

dasmo said...

"hedonic adaption" is an intellectual way of saying happiness comes from within... Or maybe not. Maybe it is an existentialist way of saying nothing matters so why bother....

Marko said...

Can't be too hot a market if the Promontory is holding RedTag sales to try and move those remaining 10 units...

ahhh....the power of marketing....their "RedTag" prices are a lot higher than the pre-sale launch 3 years ago and they are moving at the Redtag prices. I think only 7 or 8 units left out of 177.

It is a common strategy employeed by developers. Offer best possible price on launch to secure financing and get the building out of the ground. Over the 2 year build out period raise prices every 6 months or so and then if you hit a resistance point at the end with left over inventory offer "discounts."

dasmo said...

If it was a super hot market they would be sold by now... don't get me wrong, I just think it's a normal market. It should take some effort to sell a condo for half a million... Maybe those rich 20 year olds are out getting drunk every weekend instead of house hunting after all... As they should be...

totoro victoria said...

The counter to the theory of hedonic adaptation is real life experience. That and the fact that, for example, happiness does increase with increases in income until you hit a certain level.

My quality of life is definitely increased by:

the quality of my surroundings the people I spend time with
the social system in Canada
meaningful work
having enough time

I'm happy to spend more money to achieve all of these things and I've experienced enough alternate realities to know what increases my happiness.

This bodes well for the housing market in Victoria long-term.

Marko said...

If it was a super hot market they would be sold by now... don't get me wrong, I just think it's a normal market. It should take some effort to sell a condo for half a million... Maybe those rich 20 year olds are out getting drunk every weekend instead of house hunting after all... As they should be.

Historically speaking, in Victoria sell outs on completion of buildings are no where as common as other markets.

I have to go to Vancouver tomorrow to represent 5 investors on pre-sale contracts and Bosa is scheduling in appointment times and basically they are hoping we are early enough in the contract writing schedule to get the units they want.

You don't see that kind of demand on project lunch here as we don't have many investor condo buyers.

It is really a slow and steady type process here from lunch to sell out. Duet is a perfect example. The sales have never been crazy but every month they move a few units and by the end of this year they'll be close to a sell out. Sales were so slow on lunch that I seriously questioned whether Chard would move forward with the project but obviously he did and it paid off.

totoro victoria said...

Launch.

dasmo said...

So you agree it's a normal market and not a hot one then....

Marko said...

Launch.

Ahh my esl shows.

Leo S said...

Bunch of glass half empties here. Hedonic adaption is a good thing. Will that bmw make me happier? It would bring satisfaction in the short term but soon it would become the norm. Now I don't have to buy it.
Hit by a car and you're a paraplegic? Don't despair you will probably be back to your normal level in a year.
It's not the grand unified theory of happiness for sure but it's pretty obvious happyness comes mostly from your own attitude. If you can't be happy in a city like Calgary - clean, developed, full of opportunity and close to amazing wilderness - then it's definitely not the city's fault.

dasmo said...

That's the mustachian in you comming out again!

dasmo said...

This is a tech scene that puts pressure on real estate: "The median rent price in San Francisco climbed 15% year-over-year. The median rent price in San Francisco is $3,055 a month"

Leo S said...

Crazy.

totoro victoria said...

Your explanation of hedonic adaptation and happiness is way too simplistic and likely incorrect imo.

Individuals really vary in the rate and extent of adaptation they exhibit to change in circumstances. Circumstances do matter as well.

For example, baseline of happiness is lower in prison than when not in prison. Hedonic adaptation does not compensate for this life circumstances.

A BMW might not result in lasting happiness, but living in a beautiful environment in a nice home might well increase happiness in an ongoing manner.

Oswald and Powdthavee (2008) looked at the capability of someone, after an onset of a disability, to return to their original happiness set point (i.e. before the accident).

They studied the economic literature in attempts to disprove the idea that people have close to 100% hedonic adaptation after an injury (previously reported by Brickman et al.) They concluded that the degree of adaptation is actually around 30-50%, quite different from 100%.

