Monopoly has 40 spaces, so that means Victoria is less thought of by Canadians who voted in the Monopoly cities than places like Chilliwack, Kawartha Lakes, Chatham-Kent, Sarnia, Windsor, North Bay, and Beauceville.
Now, of course, this wasn't a scientific poll, and one could make the argument that retirees don't participate in online voting for board games they don't play and all that mumbo jumbo; but really, it doesn't matter what arguments you make when you have city councilors like Chris Coleman trumpeting our little piece of God's green Earth in a local rag to reassure Victorians that eating Kraft Dinner five meals per week to pay your mortgage is an enviable way of life.
Now don't get me wrong. I do agree with Chris, this is a gorgeous piece of the globe that many of us are very lucky to occupy for our short time on God's green Earth. It's just overpriced because a lot of Victorians have an inferiority complex about themselves and their city that they believe can somehow be cured by ridiculously high home prices.
100 comments:
thanks Double-Agent - your posts are always worth the time to read and reread - I appreciate that.
Second post here.
First, a bit of background.
My wife and I are planning to move from Alberta to Vancouver Island for our retirement.
I was born in Victoria and my wife also has family there.
Our retirement income will be provided by a DB pension plan and personal savings/investments.
Our assets are not in the multi-million dollar league.
We have one year to run on our lease in Calgary at which time we plan to retire, move to Van Isle and rent for at least another year while we monitor house/condo price trends.
My personal feeling is that purchasing a detached SFH in the Victoria area is simply too expensive and would result in a “house poor” situation (even after an assumed 20% price drop).
Previously, on this forum, a poster requested on reports from other posters on real estate searches and experiences in the area.
Here is mine.
Two weeks ago my wife and I rented a nice furnished house in Nanaimo for a week and then a furnished condo in Dockside Green for the following week.
While in Nanaimo we investigated through the mls system properties in Nanaimo, Lantzville, Parksville and Qualicum Beach.
We then did “ drive by prescreens” using our GPS.
We then scheduled all the open houses of interest and hit them on Friday, Saturday and Sunday.
We only hit open houses because we felt it was a little unfair to make a realtor run us all over the Island when we have no intention of buying for at least two years.
All in all the results were the usual realtor pushing hard to sell their property.
To be expected, after all that’s their job.
It was interesting to note how aggressive they were in trying to lock us up as “their” clients.
Seems to be getting a little dog-eat –dog out there.
Two of the many showings/realtors in this area were of interest.
One was a brand new condo complex in Nanaimo.
Big units, 3 bedroom 2 ½ baths, double garage with nice views of the mountains.
The listing realtor tells us that all the available units had price cuts to the tune of $50,000 (close to 15%).
The decision to cut the prices had been made by the developer the night before the open house and of course none of the advertising reflected this.
The developer apparently told the listing agency to sell the units as fast as is possible.
The next interesting listing was an honest straight shooting realtor.
He was selling a detached SFH and was helpful and informative.
He agreed that property values were going to fall in the area.
He felt that Nanaimo property would not fall as fast or as far as property in Van or Vic because it was not as badly inflated in the first place.
He thought that renting and watching the market for a year or two was good idea and suggested we get on his pcs system so we could monitor price trends for as long as we wanted.
To be continued.
Next we went to Victoria.
We used the exact same strategy again “prescreening” properties and then setting up a Friday, Saturday and Sunday open house tour.
We eliminated Sooke and went with Victoria, Colwood, the peninsula and Sydney.
The realtors were as expected.
The detached SFH’s were simply not worth it in my view.
Pretty much everything under ½ mill was dreck and needed a heck of a lot of time and money spent.
My wife and I agreed that to tie up that much capital for what seemed to be marginal houses was foolish.
We can either buy elsewhere or rent for the rest of our retirement days but buying a house in Victoria does not strike us as a fiscally wise decision at this time (or possibly ever).
While looking at a resale townhome open house we encountered a surprise.
Another honest, helpful realtor.
We told him we were living in Calgary and planning on relocating to the Island to retire.
We did not tell him about our plans to rent for another year in Alberta and then rent in BC.
The first thing he then said to us was “don’t buy, rent”.
He said we should sell in Calgary (at that point we told him we already had), move to the Island and rent for at least six months, preferably a year.
I asked why?
He said two reasons:
One, learn the areas, figure out what you want and then decide where you want to live in Victoria.
Two, property was going to drop in price.
I inquired how much property was going to drop in price?
He replied that he was not sure how much detached houses were going to drop but that condo’s were going to drop first and by 18% in 8 to 14 months.
I asked him how he could be so specific and he explained he was extremely well connected in the new condo market.
He began rattling off names of a bunch of large developments and what the issues and financing problems were and how there was a looming block of unlisted condo properties about to come on the market.
