Saturday Open Houses

We went out a house hunting yesterday, more to check out the feel of the market than to actually look for a place. Which is a good thing because we didn't come across too many open houses.

The one that we did come across, at The Amana on North Dairy was good. For two reasons. First it was DEAD in there. And second, I was impressed by the place.

Let's deal with the first issue. When we go out to "buy" anything of value I always subscribe to the Bill Cosby as Dr. Huxtable school of thought on monetary purchases: Always hide the fact you have money. So I go looking like a shrub. Ms. HHV can make a track suit look good on her so it kind of defeats the purpose, but I look like a shrub none-the-less. Why do I do this? I want the salesperson to ignore me until I have a question and I want the price negotiation to seem like I'm stretching all my finances to get into the product. Has this been a good strategy for me? Who knows.

Anyway, the Realtor yesterday, incidentally selling a $400,000K condo, was over-joyed that we walked in his door. He was a good guy. Left us alone, answered our questions, didn't talk too much and asked us the questions he needed to for his marketing--where did you read about the place, the open house etc. I liked him enough that if I was in need of a Realtor to sell my place, I'd interview him.

But he made no attempts at qualifying us as buyers. No, what do you do questions or anything like that. No, who does your financing. It was almost as if two youngish people looking at a $400K place with no potential rental income was normal. And that I find very scary. But we were there 20 minutes of a 2-hour showing and no one else came or went.

The place was actually very nice. It was a 1-bed 2 full bathrooms with a loft master bedroom. So really it was 2-bed 2-bath. For its 1000SF it felt huge. Really high ceilings (14'+), nice layout, skylights, full size appliances including washer and dryer (not stacked). It even came with two parking stalls. It wasn't luxury, like they claim, as I don't consider melamine cabinetry, arborite counter tops and black appliances luxury, but that is irrelevant. Most places don't live up to their luxury billing anyway. So whatever.

It was a nice place. Somewhere we'd be happy and proud to call home. Somewhere where we could live for an extended period of time. But at $400K, which is only about $2500/month mortgage payments, that place would suck up fully 50% of our income to live in. No thanks.

The place was "staged" fairly well. As we were leaving, Realtor says, if you're thinking of making an offer, think about keeping the furniture that's in here, I'm fairly certain the developer doesn't want to move it out. I had a good laugh at that. And not jokingly stated, "Will you take $350 inclusive?" Silence. So we left.

Roger had an interesting comment earlier this week. If the market corrects, will it start with condos? That would seem to make sense to me in that there are more condos being built than houses. So if we are to get some build up of listings, then we should see price reductions there first. And in our experience we are. Tuscany, Richmond Gate, The Julia, The Amana, The Pearl on Hillside, all of these places are in neighbourhoods that we wouldn't mind living in.

But none of these are close to selling out. And the funny thing is it's the most expensive units that are still left. Those units have one target audience: the downsizing boomer. I don't believe the down-sizing boomer is a reality. Many boomers are moving up in the market. Drive up Bear Mt. How many people who don't fit the boomer generation do you know that can afford to buy those $800K monster homes?

The Songhees condos, and others like them around town, are being marketed heavily in Alberta and Ontario as vacation/retirement properties. We think the downsizing boomer isn't looking to live in any one particular town. They may buy a place here for use a few months of the year, but they will likely maintain a property in their "hometown" too. Who knows. But I don't see a condo on Quadra at Hillside as being a product that competes with a condo on Bear Mountain or the Songhees.

Unfortunately people my age do. They think that retirees from Gordon Head will sell their $550K houses and downsize into $250K condos. We think they're dreaming. And it will likely be a nightmare that wakes them up sooner than later.

As a complete anecdote, I spoke with my friend who lives in a great condo on Chatham and Government. I love that unit. She paid $200K 3 years ago. She was shocked to learn a similar unit just sold in her building for $230K. "Is that it?" she said, "I thought this market was supposed to be hot? Shouldn't it be closer to $300K by now? I would barely have made a dime by the time I pay the sales-related costs."

Open House/Open Thread

Gonna go see about 4-5 open houses this afternoon. Just to check the "feel" of the market.

Open thread for your comments/posts/suggestions etc

I love the smell of opportunity in the morning

I've been inspired to create a mountain out of a molehill. To turn lemons into lemonade. To take the sh&t that economic life has dished me, spread it on the ground and grow some freaking roses. And I want you bears to join me.

Imagine my surprise while watching movie and a makeover while sipping my coffee and reading my Post, when on comes a commercial I hadn't seen yet? It turns out that where there is misery, there is someone seeking to profit from it. Check it: webuyuglyhouses.com. This is a venture of HomeVestors which is an American organization that, well, profits from other's misfortune.

So enter the new venture of HHV (Ms. HHV wants nothing to do with this, apparently its a bit less than ethical, but I digress): webuyyourhousepurchasemistakesinvictoria.com. My Internet professors always cautioned me to not exceed two words in a URL address, but I didn't listen with this site and if you check the "How much this blog is worth" box on the right hand side of the page you'll see how good a choice my URL address was.