These results suggest that the hedonic treadmill may not actually be a real concept and that we are not always able to return to our happiness set point.

People will be willing to pay more to live in Victoria imo because they believe it will be better for their children or themselves to live in this environment. And they may well be contributing to raising happiness for their family by doing so.

http://en.wikipedia.org/wiki/Hedonic_treadmill

SJ said...

The happiest cities, according to a UBC study, are both on the East Coast and share a lot in common besides their names: Saint John, N.B. and St. John's, N.L
The Newfies must have the happy gene.

Jul 18, 2014 - A new study found that the greater a nation's genetic distance is from Denmark, the lower its reported wellbeing is.

I'm with nature over nurture on happiness. I have a very long happy gene ;)

dasmo said...

Leo is using the Mustachian adaptation of the term. So it is simplified and really relates it to materialistic consumerism. More and fancier shit won't bring you happiness in the long run anyway. I think the general concept is more complicated. Environment can have a big affect. For me, my breathing works better here than Alberta. I also align better with the culture here. I found the long ass winters of Ottawa bookended buy mosquito infested muggy summers also depressing. My adaptation was to move...

Just Jack said...

Because property values are not entirely composed of well being there is a fault in the logic that higher property prices lead to happier families.

If mom and dad now have to work 60 hour work weeks to pay for accommodation how can that make happier families?

I suppose you could look at divorce rates by city to estimate happiness.
Then you could look at Sidney and Oak Bay to see if the divorce rate is higher in either of these two towns. My suspicion is, despite the substantial difference in property values, the rates are not going to be significantly different.

I could be wrong - but I don't think so.

Just Jack said...

When it comes to Canadian cities. The Greater Victoria area is between Oshawa and Windsor in population. We're ranked 15th in Canada. In population density we are 6th between Hamilton and Oshawa.

People have already chosen where they want to live and that's likely the best indicator of desirability.

And not all people like snow and the cold but you trade off the weather for being on an island and isolated as the western outpost of Canadian society.

Leo S said...

Obviously circumstances have an effect, but you're still the primary driver.

However, as Diener, Lucas, and Scollon point out, the amount of fluctuation a person experiences around their set point is largely dependent on the individual’s ability to adapt.

In other words, you're in control for the most part. If you tie your happiness to external factors then you will be buffeted around by them.

Just Jack said...

Another view of desirability might be how fast Greater Victoria is growing relative to other Canadian cities.

That puts us at number 24 with our population growing by 4.4 percent from 2006 to 2011. Between that of Halifax and London, Ontario. Being on an island seems to be a big factor of where people choose to live.

totoro victoria said...

No, an individual's ability to adapt varies. Some people are very adaptable and others are not.

I would suggest that the research shows that at least half of the happiness set point is inherited.

This points to the fact that some people are not as able to control the impact of external influences as others.

If what you are talking about is materialism I would agree that hedonic adaptation is more under an individual's control.

As we get closer in to the hierarchy of needs, such as with a "home" (security/family), some will find their environment does influence their everyday happiness even if they wish it did not.

Chris said...

I see the braniacs are out showing off their area of knowledge... Victoria like a lot of nice places will command a premium because people enjoy it and want to be part of it. I've lived in Calgary and having grown up in Victoria I always missed it. The atmosphere in Calgary is all about business and seems to have less emphasis on quality of life. No beaches and the parks are brown and barren. The problem at the moment is home prices across Canada are inflated and the premium for the west coast has just moved in lockstep with the rise. Various theories on how people are happy are too complex and don't do much to explain the simple fact that people enjoy nice things, places and people. That's always been true.

Chris said...

Hey Marko read this on Garth's site -

"The numbers below were just released privately to members of the Victoria Real Estate Board:

GRAPH

By the way, of the 1.64% of Victoria buyers who were foreigners, 50% were from the US.

Is this true? (Guessing that you would have received it)

Just Jack said...

Victoria commands a premium and that's why it's in the top 25 cities of Canada based on its population, density and population growth. And that's really good for a city on an island. There is only one other island city that makes it onto the list.