He feels that the developers are intentionally keeping a lot of unsold condos off the mls market but sooner or later “someone is going to blink” and a ton of listings for condos will begin to hit the system.
As to resale homes he was really not as sure but stated that there is a lot of downside and not much upside so prices almost certainly would start to fall within about a year.
He also volunteered his pcs system so we could watch the market while we rented.
A realtor who is actually pessimistic as to property values in Victoria, who would have thought?
All I know for sure is that we won’t be purchasing any real estate for at least a couple of years.
Trex
Trex and Double-Agent, thanks for posting your detailed observations here on HHV. Very interesting....
My opinion: the condo "over-build" situation is spread all across the country. Toronto and Vancouver are the main offenders but smaller places like Victoria won't be spared either.
In previous Real Estate "corrections", condos led the way down and lots of "investors" found themselves holding the bag....
Trex welcome to the blog, I enjoyed your posts.
Sounds like you met some good Realtors, mind sharing their names?
on the last thread i linked this infographic on Rent Vs. Buy.
Roger has a great calculator to use as well, but I did my own little number crunch for buying vs. renting in Bear Mountain. I used bare mountain as there is a lot of comparable properties both for rent and for sale.
Google Docs Spreadsheet HERE
In a nutshell renting is WAY! better.
Robert - nice spreadsheet. I also noticed that after 5 years there was no decrease in the house price, so your estimates may even be overly conservative.
Build in a 20% decrease in house price over 5 years and then see the difference.
I stuck with no increase or decrease in house or rent prices, simply to avoid controversy, I'm trying to be apples to apples as far as "the cost of shelter"
Just an FYI, I just did some additional number crunching and using a 3% per year appreciation for both rent and house prices (Looooooooong term trend) it takes 14 years!! before buying is better than renting in my scenario!
Nice work rob
But I did notice a big error. You're double counting the mortgage payments.
In H17, you have the total payment and below you have it broken out into interest and principle. Then at the bottom, you count both of them. In the end, it throws off the numbers by around $170K at the 5 year mark
Robert,
Interesting comparison.
Some comments.
- House insurance estimate was way too high. Around $1500 per year would be a better estimate.
- Utility costs are way too low. Figure 2000 per year for heat, 600 for sewer/water and 1200 for electricity. You should add the heat and electricity on the renter side as well as these would be paid by the renter. Owner would pay sewer and water because these would be billed to them by city.
It would be nice to live a nomadic life for the next two years. Living on a farm on Salt Spring, a water front home in Oak Bay and a beach house in Tofino for less than the cost of buying. And if you're still bored, turn the keys over to the landlord and off to Arizona in the Winter or live in Haida Gwai (formerly the Queen Charlottes) which is the most beautiful place on earth. From there its a ferry ride to Prince Rupert and a day or two drive to the land of the midnight sun, the green river rock rivers of the Chilcotin or the Williams Lake Stampede.
Or you could be sitting at home building equity.
@MSR good eyes, fixed
@justwaiting also fixed
Though heat seems crazy high but what do I know, I've never owned a house.
FIXED SPREADSHEET
Cost of shelter over 5 years to Buy
$259,208.22
Cost of shelter over 5 years to Rent
$169,318.55
Times are looking pretty miserable in the US housing market.
Washington: "Sales of new homes fell in May to their lowest levels on record, plunging 33% from April. The bleak data followed a report earlier this week that sales of existing homes dipped too"
Read the full article by goggling " Housing Market Struggles without Government Aid"
I was reading Garth Turners blog today and their was a post by someone called InvestorsFriend (post #24)
It was a nice summary of how we got this RE bubble ....
All those things that pumped up real estate like: almost zero interest rates, interest deductibility, two income families, 40-year amortizations, and no credit check were all in the nature of one-time boosts to house prices. They could and did push prices up and they could and did keep prices high (for a time), but none of them could keep pushing prices higher in the long term.
The real drug for higher house prices was the expectation of ever higher house prices. Each initiative listed above boosted home prices and for decades it looked like an unstoppable trend was in place. But it was really a series of one-time bumps that took time to take effect and were enacted one after the other and so looked like a trend.
But it was always the case that the trend to house prices rising faster than income could only go on for so long.
In the case of the U.S. once the trend stopped then people realized it was stopped and that expectation of higher house prices was gone and soon replaced by an expectation of lower prices.
At some point the house market in the U.S, will have bottomed, probably way too low, well below replacement costs and then house prices will come back to a more sensible price. (not to the prior highs of course)
In Canada the expectation for ever higher prices is still intact. That can’t last. When that expectation is gone, down will come prices.
The reason for high RE prices is easy credit across Canada
so why is Victoria so much more expensive than the rest of the country?
