tag:blogger.com,1999:blog-7123542260692860177.post3103223376025599082..comments2023-12-02T00:38:46.467-08:00Comments on House Hunt Victoria: Magnum OpusHouseHuntVictoriahttp://www.blogger.com/profile/07456914359088891317noreply@blogger.comBlogger66125tag:blogger.com,1999:blog-7123542260692860177.post-66124655684436028912010-10-21T10:14:54.039-07:002010-10-21T10:14:54.039-07:00"No one expects things to go back to 2002.&qu..."<i>No one expects things to go back to 2002.</i>"<br /><br />Over the long term, real estate prices track inflation. Therefor a return to 2002 prices in 2002 dollars is a near certainty.Ryanhttps://www.blogger.com/profile/10104704096049638272noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-59899989505293878262010-10-21T09:59:53.467-07:002010-10-21T09:59:53.467-07:00Marko:
"What does someone do with such a larg...<i>Marko:<br />"What does someone do with such a large inheritance? Do you really plunk that kind of cash into the stock market? At the end of the day real estate is much less risk."</i><br /><br />That is a very financially naive statement.<br /><br />Investing it doesn't mean it has to be put into individual stocks. And conventional investing could be more volatile, but not necessarily more risky.<br /><br />A balanced portfolio could include some real estate, but <b><i>plunking it all soley into real estate is actually MUCH more risk</i></b>, especially for an amateur real estate investor.<br /><br />Paying off a mortgage could make sense depending on the situation, but buying a bigger house, a condo, or a vacation property like many amateur real estate "investors" would do makes very little financial sense.Jasonhttps://www.blogger.com/profile/02885536763740266804noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-83304883777279596252010-10-20T22:23:09.850-07:002010-10-20T22:23:09.850-07:00"I can tell you I'd much rather end up wi..."I can tell you I'd much rather end up with the same monthly payments in a few years with the interest rate being higher and the home price being lower. My hard earned down payment would also prefer to be applied to 420k rather than 600k."<br /><br />I have been pondering this as well - and I don't think we are going to see interest rates rise as much as people anticipate. <br /><br />Inflation is low and in my personal opinion will continue to be low unless we see a large war or equivalent (lack of oil supply). Most products and goods are imported into Canada and there is certainly no shortage of goods other than Iphone 4s. Also labour is being outsourced to China for dirt cheap; I don't think this will put upward pressure on inflation in Canada. <br /><br />Secondly, I don't see countries out there running to spend huge amounts of money on infrastructure....overall, other than China I personally just don't see huge demand for money from countries. The only country needing lots of cash is China, but they aren't even borrowing, infact they are lending to other countries. <br /><br />Are interest rates really going to rise in the next 5 years to make it worth while to wait versus rent? I don't know, but I am leaning towards not...Markohttps://www.blogger.com/profile/08315282480144281935noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-67402514672515757512010-10-20T22:11:00.544-07:002010-10-20T22:11:00.544-07:00I came across an estate sale today, 900k, no mortg...I came across an estate sale today, 900k, no mortgage, only 2 kids. These lucky people are walking away with a huge sum of money, plus if they have their own home already and a decent job ~ a 1 million dollar home is certainly affordable for them. <br /><br />What does someone do with such a large inheritance? Do you really plunk that kind of cash into the stock market? At the end of the day real estate is much less risk. <br /><br />Secondly, this got me thinking, with smaller families aren't we going to see more wealth be preserved at the top? <br /><br />Most estate sales I see have 3-4 receivers, what happens when this starts being more like 2-3, and eventually 1-2?Markohttps://www.blogger.com/profile/08315282480144281935noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-4122308997051390752010-10-20T21:35:43.119-07:002010-10-20T21:35:43.119-07:00Introvert
You can believe this if you want or not...Introvert<br /><br />You can believe this if you want or not BUT I can afford to pay cash for an average home in Vic. I'm talking average here, not a Mcmansion for 800k.<br /><br />Would I? Hell no! I have my money working for me and I pay rent equivalent to about half of what the mortgage payment (+ taxes, maintenance and insurance) would be on our house.<br /><br />I'm a numbers guy and when the numbers don't ass up they don't add up. Why would I throw away the investment potential of say 200k (equivalent to the down payment) on a house that I feel will come down in value by 30 - 40% with a year or two???<br /><br />As far as trashing Victoria....dude it really ain't that great. Go travel, see what else is out there and you will see what I mean. Vic has become a little city with big city problems (afore mentioned). I used to like it A Lot! Now not so much.<br /><br />Seems to me the people that think Vic is all that and a bag od chips have never traveled internationally or even south of the border. The born and raised thing gets old for me......step out of the bubble and you will see what I mean.<br /><br />Like I said, as soon as I can adios to sleepy town! see you on the beach bud :)Unknownhttps://www.blogger.com/profile/02135885959544346194noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-24725297959135925642010-10-20T21:26:09.420-07:002010-10-20T21:26:09.420-07:00High prices don't make a better city. Somewhe...High prices don't make a better city. Somewhere along the way we lost what was important. When did we take the pictures of our kids out of our wallet and replace it with a picture of our house? When does a thing mean so much that some people will destroy their future in order to possess it.<br /><br />Its just an illusion. A distortion of what is valued in our society. Where it is more important to be perceived as wealthy than to be wealthy. Its the return of Wall Street's Gordon Gekko, where "Greed, for the lack of a better word, is good." <br /><br />And we all know how that ended.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-1617159971094667762010-10-20T20:48:13.685-07:002010-10-20T20:48:13.685-07:00Mark, way to trash Victoria!