Nanaimo for example isn't. Neither is Port Albernie, Parksville, Pince George, Osoyoos, Nelson, White Rock, Delta. For an island city that's impressive to be on the short list of Canadian towns. Because being on an island is huge handicap.

Leo S said...

>> Some people are very adaptable and others are not.

Some people are good at math and some people are not. Except that the majority of both abilities is working at it.

CS said...

"Generally people return to a baseline level of happiness whatever their situation."

Which is why some people continually strive to climb the ladder: to avoid returning to the baseline.

But some differences in contentment are be persistent.

Self assessment of happiness shows a correlation with relative prosperity. Where all are poor but equal, happiness may be greater than where all are prosperous but some much more so than others.

CS said...

If you can't be happy in a city like Calgary - clean, developed, full of opportunity and close to amazing wilderness - then it's definitely not the city's fault.

No, it's the hats those people wear that's the problem.

Leo S said...

Anyone here know if it's OK to make a payment towards the HBP before the first year it is due? i.e. Payment not due until 2015 but I want to make a payment in 2014.

original Chris said...

“1.64% of Victoria buyers who were foreigners”

That was when our dollar was near par. I expect the ‘Canada’ and ‘Foreign buyers of Victoria to now noticeably increase.

“Because being on an island is huge handicap.”

London is on the British Isles. The handicap has only affected prince Charles.

dasmo said...

Why pay it back early?

Leo S said...

Because once it's back in the RRSP I can transfer it to the work pension and wash my hands of it.

dasmo said...

If you are making regular contributions anyway you only need to remember to allot a portion to the HBP at tax time. Thats no to big a burden. if its an extra payment I'd pay credit cards or the mortgage first since they are costing you interest. ( I wouldn't dream to suggest to you to invest it ;-) )

Leo S said...

>> I wouldn't dream to suggest to you to invest it

What do you think the pension fund does with it? Stick it under their pillows?

dasmo said...

I meant in a cash account. You have an actual pension and not a work RRSP matching plan?

dasmo said...

The HBP repayment isn't tax deductible so my point was there are better places for that money than repaying your HBP early. I just assumed your TFSA is maxed...

dasmo said...

I just figured out you work for the Government....

Leo S said...

You have an actual pension and not a work RRSP matching plan?

RRSP matching. The bonus is I can transfer my regular RRSPs to them and they will manage them for me. Hence repaying the HBP into my RRSP allows me to transfer it to them who will invest it.

The HBP repayment isn't tax deductible so my point was there are better places for that money than repaying your HBP early.

It's actually a wash. I can invest it inside the RRSP by paying back the HBP or outside the RRSP. I prefer inside.

I just figured out you work for the Government....

Nope.

dasmo said...

Well you know how I feel about other people managing my money... But you have borrowed your pre tax money from yourself and have 15 years to repay it interest free. Anything is better than repaying it early!

Leo S said...

Well you know how I feel about other people managing my money

They seem to be ok at it. 7% annual return net of fees for the last 10 years which includes the financial crisis.

But you have borrowed your pre tax money from yourself and have 15 years to repay it interest free.

I guess I'm dense. I don't see the advantage of dragging it out. Sure it's interest free, but it's from myself so there is no benefit. The benefit of repaying it is I can get that $25k back into growing tax deferred, whereas if I had to invest it outside I'd be taxed on the gains.

dasmo said...

You wouldn't be taxed until you withdrew and it would most likely be less tax than the RRSP which will be taxed as income not gains... Unless you expect to be very poor in your 60's. The benefit is its pre tax money outside your RRSP. Even still, put your money into your RRSP. Just make your allotment to the HBP the minimum.

Leo S said...

The benefit is its pre tax money outside your RRSP.

Hmm, will have to think about this some more. Still have to pay it back eventually, so I don't think it's a net benefit.

Unless you expect to be very poor in your 60's

Well I expect to be making less. I do expect to extract quite a bit of my RRSPs at very low tax rates.

Marko said...

By the way, of the 1.64% of Victoria buyers who were foreigners, 50% were from the US.