Double-Agent, interesting graphs -- and thanks -- I think the most disturbing part for sales is how sales normally increase in the last 2 weeks of the month, in the peak selling months anyways (of which I think June and July are members). It will be interesting to see what the next week brings but I wonder if Realtor quotas have something to do with it.
so why is Victoria so much more expensive than the rest of the country?
Because of its inflated self-image, aka "everyone wants to live here, etc.
To have inflated prices you need easy credit and people willing to pay too much. If people are not willing to pay more to buy than to rent you will not have a bubble no matter what.
And Victoria homes have always been more expensive than the rest of the country.
I remember thinking that homes here were overpriced in 1999 or so because you could buy a nice place in Calgary or Edmonton for 150K and here they were 250K.
How times have changed, for now. I have no doubt we will overshoot the trend line on the way down, unfortunately it will be devastating for the buyers of 2005-2010.
I was just looking at some housing charts yesterday and I see a clear tripple M top formation in the charts. Tripple M tops always end in reverse vortexes of doom formations in the end. Incidentally we saw a tripple M top in the stock market right before the big crash just recently. And clearly the reverse vortex of doom followed. The good news is that Fairfield has a vortex protection shield around it caused by the sulphur pollutants from cruise ships in the summer.
Our market was kicked started by a change of governments. After a decade of poor performance of a government that appeared anything but friendly to business resulting in a stagnated economy. The result was "pent up demand" for housing as people held back purchasing.
The next government brings in sweeping changes to retire the top heavy salaried employees which opens up room for a younger generation and allows the government to hire two new employees for the cost of the one leaving. This caused a contraction in the supply of homes as the retired employees chose not to move up the property ladder and an increase in demand by the two new workers.
So, demand increased and supply decreased. Resulting in double digit price increases earlier than the rest of Canada. And prices kept increasing at double digit rates year after year.
Expanding the sewer system to the Western Communities brought new jobs and new workers from rural BC. And the workers bought the homes that brought them here to build in the first place. And the wheel went around and around.
After 3 or 4 years prices ceased going up for purely supply and demand reasons, but for speculation reasons, simply because prices had gone up the year before. We were now spending more money than a drunk politician in Hawaii.
Summation: Our prices are higher than the rest of Canada, because we started on the double digit price increases before the rest of Canada.
We had a head start - that's all.
My PCS account has turned into a ghost town in terms of sales. I think they should add a tumbleweed animation for effect.
1627 Elgin Rd finally sold this week - for $100,00 below initial asking price.
small steps.
Here is what things look like this week for Colwood, Sooke, Sidney and the Malahat (300-500K).
Click for PCS Screenshot
I think the sellers are heading for the exit...
JustWaiting, thanks for that. That's crazy. Those are the houses that have typically always sold. Even in the dip during 2008, that price point was very tight. My how things have changed. The ball is clearly rolling and gaining momentum.
Update from my PCS. The last time a condo was sold was May 12. That's for 2 bed in the core municipalities including Colwood and Lagford priced under $250K. If that doesn't say the market has blown up I don't know what does.
^ wow that is crazy! The SFH market isn't that bad yet but I guess thats why it is slowing down so much as we speak...no move up buyers.
My Price Correction Service for all houses up to 1.3Mill in saanich east, ten mile. queenswood, oak bay and fairfield has been a ghost town also for sales. Listings have slowed down pretty much too, but the sales are truly amazingly low. When you think that most sales show up after conditions removed some weeks or months after the deal was made, things could be worse than they appear to be. Lots of price corrections.
Iwonder where Dave the realtor who was so bullish went to?
So, demand increased and supply decreased.
No they didn't, because rents did not rise proportionately to prices.
It was just a bubble, like everywhere else. Every bubble has its own rationalizations but they have the same cause - people willing and able to pay too much to buy.
The condo market for the Westshore is ground zero.
The months of inventory for new condominims is now 11.
But the far more important re-sale market is at 8.75 months of inventory with 105 condos for sale.
If your're living in a condo in Colwood or Langford - get used to it. Because you are going to be there a long, long time. The condominium re-sale prices for the Westshore has only increased by 3.5% from a year ago or roughly equivalent to your closing costs if you bought last year.
But its hard not to talk about condos without touching on Bare Mountain quarter ownerships. Yes, you can buy a 1/4 of a condo and rent it out. If you bought the time share as an investment, then you are in deep deep doo doo.
Your looking at a 75% vacancy rate and hotel costs of $2,000 to $2,500 for a net profit of $600 to $1200 for three months. And that doesn't include residential property taxes and the unexpected tax bill when the Revenue Agency and BC Assessment deem you a mini-hotel business. YIKES.
And forget re-sale. These fractional ownerships are now 25% and lower than when you bought in 2006. As they should because these 1/4 ownership units can easily lose money as you're getting a whopping 1 percent return on your investment before making a single mortgage payment.