Anyway, back to the scent that has permeated throughout town this morning: Opportunity. No Wait. I know. The market hasn't fallen yet. YET. But when it does we need to be ready people. That means you need to meet me with your blank check in hand now. We'll put your name on the exclusive list of only ten investors (we don't want to dilute the profits here people) SMART enough to get ready for the coming auctions and fire-sales of distressed properties. When these $400K crack shacks are selling for $150K again, we need to be ready to pounce.

Check out that HomeVestors site. Actually they have three sites: webuyuglyhouses.com, uginvests.com, and wesellluvlyhouses.com. How an uginvest in an uglyhouse can turn into luvly I'm not yet sure, but rest your pretty little minds, I will find a way! and you don't want to miss out on this once in a lifetime opportunity, I need to say that again, ONCE IN A LIFETIME OPPORTUNITY. The RE market isn't cyclical folks. The opportunities that over-leveraged boomers buying big monster homes on Bear Mountains around town won't repeat itself like it did in 1982 and 1995. This time things truly are different.

Do yourself a favour, get in on this ONCE IN A LIFETIME OPPORTUNITY to PROFIT from other peoples mistakes. After all, we need to teach people a lesson. We'd be like educators. Except we actually profit from teaching. And we'd be doing our part to make sure that the RE cycle never repeats itself again.

It's a made in Canada problem! Y2ThisTimeIt'sDifferent

In case you've been under a rock today, the credit crunch has hit home in a big way.

Good thing the federal government reports an incredible $14.2 Billion surplus, because they're going to need it to bail out NavCan and CMHC who carry their fair share of ABCP exposure.

So what's to blame? It seems unlike our American cousins who just lent money to anything with a pulse, we in Canada just lent willy-nilly to any business with a pulse with our LAX REGULATORY REGIME. What does this mean?

It won't be just individuals who lose their shirts and homes, it will be businesses and their employees who lose their shirts, cars and homes. On what sort of scale remains to be seen.

The National Post has this account:

"It's a made-in-Canada problem," said Claude Lamoureux, head of Ontario Teachers' Pension Plan. Many people in the market "didn't know or didn't ask questions" because they were making more profits than elsewhere, he added.

In Canada, the market grew more quickly than in other countries, doubling between 2000 and 2007 to $120-billion, because the Canadian definition of disruption to the market was much narrower than elsewhere.

Mr. Smith calculated that Canada's big six banks are on the hook for total liquidity facilities worth $135-billion.

$135 Billion is about ten year's worth of profit for the big six, combined. Wow.

The more I read, the more I realize just how big and unstable this deck of cards is. All it's going to take is someone to get a bit jumpy, stop cooperating with their counterparts in other organizations, cut losses and run for this thing to get ugly real fast.

With all the recent talk of the Conservatives engineering their own defeat around the Throne Speech and heading into a fall election makes me believe they know this is going to get ugly real fast and they don't want to go down with the ship they didn't build.

You have to watch

Check out Mohican's post from today. Watch the YouTube. Can this happen here?

The single income household in Victoria is officially dead

According to Stats Canada only five percent, yes 5%, of Canadians earn $89,000 per year or more.

And according to CBC that makes you a part of a club. What does all this mean? Not much. After all, unless you're in the club, you're not in the know, so really, don't lose any sleep over this one. After all the death of the single income household happened sometime in the first half of the 21st century in Victoria. Right about the same time that housing prices for SFH crept, or leaped if you're hearing this from a Realtor, above the $400,000 mark.

The country's 1.2 million high-income earners — those among the top five per cent — were predominantly male (75 per cent), aged 45 to 64 (54 per cent) and married (78 per cent), Statistics Canada said.

Almost half (46 per cent) of the top five per cent of tax filers lived in Ontario. About 18 per cent are in Quebec, followed by Alberta (15 per cent) and British Columbia (13 per cent).

I guess this adds fuel to the argument that rich Albertans and Ontarians--everyone knows Quebecers don't want to come here ;-)--are driving up our real estate prices. Next thing you know, Realtors will be blaming "those men" and saying that as long as they keep making men and not land, prices will continue to rise. (That sound you just heard was Ms. HHV slapping me).

$400,000K really is a magic mark. Let's say that the (generous) average household income is roughly $75K/year in Victoria right now. And that "average" household has $100,000 or 25% down payment saved up or equity in the condo they bought 4 years ago. That means they can "trade up" into an average SFH house priced at $400,000K, amortized over 25 years at 6% interest and still fall into the 30% of gross income figure that CMHC requires for mortgage insurance.

That $400K is this Bear's target for a downturn. I won't hold my breath, but that's the mark of sanity in my mind folks. And that number represents a 32% correction from August's prices. That's a big drop, but won't be breaking new ground in the land of modern real estate corrections. And to be buying in that kind of environment may prove to be more exclusive than the so-called 5% income club. And I won't be losing any sleep over that purchase.

