Moving days are coming fast

So we will be slowly moving over the next week. We're getting excited as we feel we're moving 'up' in the rental market; really, it's just a modest move into a similar property but with a bit more space and a lot more natural light. We're going to junk out most of our 'stuff' that we've collected over the past four years, so we're shopping for some newer things to furnish our place.

Which brings me to the meat of this post: have you got any secrets you'd like to share with us and the readers of this blog? We've been checking out the usual online sites for used stuff in town and the classifieds in the newspaper and while there is some selection, it's usually just someone else's unwanted junk that they would rather foist onto someone else than drive down to the Sally Ann.

I'd love to compile a bit of a resource list of good quality retailers in the used-furniture marketplace. I know there are tons around, but if you shop at any, do you go regularly? And are you happy with the offerings consistently? Do the shops stand behind what they sell? Any secret websites?

How's This for Condo Driving?

Interesting article in the TC today about the Bayview and yesterday's untimely Spring rain: it seems that the torrential downpour wasn't able to dampen the perpetual pump and dump of condo marketing in this, the mother-of-all-retirement-markets.

Some notable highlights:

• in this market that sells itself, a developer must charter private jets and commercial airliners for 200 guests for a special "buyer's weekend" (estimates are "dozens of buyers" came out of that marketing campaign)
• the "buyer's weekend" includes golf tourneys, spa treatments and sightseeing activities
• Most buyers are from Alberta and Ontario and include former provincial premiers Mike Harris and Brian Tobin
• the next target is "people from the desert" looking for "opposite seasons"; I guess summer here, winter there?
• the two aforementioned premiers are said to be wooing "King" Ralph of Alberta to join their exclusive living in luxury accommodations

Bayview has units ranging in price from $400K to $3M. If you have political aspirations, that $400K studio apartment may be the best investment you can make in your career: you'll have an inside seat in the lobby where you can wait patiently for the twice-yearly appearances of the busy ex-politicians.

Either Palm Springs is getting unbearably hot in the global-warming winter, or all the well-publicized anti-American sentiment in Canada is making life uncomfortable for our heads of state down south as Mike Harris is quoted describing yesterday's weather as "beautiful West Coast"; of course, what else is he to say when his money is tied up in a development and he just arrived at the golf course in a stretch-limo to woo potential buyers with a little shoulder rubbing prior to their full body treatments later in the day?

And to think most of us just get a complimentary LCD flat-screen HDTV when we spend $400K on a closet-sized condo; we're going to start demanding free trips to Hawaii for a little "opposite seasons" with all our conditional offers to purchase from here on in.

Thursday News Hunt

Thanks for posting links in the comments these past couple of days.

Here's some news we've been a huntin':

BC housing crunch expected to ease

You've retired and 'downsized' in this market into a new 25 year mortgage; have no fear, mandatory retirement is no longer...

Buying a fractional ownership condo? You're in luck, you are about to receive tax-fairness.

Like most smart business people/economic specialists, even David Dodge doesn't want to hang out for the downturn...

When the smart money doesn't do it, should the little guy step in and provide opportunities for renter's in this market?

BC Home Sales Decline Six Per Cent in First Quarter; but apparently this means prices will continue to rise for the next two years, ah huh...

feel free to post links in the comments section.

Is Vancouver Different?

I'm not a fan of the big city... I prefer the lifestyle of Victoria. We've been highly entertained by the commentary over on CondoHype! So in that light, yesterday we travelled around to some marketing offices downtown pushing the condo lifestyle in Victoria.

I've heard that there are line-ups almost as long as the passport office one's for new condos in Vancouver's trendy neighbourhoods. What's the story in Victoria? Victoria's Truth has an insight into price reductions in the Victoria condo market. What did we find? Two general trends:

1. Either the doors on the display suite offices were locked
2. Or the display suite office was open and there were people inside, but they were staff and not potential buyers

I had no idea what to expect, to be honest. I wasn't thinking we'd see a line-up or even a bustling showroom. But I'd have at least thought they'd all be open. So kind of surprised.