If you're a doctor or a plumber that needs a write-off and a place for the mistress or toy boy, this may be for you. Because someone is definitely getting screwed on these.
east the weather would have been better.
There has been a lot of discussion recently on this blog about price reductions. Today I did an analysis of price reductions in Saanich East, Saanich West and Central Saanich. I looked at Single Family Homes from 390-620K which is the typical FTB price range. Here are the results...
- 197 active listings
- 92 have had no price reductions
- 105 have had one or more price reductions
Price reductions are often 10-20K but there are some that are 50-100K.
Realtors know what is going on but right now it is a dirty, little secret. Sellers that need to unload will drive the prices down. When the TC and local TV stations let the cat out of the bag the market will turn quickly.
Rents do not increase or decrease the number of listings (supply) or the number of prospective buyers (demand) for housing.
Primarily because renters are generally not prepared financially for ownership - yet. Drop the interest rate and more renters qualify - raise the interest rate and far fewer renters are potential home owners.
There's a rental market and there is a home owner market. Typically they coincide, but they will lag each other and sometimes go in opposite directions from each other. If ALL renters were actively seeking housing, you would have an argument. But the 20 year old getting stoned in his apartment after working an afternoon shift at the 7-11 doesn't count, neither does the person on unemployment insurance, or the pensioner who supplements their income by collecting pop bottles.
Just because someone rents your basement suite, does not mean than they can buy your house - or even want to. I've lived in suites that I would never buy - because the suite was cheap! I could have afforded a more costly suite - but I was cheap! But when I go to buy a house, I'll want something nice to live in, so I'll pay more - because I can pay more!
OMC, I think you have your wires crossed. I am not a realtor. I'm just another Dave.
What have I said that is SO bullish? That HHV should not cherry pick data to show a downtrend in prices? That a running average should be used to increase the signal to noise ratio?
I am happy to share my opinions and answer questions. Ask away. I am not disappearing or running away here.
Thanks Double Agent!
More than 50% of SFH under $620,000 having price reductions is big news!
Deanna,
Yep- The reduced/total listings ratio in my previous post is 53% (105/197). However, I was not able to easily count properties that were re-listed at a lower price. I estimate that the ratio is actually closer to 60% if they are included.
This is great news for patient buyers! Many of these sellers will be telling their friends and coworkers about how they had to lower the price to sell. The word will get around that real estate doesn't always go up in Victoria. Once this myth is dispelled there will be even more downward pressure. Once prices return to affordable levels we will have a RE market that allows modest income families and young people to stay in Victoria.
BTW - It is still possible for agents to make a decent living in a RE downturn. There are buyers and sellers during all phases of the real estate cycle. Telling the truth to sellers and buyers still results in a commission eventually. Newbie agents should really talk to the old hands before desk fees and few sales forces them out of business.
hmmmm....
as i go down my list of price reductions/relists so far this week...
Minus - 30K
- 31k
- 91K
- 20K
- 20K
- 31K
- 20K
- 86K
- 16K
- 40K
- 16K
- 16K
- 40K
- 20K
- 56K
- 70K
- 46K
- 38K
- 40K
- 36K
- 129K
- 10K
- 73K
- 18K
- 69K
- 14K
- 41K
- 59K
- 49K
and so on and so on.
PCS is like a ghost down these days.. Seems like updates of any kind have crawled to a halt. From 6-10 updates a day to 2-3. Did everyone go on vacation?
How about houses in the Sooke Core?
Some of the recent re-sales (case schiller style analysis) are showing that in some cases prices have rolled back to April 2008.
But, prices are still up from May 2007 by some 12%. This represents an average 4% increase per year. If you bought in May of 2007 and sold today, the 12% increase would just cover your total cost to buy and sell the property. And you would have lost three years in property taxes and the difference between the rent and the mortgage payment.
That's a negative return on your equity and that is not a good investment.
Maybe we should be thinking of Sooke as - The Windsor of the West.
Foreclosures hitting the market: Check out MLS 250587, an ugly house on an ugly lot on Shakespear
Interesting that the banks are pricing it 5% above assesed value. Guess they think the selling price should be around 2% above assesed. Will be an interesting benchmark to follow.
"Foreclosures hitting the market: Check out MLS 250587, an ugly house on an ugly lot on Shakespear
Interesting that the banks are pricing it 5% above assesed value. Guess they think the selling price should be around 2% above assesed. Will be an interesting benchmark to follow."
This home is a horrible benchmark for assessment value, at least in my opinion. This is far from an ugly house on an ugly lot.
1575 Westhall Av. recently sold for $577,000 (1522 sq.ft home, 2798 sq.ft lot). This Westhall lot was originally subdivided from a 6700 sq/ft Doncaster corner lot.
Fast forward to the Shakespeare lot, yes it isn't the nicest; however, it is a prime 7200 sq/ft lot to rezone into two 3600 sq/ft lots.