Is this true? (Guessing that you would have received it)


The numbers I have show foreign buyers at approximately 4 to 5% and I don't have the break down but no way 50% of those are from US.

Just Jack said...

Last month there were 309 houses listed for sale in the core districts compared to 245 in February 2014. A 26 per cent increase year over year. But the increase in listings didn't seem to keep up with demand which increased from 125 house sales to 164.

The Months of Inventory and Sales to New Listings ratio still favors seller with median exposure between 3 to 4 weeks on the market.

Preliminary information suggests there has been some year over year price creep of 3 per cent. Which is not untypical for this time of the year.

With one month to go before the spring market begins. It isn't likely you'll find a good deal on a house, in the next 90 days, in the core municipalities.

Just Jack said...

The surge in the market has also affected condo sales in the core. New listings are just keeping up with sales as the sales to new listings ratio is at 59% keeping the months of inventory well balanced at 4.8. And exposure time at around 4 weeks.

A bit better for prospective buyers in the Western Communities with sufficient new listings relative to sales to keep the market at 6.5 months of inventory. Where you can still pick up a deal on some of the ugly duckling/ diamond in the rough properties.

Ironically, this market isn't helping those in financial distress. Without a boost in prices, the ability to refinance debt using the house as the ATM machine isn't there as the equity is gone. The result is more homes selling under court order.

It's a very odd market to appraise properties as you have a mixture of properties selling under normal marketing conditions and under duress circumstances. This could lead to collapsing sales.

Marko said...

The open house today at 1420 Denman was insane!

Introvert said...

If you can't be happy in a city like Calgary - clean, developed, full of opportunity and close to amazing wilderness - then it's definitely not the city's fault.

If you don't like your city, change yourself.

If one couldn't move to another city, for whatever reason, then, yes, changing oneself would be advisable.

But if one could move, wouldn't that be the most sensible choice?

Is it not easier (and infinitely more pleasant) to move to a place that you like as opposed to trying not to hate the place that you're in?

Not according to Leo.

dasmo said...

Are we into the "we are signing deals on the hoods of cars" zone yet?

Leo S said...

I missed your straw man arguments introvert.

SJ said...

The open house today at 1420 Denman was insane!

Maybe it's a combination of prices nearing a million in TO as the coldest month in history is being recorded!
http://www.thestar.com/news/starweather/2015/03/it-s-official-february-was-toronto-s-coldest-month-ever.html

"Gee Thelma, maybe it's time we retire to Canada's paradise for half the price... All the Albertans are doing it." ;)

Marko said...

I spent the entire day in Vancouver yesterday representing buyers on pre-sale contracts. At a BOSA launch in New West....it was a zoo. People were buying up condos like TVs on boxing day. Most insane thing I've seen, people budging the line-up, etc. My buyers were only able to secure 1 of the 3 units they wanted as the other two sold before we got our turn.

Then I headed over to Fasle Creek to a different development and people the in the showroom are talking about 850k condos being good value.

It was a nuts day.

Then I show up to Denman this morning at 11:00 am with at least 40 people there, an inspector starting an inspection (someone already hired an inspector even before offers are presented, persumbly to make an unconditional offer)....total zoo, you couldn't walk through the house.

I think the government should have offset the drop in interest rates by increasing the minimum downpayment to 10%. Some individuals appear to be desensitized to large sums of money.

Curly Fry said...

Demnan looks like a great place. Unique upgrades + a Legal suite + location, location at least. Will be interesting to see what it sells for.

Curly Fry said...

I think the government should have offset the drop in interest rates by increasing the minimum downpayment to 10%. Some individuals appear to be desensitized to large sums of money


Agreed!

dasmo said...

No wonder Bosa is kinda abandoning bayview...

jwalbren said...

I was at 1420 Denman this morning. Lovely place and way under priced IMHO.

We thought about putting in a bid at around the 710k mark, which is our max, but we promised we wouldn't just jump into a purchase. We are pretty sure from what we heard that it will be sold today for closer to 700k.