Often, when people r...Mark, way to trash Victoria!<br /><br />Often, when people really want something they can't have, they denigrate it.<br /><br />The grass is always greener!Introverthttps://www.blogger.com/profile/03333045260631104757noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-71953194010599944282010-10-20T20:43:04.374-07:002010-10-20T20:43:04.374-07:00$600K
$500K
$400K
$300K
$200K
Who knows where the...$600K<br />$500K<br />$400K<br />$300K<br />$200K<br /><br />Who knows where the market will stabilize. Trying to guess where the bottom will be is asking where demand will be in 2, 3, 5 or 25 years from now. <br /><br />Last month 121 houses were bought in the municipalities of Victoria, View Royal, Oak Bay, Esquimalt, Saanich and Victoria. The year before it was 218. What if that number dropped to 60.<br /><br />There are close to a 250,000 people living in the core municipalities and a little over a hundred thousand homes and condominiums. What happens to prices when only 60 homes a month sell? What happens if it drops to 30?<br /><br />Would you be willing to buy a second home and rent it out? Then what are you going to use as a down payment when your equity has been wiped out? Are you willing to buy a rental house when prices are falling?<br /><br />What price would you offer on a home under a court order to be sold, knowing that you will be the only bidder?<br /><br />I guess you have to ask yourself how likely is it that the number of homes sold could drop from 121 to 60?Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-18259684046511182562010-10-20T20:20:54.101-07:002010-10-20T20:20:54.101-07:00HHV,
We are very similar.
We bought when we foun...HHV,<br /><br />We are very similar.<br /><br />We bought when we found a place we liked and knew we could live in for a very long time at a price that we thought was fair and affordable at the time.<br /><br />It really is that simple.Still Waitinghttps://www.blogger.com/profile/14242831023104100299noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-51598585204623438762010-10-20T20:04:27.779-07:002010-10-20T20:04:27.779-07:00Those are not unreasonable expectations in my view...Those are not unreasonable expectations in my view. I personally think we could potentially see about $125,000 come off present prices. Worst case scenario, best case scenario, depending on which side of the fence you are on.Still Waitinghttps://www.blogger.com/profile/14242831023104100299noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-85612318963435165582010-10-20T20:02:36.530-07:002010-10-20T20:02:36.530-07:00HouseHuntVictoria said...
I was raised in Victori...HouseHuntVictoria said...<br /><br />I was raised in Victoria and love it here, but I've lived elsewhere in this country and enjoyed those experiences. I do not believe that Victoria is worth a 50%-80% premium over say Nanaimo or Courtney.<br /><br />>>>>>>>>>>>><br /><br />wholeheartedly agree....no way is it worth the premium! It is my biggest problem with this whole scam AND the RE scum that drive it.<br /><br />Vic is cool but not worth the money. IF I could, I would be gone tomorrow. Regrettably I have ties here. As soon as that changes it's adios!<br /><br />Personally I wouldn't miss the noise, traffic, and attitude that Vic has become.Unknownhttps://www.blogger.com/profile/02135885959544346194noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-85925928506193195062010-10-20T19:54:27.904-07:002010-10-20T19:54:27.904-07:00SW, to answer your question, we'll buy when we...SW, to answer your question, we'll buy when we find a place we like and know we can live in for a very long time at a price that we think is fair and affordable at the time. <br /><br />I know that's vague and it is - because our circumstances will change along with the various inputs at the time: price, interest rates, down payments etc. <br /><br />I also don't know if the criteria will ever be met here, in which case we may choose to continue to rent in Victoria or explore opportunities to live elsewhere. I was raised in Victoria and love it here, but I've lived elsewhere in this country and enjoyed those experiences. I do not believe that Victoria is worth a 50%-80% premium over say Nanaimo or Courtney.HouseHuntVictoriahttps://www.blogger.com/profile/07456914359088891317noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-31316530218602816842010-10-20T19:46:27.722-07:002010-10-20T19:46:27.722-07:00Blogger Still Waiting said...