Hypothetically speaking you pay the full $495,000 and build two high quality 2000 sq/ft homes at a cost of $500,000. Given that the Westhall property sold for $577,000 you are looking at about $640,000 per home.
$495,000 + $500,000 = $995,000 in.
$640,000 + $640,000 = $1,280,000 out.
My numbers are just guesstimates; however, you see my point.
Obviously there is risk involved, but if you can get the home for under $450,000 there is potential to make a lot of money.
Once prices return to affordable levels we will have a RE market that allows modest income families and young people to stay in Victoria.
I hope you are right double-agent! I would love to stay here and be a home owner one day. Victoria needs to provide jobs and housing for the young work force.
Americans know a bubble when they see one.
Vancouver's Real Estate Bubble Trouble - Brokers are rock stars, cabbies flip condos, and shacks are going for $1 million
An 815-square-foot, one-bedroom apartment is on sale for C$879,000, which works out to C$1,078 per square foot, or $12 higher than the average price in Manhattan...
"Some of the brokers in Vancouver think they're rock stars," says Grant Connell, a broker with Sotheby's (BID). According to Connell, they are getting paid like them, too. "Many have made $500,000 or $1 million this year,"
"It could be that investors see Canada entering a renaissance," says David Rosenberg, chief economist at Toronto-based portfolio manager Gluskin Sheff. "As the old saying goes, in the land of the blind, the one-eyed man is King."
"Canadians defend their bubbles, especially here in Vancouver," says Pospisil. "People get angry when you tell them it's a bubble. They say it's different here, that this is such a beautiful place and everything is different. Everywhere there is a bubble, they say it's different."
There are many reasons why we get real estate bubbles.
China's housing boom spells trouble for boyfriends
Many women won't marry a man who doesn't own a home. This recent shift, along with soaring real estate prices, has created a woefully frustrated class of bachelors.
"A man is not a man if he doesn't own a house," said Chen Xiaomin, director of the Women's Studies Center at the Shanghai University of Political Science and Law.
Does this sound familiar?
Fang will need about $75,000 to afford the 30% down payment on the home the couple want. That's a lofty goal, considering that the computer technician is between jobs and has no savings. He's counting on both sets of parents to chip in.
Wang Haijun, a real estate agent on Beijing's east side, said he can always tell when a desperate bachelor walks into his office.
"They're always the least rational buyers," Wang said. "They don't care how little money they have. They just want an apartment as soon as possible. They take on a mortgage with the longest terms and highest interest rates. But they have no choice.
Marko, for me it would be a horrible house. Perhaps it is an opportunity for you. Why not put a bid in at 450,000 and tell us how it goes.
On the same street is 2205 Shakespeare. Original asking price was $569K with an assessment value of $548K. It just sold for $495K. It is a nice enough home with a suite. I would certainly go for that one over the two. You will always get "something" for the suite and you have a bright, spacious home to live in that is close to everything.
interesting - almost 10% below assessment - was the house in good shape?
Hi Animal Spirit: Here are some details:
2205 Shakespeare
Built: 1979
2226 Sq. Ft. Main Fl: 1145 Sq.Ft.
Main floor has 3bds, L/R with rock fireplace, Kitchen with older but what appear to be in very good shape real oak cabinets; D/R,Three good sized bedrooms with the master having a two piece ensuite. It has a large two tier back deck that has been updated and looks over the backyard.
It has all thermal windows and the exterior siding is stucco and wood. It is a nice looking home with the roof having a large overhand. It is a corner lot measuring 63'W X 86'Depth. The lot is hedged and appears to have some nice shrubbery etc. There is an 8ft high lower level with a decent kitchen and bath.
The house was originally listed at $569K in April on MLS 277297 and it had photo's.
It sold for $495K MLS 279425.
I would post it here but am unsure as to how to do this.
Given that the house seems to be a pretty good one, this might set a new standard for sales price vs. assessment in Fernwood.
oops - everyone just lost 15% on their housing based net worth (now 10% below assessment, was 5% above). This would be 75K on a 500K house.
(yes, of course this analysis is incorrect...)
I know this is the wrong forum for this, but I need to vent. Guess WTF our government just spent $1 BILLION dollars on? The 2 day G8/G20summits. What a F*ing ridiculous waste of tax payer money! Clearly these guys need to get some video conferencing gear. Stuff like this just makes me mad. I mean seriously, don't we have enough debt already?
Hope you got your $30 worth today with all the action and drama created by the protests.
Hey Marko. Is that your picture in the TC today talking about the HST and new building?
S2
LOL.....a bit of cheap shot jack.
I am a 24 year old guy that leaves at home trying to save some coin....and that is Mike Miller, owner of abstract developments. He has a multi-million dollar Ferrari collection. If you go to the abstract developments, "The Radius" is his personal home....very nice.