Every house we have looked at is either a teardown or is sold or has pending offers by the time we even get to it, and we usually try to get to places day they come on the market if our Realtor can get us a showing.

CuriousCat said...

I agree, Denman looks really nice!! They must have priced it low to get multiple offers?

Marko said...

There are have been other nice well priced properties listed in the last 4 years but I haven't seen that kind of interest. In the core there is more demand than supply right now.

Just Jack said...

Because supply is so short, you're seeing a concentrated portion of prospective purchasers viewing the property on the first day. 40 or 50 couples viewing the property could be close to the entire universe of prospective purchasers for this type of home and price range and it only takes two of them to create a bidding war.

As it's far easier to get financing for a home already renovated than it's to buy a home and come up with the extra cash to repair the home yourself. These are going to be your hard core buyers willing to finance to the teats than to be outbid on the home.

It's like cash versus a credit card. You'll pay more for something you can buy with credit than you will if you had to pay cash.

The cost to repair these older character homes is astounding. Freakishly expensive when you have licensed contractors doing the work.

If this is the type of home you're looking to buy you are going to have to pay a premium price. A price that you may not be able to re-sell the home at during a more balanced market in the future.

Marko said...

Best sales year for February since 2010 and the lowest active inventory since 2010 as well. By comparison, 2013 had 4,072 active listings and 394 sales.

Mon Mar 2, 2015 8:20am:

Feb Feb
2015 2014
Net Unconditional Sales: 542 412
New Listings: 1,108 1,064
Active Listings: 3,480 3,770

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

Just Jack said...

If you're looking to buy this style of character home which is a 1.5 storey with basement of standard construction then you should be careful of the house size. These are not easy homes to measure. As per CREA, the upper floor should be the exterior measurements less the interior stairway. Since the stairway is counted in the main floor measurement already. In the case of angled walls, that are common in upper floor character homes, the measurement is taken from the 4 foot high or hip height. It sounds easier than it is in practice trying to accurately measure the livable floor area of these older homes.

I would suggest that you confirm the measurement using evaluebc.bcassessment.ca

That isn't to say the listing is incorrect because of additions to the home over time. It's just something a prudent purchaser should verify for themselves if it's important to them.

Ideally you should measure the home yourself.

SJ said...

The most expensive cities in the world have one thing in common - boundaries to development. For instance if you look at a map of the World's most expensive cities and Victoria, they are surrounded 270 degrees by ocean
or other boundaries.
It's interesting how Price/Income is near 10 or higher and still rising in these cities, while Victoria has recently fallen into the 5's.
Over the long-term, Victoria is geographically ‘bound’ to go much higher.

reasonfirst said...

SJ - why do you think did Victoria fell to the 5's?

dasmo said...

Victoria remained flat for many years as incomes increased?

jwalbren said...

We are moving here from TO, just got sick of the -40 with windchill and pulled the trigger. Our condo is on the market for same price as a decent single family home in the 500k range here.

No real crime, no commute, no cold, lower prop tax, or should I say you get something in return for property tax, like good schools and police and healthcare. Water is good here and I'm going Kayaking this afternoon in the sun, might even wear a t-shirt at some point.

caveat emptor said...

Welcome to Victoria jwalbren. I'm sure you know it's not always this nice in early March (enjoy while it lasts!!). Still it's a pretty darn good place if you like doing outdoor sports in non-freezing weather

Leo S said...

> We are moving here from TO

Retired or working? If so how did you find the job situation here compared to TO?

SJ said...

SJ - why do you think did Victoria fell to the 5's?

Sorta what dasmo said, although I find we actually corrected a fair bit to get us to 5's.
As to why? Dunno, but off the top of my head...
> the US correction rerouted wouldbe Victorians
> amplified by exchange rate
> Alberta enticed islanders with the big bucks
> even weather may have played part - more normal winters look to have now returned East of Rockies. Then there's Toronto, just recorded its coldest month in hISTORY!!! That's not normal.

Just Jack said...