We live not too far from the Richmond Gate development and we've watched it go up with curiosity. We've discussed it as a potential home for us for the long term. We like the neighbourhood and could see ourselves staying here, but not at those prices.

They started selling small one-beds at $250K. Now, you get a one-bed, 1.5 bath plus a computer closet for $340K (at 750SF). My friend sold his 2000 SF house with mortgage helper last year at the peak, just around the good corner from there, for $430K.

The marketing for RG seems diminished. There is no "lifestyle" pushing going on. Instead it's being touted as "affordable luxury". Considering you can get the same "affordable luxury" for $100K less on Goldstream Avenue in The Strathmore (you can spend the extra $10K yourself to swap out the fixtures and counter tops that make the difference there), what incentive is there to be in town? And does it equal a $100K premium?

The housing markets are more balanced between Langford and Saanich (in our market segment anyway). Why the big difference in condo prices?

New CMHC Financing Insurance Rules

Big announcement today--we'd heard rumours on other blogs, but I couldn't find anything in Hansard, so waited until confirmation before posting on this one--the Feds have reduced the minimum down payment from 25% to 20% to qualify for insurance-exempt financing.

At first I thought, uh oh, this is going to heat-up the market. But after some thoughtful analysis, I'm thinking different. I actually like this move. We're likely going to wait out this market for a bit and attempt to sock everything we can away to make that 20% mark. On an average family home using the median, not average price ($470ishK), that's closer to $100K down instead of $150K down. Much easier to attain and saving $3K or so on insurance premiums will help with a month or two's mortgage payment.

So it may help us out. But really I think it's going to help out the market. And not help the market keep going up.

20% seems like a lot on the savings side, especially in our market here in Victoria. But the Canadian average home price is significantly less than here, so saving up 20% should be considerably easier. 20% market declines are not unheard of. We may see something like this when this market cycle corrects in Canada (not just Victoria).

But here's my logic for why I think encouraging people to save is a good thing: because saving makes people financially responsible. And when people become financially responsible they will look long and hard at the market before jumping in.

But it won't be just individuals doing the looking. Banks and mortgage companies will have to look at people's credit a bit more carefully too. Think about it: if I come in with $40K down on a $200K condo most banks will give me the rest. But if the market corrects and my condo drops to $160K--and in the ensuing recession (which often coincides with RE corrections) I lose my job--it may mean the bank is left holding a declining asset and a mortgage liability without insurance. They know this better than I do, so they may exercise significantly more caution in lending me the money initially. And if I don't qualify, then that means there is one less buyer.

I'm likely stretching my logic a bit too far. But overall, I think this is likely a good thing for returning some rationalism to an exuberant RE market. Of course, you can feel free to disagree with me in the comments.

From Away's

If you've ever been out East, no not TO east, but Halifax or St. John's, you know, the real East, you are likely familiar with the saying, From Aways. It's not derogatory or a put-down, it is simply a descriptor that local people use to describe someone who is not born in the Maritimes.

One of the biggest myths of the local RE market here is that our prices won't ever go down because all of these "from aways" keep coming here driving our prices up. I had the pleasure of having breakfast this morning with four quickly-retiring "from aways" that are here on a whirl-wind tour of the RE town looking at moving here, to get away from the harsh winter climes of Edmonton.

One couple was my aunt and uncle, the other couple are their friends. My aunt and uncle have been talking about moving here forever; like most people that come here, they want to stay, and because they have family here, one would think it would be an easy transition. Yet they talk about it at least twice a year and still do not come.

Their friends, who are far more serious and are the drivers of this short little "drive-by, look see" trip are serious. They have seen a massive increase of their own home market value in Edmonton in one-year. If you aren't following the RE market outside of Victoria, theirs is far hotter than ours ever has been or ever was. They see this year as their opportunity to realize a dream.