No, no, no. It's not jack. It's his wife S2. Just admiring that's all. :)
Sorry Marko. I read it as Mark Miller. I'm going to have to get a new glasses perscription me thinks. :)
Marko said,
LOL.....a bit of cheap shot jack.
I am a 24 year old guy that leaves at home trying to save some coin
Not a cheap shot at all. Marko you have told so many BS stories in the past it is hard to know who you are. But we do know that you are a troll that provides some comic relief and no one here takes take anything you say seriously.
The sad thing is that you have tainted the reputation of Juras Developments who may or may not even be associated with you.
We sell houses based on quality and pricepoint not an overinflated reputation.
and now for some completely different....
it's monday morning; bring on the stats!
I will make a prediction with out lookind at any thing. Listings have dried up in my PCS, but sales are even slower. Average prices will be up due to the collapse of the $500-700k range. Will we make 650 sales this month?
For the last two weeks, between 20 to 25 percent of all types of residential properties have sold below assessed value on the Victoria, Peninsula and Westshore areas. Assessed values were from a low of 0.71 times price sold to a premium sale price of 38 percent above the sold price with the typical of all types of residential properties selling 7 percent over assessed value.
How about just condominiums in the core municipalities.
Assessed are off by 0.86 of the purchase price to a premium price paid over assessed value of 27%. The price paid for condominiums being typically 6 percent more than the assessed value.
On average, the assessments are accurate, but on an individual basis, they can be quite far off. The assessment provides a good starting point to formulating an offer to purchase, but in the end it comes up to YOU to determine what is or is not a reasonable price to pay for the property.
So how much wiggle room do you have with the asking price of a condominium in Victoria?
The largest discount from the list price in the last two weeks was 7.5%, the no one paid over asking price on a condo during the last two weeks. The typical condo buyer getting a reduction of 2.3% from list price.
Certainly no heavy discounting going on, and you are not going to get large discounts in a demand-driven downturn like we are having at the moment. The marketplace has to deteriorate significantly more, before one will see price slashing.
Another reason why the typical realtor is a joke...
"The typical condo buyer getting a reduction of 2.3% from list price."
So the market is heading south, inventory is huge, and your real estate professional you've hired as your buyers agent is negotiating you 2.3% of list price.
On a $300,000 condo you are paying the buyer’s agent 3% + 1.5% + 1.5% = 2% average.
So essentially, the point of hiring a realtor is so that they can barely negotiate enough to pay for their own commission?
Wouldn't you be better off going directly to listing agent and saying I will pay full asking price $298,500 for your $300,000 listing, but since I am representing myself I want half the commission?
Meant to say full asking price minus $1500.
The number of house sales in the core municipalities are down approximately 40 percent, and prices are up 8% from last year.
Condo sales are down roughly 30 percent with prices up 5.5% for the same areas and time periods.
Our interest rates are about the same as a five years ago. A look back on memory lane shows us that the number of sales were about 30 percent higher in June 2005 and prices were 30 percent lower.
So, today's condo buyer is paying a higher percentage of their income on housing that those in 2005. The benefit of the low interest rate having been negated by the high prices. Hence, the drop in the number of sales.
In a nut shell. Fewer people can afford condos today, than five years ago. The pot of prospective purchasers has been drained to near critical levels and any significant increase in the interest rate may collapse sales volume.
Higher prices are now strangling our economy rather benefiting the community by increasing the number of jobs. It is far better for our economy to have two homes sell for a total of $500,000 - than one home sell for $500,000.
Month-to-Date Stats June 28
Net Unconditional Sales: 552
New Listings: 1,294
Total Active Listing Count: 4,559
Wow!!! Sales are toast!!!!!!!!
It's Monday morning and time for the weekly stats report...
For the period June 1-27. June 1-20 is shown in []
MLS Sales - 552 [410]
New Listings - 1294 [1002]
Active Listings - 4559 [4535]
Totals for May 2010
MLS Sales - 695
New Listings - 1621
Active Listings - 4521
Totals for June 2009
MLS Sales - 946
New Listings - 1436
Active Listings - 3794
Previous Year Sales
2002 - 659
2003 - 809
2004 - 781
2005 - 862
2006 - 762
2007 - 949
2008 - 723
2009 - 946
2010 - 635 (estimate)
Comments: Once again I have to lower my sales estimate of June MLS Sales from last weeks 650 to 635. May was a soft month for sales and June will be a repeat with sales about 10% lower than May but way down (over 30%) from June 2009 . Price reductions are continuing as sellers chase the market down. VREB spin machine will require extensive repairs for July 2 press release.
Think - I was editing my weekly stats report and you beat me to it :>). I bet you are dancing around your desk today. I found you a dance partner.