Wearing a T-shirt, in a kayak, on the ocean, in March.


https://www.youtube.com/watch?v=1WizROIojlA

SJ said...

jwabren, welcome to Victopia ;)

And reasonfirst, you may not believe but I don't really care financially where prices go in Vic. It's more of guessing game. Sure I tried to buy my last place near what I thought was good entry, but I'm not concerned financially as I'm fairly well diversifie. It's moreso just fun to weigh the variables and guess. That and I would like to win certain RE bets I have with friends & family ;) I don't rule out a big correction in years to come, but I haven't yet placed my bets on that. My only guess for now is I think it will be preceded by a manic phase.

Just Jack said...

Depending on where you want to live in Greater Victoria you may find it difficult to find a home to meet your needs. There isn't much to chose from and you're not going to have any leverage in buying in a sellers market.

Statistically, out of town purchasers will spend 2 to 3 percent more on a house than a local buyer anyway. So don't sweat it and just buy it.

And I'll save you the grief in trying to find one. We don't have brick construction and basements are counted as livable space here. Any house older than 1984 will be built from 2 x 4 sticks. Insulation may or may not be present in the older housing, the same for electrical panels over 100 amps, knob and tube wiring, lack of poured concrete foundations, termites, aluminium wiring, carpenter ants and some serious mold problems.

Welcome to the Wet Coast anything that isn't sealed will develop moss and rot including your car.

reasonfirst said...

SJ - just trying to gauge how deep your analysis went. Now I know.

Just Jack said...

And I suppose since you're from Toronto and didn't mention a significant other you might be interested in the local dating scene.

Since this is a retirement town when we say 50 shades of Grey. We really mean 50 shades of grey.

jwalbren said...

@Just Jack. Pretty negative viewpoints of this town, why do you live here?

We have all that and more on the east coast, I could make a list that matches your list, then add on so many things.

From what we have seen, we should be able to buy a decent house that is renovated, with a suite for our budget, we only have been looking for 2 weeks and already came close to finding a couple great ones, but we are taking our time.

There is nothing that we havent seen that can't be fixed with a little reno, and in this town, a renovated place goes up so much in value, I'm amazed more people dont renovate.

Just Jack said...

Sorry, I didn't realize that Toronto had been moved to the east coast.

SJ said...

VREB stats released today show the medians moving at a fair pace now.

SFHs 6.2%
THs 3.2%
Condos 7.7%
(Feb 15 over Feb 14)

JJ, just its floaters move to the east coast ;) and your anything that isn't sealed will develop moss and rot needs correcting. Isn't should be is.

Just Jack said...

Well jwalbren, if you actually are who you say you are, people do renovate in Victoria. And it is very expensive if you use licensed contractors.

You could spend $150,000 updating a 1975 Gordon Head Box and increase its market value by $50,000 to $75,000.

Now tell me more of what it's like to live on the "East Coast" of Canada in Toronto.

jwalbren said...

@just Jack, ah, you got me! I am secretly a real estate agent born and raised in Victoria, who is trying to lure a couple bitter basement dwellers into buying expensive houses.

My brilliant plan is working.

Luckily we haven't met anyone as nasty as you so far, most people here are super friendly and welcoming.

jwalbren said...

Yikes, SFH up over 6% ...

I wonder if that is all the nicely reno'd places we are looking at that go quickly for a slight premium.

Leo S said...

Yikes, SFH up over 6% ...

Don't get too excited. Actual increase is more like 1-2% looking at the indexes. YoY comparisons of monthly medians is totally worthless.

jwalbren said...

Ok, so house prices in Victoria have risen only 1% in 8 years? That should mean that they are now affordable/priced within a range that is affordable.

Leo S said...

That should mean that they are now affordable/priced within a range that is affordable.

More or less yes. Not affordable by measures that you would find published, but within the historical affordability range for Victoria.

fizzy said...

Sold in June 2014 for $605K (per BC Assessment). Back on the market now listed $629K. A flip? But it won't even cover the realtor's fee! I went to the open house last year, and it was completely renovated, no room for improvement ... so I'm just very curious why back within a year. 2728 Blackwood.