Then they came here. While they may be looking in the wrong areas of town, their dream of a character house with 3-4 bedrooms and 2-3 bathrooms on a tree-lined street with a nice Garry Oak in their backyard has grown a little lost. They've driven through Gordon Head, View Royal, Langford, James Bay and Fairfield. They've been through Uplands, Cordova Bay, Mt. Doug and Estevan. They've even looked out in Sooke, Cobble Hill and Shawnigan.

They came armed with MLS numbers and addresses. They have been let down by the experience of driving past a home that doesn't match the mental picture they created when dreaming online. They'll keep looking today and will return this fall to look some more. They want to come here by 2009.

I doubt their experience is unique. If they are having reservations now, before even looking at the math of purchasing a home, I wonder how they'd feel then? If the boomer generation is riding as large a gravy train as the 'experts' say they are, then no worries. But will a $300K mortgage on a $700K home, that may not be quite as nice as the one they had in Edmonton, really be that appealing for retiree's?

The Bare Land Strata

We're pretty sure everyone knows what a strata is. But how about a bare-land strata? Are you aware of the number of new developments in the CRD that are using this method of gaining permits? And it's not just in Langford.

Essentially a bare-land strata works just the same as any other strata corporation. There are individual assets (your home) and there are shared assets (streets, sewer, water, power lines and street lamps). Some bare-land strata corporations also own golf courses, marinas and other recreation facilities. Some are upscale and have amenities to attract luxury buyers, but a growing glut of these bare-land strata's are being developed and targeted to low-end buyer segments.

When the municipal council grants developers permits to put in communities (I define a community as places like Sun River Estates, Citation Village etc) the biggest concern for the municipality is the cost in servicing these new areas of town. The municipality wants to increase its tax base (largest taxpayers are local business, not residential) and wants to keep its costs under control. So how do they do this?

Enter the bare-land strata. The province created this 'corporation' some time ago. Municipalities are taking advantage of it to pass on the costs of what we would normally consider community services paid through property taxes onto the strata owners. Consider this: you buy a house in Citation Village for $400K. You're getting a brand new home, it's pretty nice, it's pretty big compared to what that money buys you elsewhere and the community is new. Lots are real small though, but that's less lawn to mow anyway so no big deal. You have to pay a strata fee of $85/month, but that's less than the average condo fee by almost half, so again, seems like a great deal.

Are you aware though that when the winds hit and the lampposts come down that it's the strata that pays? Or when the rains come and the inevitable potholes appear, again it's the strata that pays. Now these would be relatively minor costs for the strata corporation to bare, but what about ten years from now when the roads need to be re-paved completely? Normally, the city takes care of it. Not in your bare-land strata though. Instead, it's like a condo roof has to be replaced and the strata corp either saves up for it, or if the strata isn't run in a proactive manner (and it's easy for strata's to be managed in less-than proactive ways) the bill gets divided up and passed onto the homeowners. I'm not positive on the CRD cases, but I've read about bare-land strata's that are responsible for their own fire departments. I can't imagine that being the case here though.

You still pay the same rates of property taxes as your neighbours who aren't part of the bare-land strata.

I know that I'm not painting a very good picture of the situation. And I also know that I don't have all the information. So please feel free to chime in with your thoughts and corrections. Does anyone own one of these or know of someone who does?

We walked through a home in a bare-land strata about 1.5 months ago. It was nice and big. It had a suite downstairs and parking for one car. If you wanted more than one car you had to park in the common parking two blocks away. There was no on-street parking as the streets are too narrow. We were actually pretty impressed with the home. It needed some work to complete it, but we figured we could get that as part of the offer, or knock $15K off the price to get the work done ourselves. The risks of the strata scared us off though.

With more and more of these bare-land strata's being developed and municipal councils seeming to favour this style of development over others, it's safe to assume that first-time buyers like ourselves may have to go this route to get into a home. We'd love to hear your thoughts on this issue. Are we reading too much into it? Should we just accept this is a new reality in the RE market and budget accordingly? Or should these bare-land strata's be avoided at all costs?