Click Here to see Think's Dance Partner
I should have added a disclaimer about sale prices being 2.3 percent below asking. That's based on the last list price. There may have been several price reductions, but the 2.3 is calculated on the last list price.
So, like the days-on-market, this is manipulated in the agents favor.
It does help you decide on which agent to use, as all agents do the same manipulation. So an agent can tell you that on average she/he sells properties in 15 days and within 2 percent of the list price. And in relation to other agents, you may chose this person over the next - or not.
As for whether to have your own agent or not - that depends on your knowledge of real estate.
Your first purchase, you might use both a list and sell agent. After a couple of home purchases, you may not use an agent at all.
Good morning all. Here are some stats from my PCS.
SFH: Victoria,Oak Bay, Esquimalt, Saanich East and Saanich West.
Price range: $375K - $775K
Minimum 2 bds and 2 baths
New: 37
Sold: 18
P/C and relists: 54
OM: 6
Some interesting SOLD prices were:
1002 Highrock: $689-$616 (-$73K)
823 Caroline: $730-$670 (-60K)
1637 Davie: $414-$345 (-69K)
826 Queens: $674-$615 (-59K)
Some interesting REDUCTIONS were:
270 Beechwood: $795-$699 (-96K)
4107 Borden:$725-$649 (-$76K)
2057 Townley: $669-$599 (-70K)
18 Phillion: $789-$649 (-$140K)
3123 Rutledge: $469-$399 (-$70K)
863 Craigflower:$$539-$448 (-$91K)
985 McKenzie: $535-$449 (-$86K)
729 Miller: $514-$458 (-$56K)
5589 Oldfield: $$749-$620 (-$129K)
975 Taine: $500-=$435 (-$65K)
Condos: Min 2bedroom
Price Range: $260K - $625K
Fairfield,Oak Bay,James Bay,Rockland, Sears, Vic West,Esquimalt,Camosun, Cedar Hill, Gordon Head, Swan Lake, Tillicum and Gorge areas.
New: 16
Sold: 12
Price changes and re-lists: 20
OM:1
Here is some advice being offered to homeowners by mortgage brokers.
Get that HELOC or refinance before prices drop
When home prices do fall, it makes it tougher for certain people to qualify for a mortgage—especially for refinances. When prices start dropping, appraisals come in lower, insurer valuation systems become more conservative, and lenders tighten up in general.
Long story short, if you’re in the market to refinance and you think home prices are headed south, it may pay to get your appraisal and approval soon.
Sounds like great advice!! When the value of your biggest asset is about to drop take on more debt.
ha ha - I love my new dance partner!!!
As usual I forgot to mention that my stats are just for the past week, i.e. 21 June - 27 June. Thanks
Remember in recent months loads of price reductions have taken place in the new condo segment but have been sold through the developers and are not reported on MLS.
Many older condo's on the market have been substantially reduced when you look at the reductions in terms of percentage points. To go down $25K on $298K asking is more than an eight percent drop. I realize you all know this but you always have to keep it in mind. So lets say you sell the place for $273,000. The realtor fees will now drop from $11,940 to $11,180. If, as usual, two realtors are involved, they will take a hit of only $325.00 each and after income tax make that $225.00 And you the seller took a hit of $25,000. (After tax money) That is why they think nothing of asking you to reduce......it really doesn't make much of an impact on them. You know, the purchasers realtor just won't buy them that nice little house plant he intended on getting them for their "new" home and he'll drop sending them a calendar next year as well. :-)
Remember Tony Joe the former VREB president, real estate pumper and head spinmeister... He and his fellow agents are worried about the Victoria RE market.
Tony on Facebook
Many properties experiencing little activity however we did experience a multiple offer situation over the weekend. Many are concerned but most agree this is the effect of "normalizing" market conditions.
They should be worried. Price reductions everywhere and sales tumbling.
There is a great book called 'Freakonomics'. There is a section on real estate that talks about how there is little incentive for realtors to get top dollars for a property and also goes into showing how realtors will get higher prices when selling their own properties (self-owned).
I highly recommend the book and I think many people here would enjoy its contents.
I was chatting with my Dad the other day and I think I figured out why the CHMC changed their policies. It wasn't to reduce house price inflation, rather, it was to combat money laundering.
It was primarily targetting small-money investors with the suite rules and the 20% requirements. The premise is you rent out some/all of your house to 'tenants' that pay you in cash. Dirty money in, clean money out.
So now you need 4x the down-payment to start laundering a whole house worth of money, going from a scant $25K for the typically Victoria crack shack to whopping $100K. By rolling back the suite income rules, they make people actually have to demonstrate real income rather than just faking with a suite or two.
By making it harder to launder money is generally considered good. As a side effect it will help knock the wind out the sails of lower quality properties. Which will, in turn, knock on to nicer property and so on.