I agree that house...Blogger Still Waiting said...<br /><br />I agree that house prices here are too high at the moment.<br /><br />I would be interested to learn what many on this blog feel would be reasonable price before they bought.<br /><br />>>>>>>>>>>>>>>>>>>>>>>>>><br /><br />Personally I am looking for 30% minimum before I wade back in....that would take a 600k home down to 400kish.....still a whack of $$$ but doable without selling my first born, my soul or losing sleep over rising rates.Unknownhttps://www.blogger.com/profile/02135885959544346194noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-80465646361147871332010-10-20T19:44:36.083-07:002010-10-20T19:44:36.083-07:00I can tell you I'd much rather end up with the...I can tell you I'd much rather end up with the same monthly payments in a few years with the interest rate being higher and the home price being lower. My hard earned down payment would also prefer to be applied to 420k rather than 600k.<br /><br /> No one expects things to go back to 2002.Inglishmagorhttps://www.blogger.com/profile/06512753372584425267noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-53259033259481076432010-10-20T19:42:43.438-07:002010-10-20T19:42:43.438-07:00I have nothing against renting.
Choosing the op...I have nothing against renting. <br /><br />Choosing the option that is best for you family IS the best option and I totally respect and understand that.Still Waitinghttps://www.blogger.com/profile/14242831023104100299noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-62190649279338950532010-10-20T19:38:16.477-07:002010-10-20T19:38:16.477-07:00HHV,
Absolutely not.
But at today's low fixe...HHV,<br /><br />Absolutely not.<br /><br />But at today's low fixed rates it makes more sense than it did 6 months ago.<br /><br />I am just saying that if people are waiting it out for their dream home for $200,000 at a reasonable interest rate in Victoria, I don't think that time will ever come.<br /><br />I agree that there will be an equilibrium eventually reached. I just don't think the same price/rate combination will be the same as it is in Smithers, Port Alberni or Duncan.<br /><br />Victoria is a nice place to live and I think many people realize this an are ok with paying a bit of a premium.<br /><br />I agree that house prices here are too high at the moment.<br /><br />I would be interested to learn what many on this blog feel would be reasonable price before they bought.Still Waitinghttps://www.blogger.com/profile/14242831023104100299noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-19710609516927645252010-10-20T19:05:52.915-07:002010-10-20T19:05:52.915-07:00Still Waiting,
Forgive me, but your personal rea...Still Waiting, <br /><br />Forgive me, but your personal real estate history is really irrelevant.<br /><br />We agree that the past 8 years of Victoria market history doesn't mean the next 8 years will play out the same.<br /><br />You've stated you wouldn't live in any of the homes currently priced at $565,000 (welcome to the club). <br /><br />Here's the $64,000 question: if you had a modest 10% down payment (which is an immodest $60,000), would you rush out and spend $600K on a house <b>today</b> simply because the bank approved you for a $560,000 mortgage? <br /><br />You benefited directly from one of the luckiest decades in Victoria real estate history. There are more than a few of you who did. But your circumstances can't be universally applied to people who are in a buying position today who don't currently own.<br /><br />As I've stated on the main post, there's a great many people who could easily find themselves in a position to buy a home today that makes a great deal of sense <b>for them</b>. But that doesn't mean the people who choose to rent right now are making a poor financial decision. <br /><br />And despite earlier assertions, this blog and this writer do not advocate forever renting nor renting right now over owning if owning makes more sense for the individual. But for my family, renting makes a great deal more sense than buying today.HouseHuntVictoriahttps://www.blogger.com/profile/07456914359088891317noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-70461406548921414862010-10-20T18:12:54.722-07:002010-10-20T18:12:54.722-07:00There are not any houses in Victoria I would even ...There are not any houses in Victoria I would even consider living in for $565,000 presently.<br /><br />As to reverting to 2002 prices. I have my doubts.<br /><br />Also, why would I have only paid back $25,000? Perhaps I made some lump sum payments over the 5 year period?<br /><br />Again, I never said prices don't come down, they may indeed. I just don't believe they will drop so much to erode the "fake" money we made.<br /><br />We simply traded equity appreciation with someone else in order to live in a home that better suits our needs.Still Waitinghttps://www.blogger.com/profile/14242831023104100299noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-22629820253685856312010-10-20T17:57:35.265-07:002010-10-20T17:57:35.265-07:00The last few years have really proven to me that I...The last few years have really proven to me that I don't know what's going to happen in the future. <br /><br /> What I do see right now is real estate having a lot of the future potential already priced into it. Meaning a house bought in 2002 was bought as a house. Within a few years housing prices became the cost of the house + what it will be worth in 5 years. This went on long enough that no one is factoring any risk into the equation.