Don't forget to keep posting in the What's happening on the Victoria RE market thread.

Rev. Al Tysick For Mayor!

OK. Well maybe not mayor, but he puts forth a compelling argument. Or at least a rebuttal. Or at least a bit more of the same old, same old? And in my quest to be fair and balanced, I shall post it in response to Geoff Young's piece in the TC. (also from the TC).

Walking around downtown can be a scary experience -- particularly if you do not have a home and you are wondering where to lay your head and how to heal your broken body.

Fortunately the Greater Victoria Chamber of Commerce has decided to do something about homelessness and the city's downtrodden, something to improve the lives of our neighbours who are homeless, make the downtown more pleasant for everyone and save taxpayers $9.5 million annually.

As Bruce Carter, chamber CEO, argues in a recent news release, "Our lower levels of government continue to struggle with limited funding to deal with the problem, and in the meantime, the doorsteps of business are becoming the homes for an increasing number of people in need. It is unacceptable to continue the status quo approach because it's getting us nowhere."

The Homeless Needs Survey, which was conducted last spring, found that there were at least 1,242 people in the capital region who were homeless or unstably housed, that is, who could become homeless at any time.

Contrary to the myth that Canada's poor are flocking to Victoria, most of these unlucky people are from our hometown and just can't afford a place to stay or need some help to maintain housing.

According to the survey, three-quarters of people surviving without a home were previously housed in the capital region. A further 16 per cent were from elsewhere in B.C., mostly from Duncan and Vancouver. About 20 per cent of the people at the Streetlink emergency shelter have regular jobs but no homes.

Some people think we are wasting money when we help our most needy neighbours.

In fact the opposite is true. According to B.C. government research, it costs $12,000 more a year to keep someone on the street than to provide them with a modest home and some support. Multiply that by the number of people who are absolutely homeless in the capital region -- at least 791 individuals -- and you get a staggering $9.5 million wasted every year to allow people to be homeless.

Hard to believe? Consider the hidden costs of homelessness. During the Homeless Needs Survey we learned that 33 per cent of those surveyed had used a hospital emergency room in the previous three months and that nine per cent had stayed in a hospital bed in the previous month. In the general population, only 12 per cent access emergency room services each year.

Hospital beds are very expensive, running about $1,000 or more per night. Providing supported housing, a place where one can recover, gain health and better connect with society, costs about the same for an entire month.

When you factor in the costs associated with health care, the justice system, social services and business losses, you don't have to be an economist or a rocket scientist to realize that doing the right thing is also the most economical choice for our community.

Together we are working on only a few, small initiatives to make a difference. Tragically we are not doing enough and the results are plain for everyone to see.

It isn't "new services" encouraging homelessness but the high cost of housing and the challenges of maintaining housing if you are mentally ill, head injured or battling a debilitating disease such as an addiction or disability.

We need more action and less blaming. It's time to move forward to end homelessness in the Capital Regional District and make our community everything we want and need it to be for everyone living in our beautiful, generous Garden City.

Rev. Al Tysick is chairman of the Downtown Service Providers Committee, whose 21 members meet monthly to share ideas and strategize around solutions to Victoria's social issues.

Read his first line again "walking downtown can be a scary experience." No sh&t you say. I love how he qualifies it though. I actually agree with what he has to say. I too think it's time for our downtown community to be "everything we want and need it to be for everyone in our beautiful, generous Garden City."

So that means I shouldn't be scared when I walk downtown by aggressive panhandling. I expect you, Rev Al, to support my petition to ban panhandling like we banned smoking, like, almost everywhere. In my petition the only place where panhandlers can ply their trade will be in front of Streetlink and Our Place. (OK that reads a little harsh. I support the good work that the good Reverend does and mean no slight, I'm just feeling a bit miffed that while he dismisses Geoff's statements he offers little in the way of alternative suggestions.)

I also want to highlight the statement by Bruce Carter: "It is unacceptable to continue the status quo approach because it's getting us nowhere." The status quo is getting us nowhere and Rev Al your whole letter is about maintaining the status quo which is "We need more action and less blaming. It's time to move forward to end homelessness in the Capital Regional District..." Are you suggesting we build supported subsidized housing in the second most expensive city in Canada? Because that makes very little sense for EVERYONE involved.

Why not suggest that we create a plan that provides supported, subsidized housing in say, Sayward, or Port Alberni or any number of struggling towns on the Island or in the interior that would welcome both the jobs and building that will help their local economies while providing tax-conscious service delivery for the province (read lower priced housing options for both the people living in the housing and those who will have to work for the relatively low-wages those jobs pay)? It would also remove some addicts and other "ill" people from the major source of their "chronic conditions."

Link to open thread on Victoria Real Estate Happenings (please keep posting your anecdotes).