<br /><br /> I have no idea what the future will bring, but I think we are just starting to get to price of house + future growth - a little risk. I also think that when the future growth past of the equation shrinks a little the risk side will grow a little kinda feeding on each other.<br /><br /> Not saying this will happen quickly, but I don't believe this market can maintain itself at a stagnant level.Inglishmagorhttps://www.blogger.com/profile/06512753372584425267noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-64408647178381616442010-10-20T16:57:07.376-07:002010-10-20T16:57:07.376-07:00"We like having the security of home ownershi..."<i>We like having the security of home ownership and consider the $315,000 we "made" on our previous home, a prepayment of future housing costs for a home we love.</i>"<br /><br />The problem with your math is, you assume prices don't come down. But they will, because we're in a bubble, and Victoria is not different than Florida, or Phoenix, or anywhere else. So effectively what you've done is look at your suddenly increased net worth and used that as a rationalization to go deeper in debt.<br /><br />Just to flesh out some numbers, assuming you bought with 20% down in 2002, that means you started out with a 200,000 mortgage. Assuming a 25 year term, in 2007, you would presumably have paid back about $25,000, leaving 175,000 on the mortgage.<br /><br />However, instead of renewing your mortgage you saw that you had "earned" $315,000 fantasy dollars, and so you rushed out and bought a new home for $700,000 and you now owe $310,000 instead of 175,000. When the market reverts to 2002 levels, instead of being ahead what you have paid on the mortgage, you will be back at zero. Because instead of still being in a $250,000 house for which you paid $250,000, you will be in a house you paid $700,000 for, which will be worth $310,000.<br /><br />If you had sold for $565,000 in 2007 and rented until the market corrected, you could buy that house with cash. Instead, you will have as much equity as you have paid down since 2007.Ryanhttps://www.blogger.com/profile/10104704096049638272noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-91443670755410768472010-10-20T16:35:35.352-07:002010-10-20T16:35:35.352-07:00Jason,
Yes, I think the same thing is happening i...Jason,<br /><br />Yes, I think the same thing is happening in Victoria. We have some friends that bought a new house and can't sell their previous house for what they "need" so have decided to rent it out until prices go "back up", they cannot afford to do this for very much longer - dangerous game to play - I wouldn't be sleeping much at night. I've heard a bunch of similar stories from others in town too - I think there are a lot of people barely keeping their heads above water just hoping magically that prices will start to go up again soon. They are in denial and it is sad as this spring likely there will be a huge increase in inventory and sales will stay flat leading to more downward pressure on prices. I think that is when the panic will really set in. This housing market is very likely going to stay flat or go down over the next few years - that is the logical path for it to take, fundamentals. And if it walks like a duck...thinkhttps://www.blogger.com/profile/04527051722420253429noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-4482392115160741732010-10-20T16:30:23.075-07:002010-10-20T16:30:23.075-07:00If you have bought the home for your child, then y...If you have bought the home for your child, then you should get them on title as soon as it is legally possible. <br /><br />Otherwise, the child will be straddled with costs at your death. Of course if you keep telling your kids that when you die, they will have a million dollars, you might want to stand a little farther back from the bus stop when your with them.<br /><br />Try to think of what it would have sounded like if your father kept saying this to you when you were 10. Especially when he was tucking you in at night. Or the day your boy appropriately replies "can you hurry up on this promise."<br /><br />As for never selling your home, you might not sell, but people rarely stay in the same home for more than ten years today. Because for the last decade people have owned their garbage cans longer than their homes.<br /><br />The best or worst of intentions do not always work out the way you want. <br /><br />For the last three years, in general, people in the city who bought and are now faced with selling are financially worse off than if they had stayed renters as there home has only appreciated 2.7% in that three years. Only those who bought five or more years ago have had any great appreciation of $100,000 or more. And since a big chunk of homes currently listed for sale were bought less than three years ago, there are a lot of people who are not so enamored with real estate today.<br /><br />Prices peaked for Victoria around April 2008 at about $610,000. <br /><br />Today the median is $575,000 and you can get a five year rate at 3.4 percent. <br /><br />Three years ago, the median was $560,000. The interest rate was higher and 48 percent more homes were being sold then than there are today.<br /><br />So your kids might be thinking that the longer you cast a shadow on this side of the ground, there losing money.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-3477198428994761222010-10-20T15:22:52.421-07:002010-10-20T15:22:52.421-07:00And just some anecdotal numbers for you. In Kelow...And just some anecdotal numbers for you. In Kelowna, my wife and I viewed 9 possible houses to rent this summer.<br /><br />3 of them were owners who had already bought another home. A 4th was a woman who had been speculating and owned 4 properties (all 4 were currently for sale but not selling). A 5th was an investor who had been renting out the property for a couple years and a 6th owner was moving to Victoria for work, but he was going to rent.<br /><br />Those 6 all wanted to sell, but weren't able to (at their current prices).<br /><br />Out of those 6, only two of them could possibly make a profit on their sale (based on asking prices and original sale prices). We eventually rented one of those two.<br /><br />4 of the other 5 were asking exorbitant rent, and 2 went so far as to say they couldn't go any lower because of the mortgage. I noticed that all but one eventually rented out and were taken off of MLS, but the last one has been sitting empty and for sale for 4 months.<br /><br />It was an eye opener. Maybe not indicative of the whole market, but shocking to talk to some of these people and hear their stories.<br /><br />Is the same thing happening in Victoria?Jasonhttps://www.blogger.com/profile/02885536763740266804noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-26025559270235250302010-10-20T15:06:54.372-07:002010-10-20T15:06:54.372-07:00Actually, I suppose that back in 2007 that same sc...Actually, I suppose that back in 2007 that same scenario could have been 0% down, or even 0% down with 6% cashback!<br /><br />Yikes.Jasonhttps://www.blogger.com/profile/02885536763740266804noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-15042447650117205022010-10-20T15:04:47.446-07:002010-10-20T15:04:47.446-07:00"I totally agree with you about other costs a..."I totally agree with you about other costs associated with home ownership. It is costly! So are kids!"<br /><br />Agreed. It sounds like I am on a similar timeline as you. We bought in 2003 and sold this year looking to upgrade, but decided to rent for the time being. It was a very difficult decision - there is still a social stigma against renting, and most would never considering renting if they can afford to buy.<br /><br />"You are probably also right that maybe I could only sell my house for $625,000 today. Again, a drop in price I did not consider when I bought in 2007."<br /><br />Which is fine if you are OK with that loss (both financially and emotionally). Some people would not be in the same boat, but as you said, you enjoy your home and I completely understand that it can easily be worth the extra cost.<br /><br />I think the problem will be the low equity buyers. The numbers have probably been hashed out a million times here, but for example, a very conservative example of someone who bought that same house for 700k with 10% down (which is not even considered low equity anymore).<br /><br />They would have shelled out at least:<br />70k for a downpayment<br />12k for CMHC<br />12k for property transfer tax<br />2k for lawyers and other misc<br /><br />Mortgage payments on 630k amortized over 35 years at 4.5% would be almost 3k per month.<br />Property tax?<br />Maintenance?<br />Probably adds up to more than the corresponding rent so they are spending more each year than they would renting.<br /><br />If they sold today for 625k through a realtor they would probably be out another 20-25k to sell, plus more 10-20k for the mortgage penalty (most people completely forget about this, and it can be very high on fixed rate mortgages due to the current low rates).<br /><br />Their principle remaining would be 588k so they would walk away with almost nothing, down over 90k from their original expenditure + the lost opportunity cost (94k at 4% over 3 years ~ 12k, you seem to be forgetting about this when comparing your rent to mortgage payment. 315k at a conservative 4% would bring in about 1000 per month) + the extra cost over renting.<br /><br />Some people would just move on, others would be devastated.<br /><br />Now if they only had 5% down OR if they took out a line of credit at the absolute peak in 2008 to renovate or go to Mexico, they would have been faced with a 30-40k bill and possibly couldn't afford to sell.<br /><br />When we were looking to rent we were surprised at how many people were in this situation (trying to rent out their homes because they could not afford to sell). I don't know how those scenarios will play out, but they have a major impact on the rental market, and I assume they will have a negative impact on the economy and some will eventually lead to foreclosures as well.Jasonhttps://www.blogger.com/profile/02885536763740266804noreply@blogger.com