We are already seeing June sales drop to the lowest level seen in many years. In a few days the dreaded HST will arrive in BC and consumer sticker shock will be around for some time. However, new home sales are already in trouble...
Reality of HST hits new home buyers
“We had people seeing the added tax and backing away from buying a new home, saying ‘find me something that’s one year old,’” said Victoria Real Estate Board president Randi Masters.
HST hits BC home Buyers
British Columbia's harmonized sales tax (HST) will hammer buyers of new homes, adding more than $18,000 to the average price and keeping some buyers from qualifying for a mortgage, according to the Surrey-based president of the Canadian Home Builders Association.
msr,
not sure I understand totally. If you are paying a mortgage every month with 'dirty' money there is still a paper trail. Also, if you ever get busted you now have an asset to seize. I think most gangster types will rent high end properties and pay cash. Same with fancy cars.
Some Vancouver landlords are easily upset these days. Here is a rant by one of them.
Westender Magazine - Online Edition
You rent, you risk - I’m sick of the jizzbags who enjoy the benefits of renting instead of buying a place and then won’t accept the downside — that is, they might have to move out if their landlord needs to renovate the place. I own a place: I’m a quarter-million dollars in the hole; I pay $250 a month to my strata; and if I want to move, it’ll cost me thousands of dollars in realty/transfer/mortgage fees. Renters avoid all of this by living in someone else’s property and letting the landlord assume all the risks that come with ownership. When the tide turns and it’s time to go, they can bitch and moan and call the CBC “Go Public” hotline, or they can do what I did: accept the unpredictability of renting, take their two months’ notice... and buy a place. Or keep renting and stop complaining.
Frank
Shave and a haircut. MLS® 276920 just sold in broadmead. Started at $839, BC assesment at $765 and sold at $705.
@Skeptic
Wow dude is seriously nuts. Avoiding the colorful vocabulary I do agree with him to a point. As a renter you do accept that you can be forced from your home.
HOWEVER, there are laws in place to protect renters from unlawful eviction. If the renter is kicked out according to the tenet act and within the law, they shouldn't bitch. If Mr. Bitter Owner kicks them out for no reason then bitch away and take him to court.
Anecdote: The gf talked with a Realtor at her work yesterday, and asked how business was (small talk that sort of thing) and he said slooooooooow.
Anecdote #2: I work on Oak Bay Ave, for lunch I sometimes go to this little bakery in the village. The place has been under new ownership for a few months,and the husband is also a Realtor. Just recently his business cards are littering the place. He is practically handing them out with every order.
The Times They Are A-Changin' - Bob Dylan
Housing market will continue to see poor sales in Canada and US due to falling consumer confidence.
Canadian consumer confidence plunges in May (Financial Post)
Consumer confidence plummeted in June, erasing all of May's gains, according to the Conference Board of Canada's index of consumer confidence.
The index dropped 5.7 points this month to 83.6. That leaves it 13 points lower than 96.6, at which it started the year off with, but still well off the 27-year low of 67 in December 2008.
U.S. consumer confidence plummets on job worries
U.S. consumers are increasingly worried about jobs and the economy, the Conference Board said Tuesday, as it reported that its consumer confidence index plummeted to 52.9 in June -- the lowest level since March -- from a downwardly revised 62.7 in May.
ML No: 275961
1141 Union Rd V8P 2J2
SE Maplewood-Saanich East
Fin SqFt: 2038
Assess: $461,000
Listed at $ 499.900 (after a price reduction)
Sold for $460,000
3 other houses in same street trying to sell from $ 519 - $ 549 K.
I guess their realtors have not told them that the market has changed directions. After July first it will be impossible for them to sell at the $ 460 K, as people will be putting offers for $ 450 or less.
This is the trend that I saw in California before the 2008 meltdown, 2 years later (2010) I was able to buy a nice property for $ 150 K (it was worth $ 498 K before the meltdown)
Just wait, we have not seen anything yet.
Over-inflated asset prices are rarely 'good for the economy' - in short high asset prices bring forward demand and cause a great deal of economic distortion. Both of which eventually feeds into a painful correction.
The increases in home equity were wonderful for those who already owned and spurred a flurry of buying with the use of HELOCs, etc. But the cost has been an entire generation that is is massively in debt, and is at an extreme risk if the cost of borrowing goes up. Further, these 'late buyers' don't have much left over after their monster mortgages eat up nearly every disposable dime they have.
Then there's the impact that an over-heating housing sector has had on 'distorting' the rest of the market. Think of all of the workers in the housing market who would otherwise be employed elsewhere in the economy. Many are highly trained in other areas but have chosen to flog houses...what a waste!
This does not end well...
Found on the CBC is a story I'll file under the "I'm a REALTOR and I have too much time on my hands" category:
A Vancouver man has broken his own record for the most ascents of the Grouse Grind trail in a single day.
Just after 11 p.m. Monday, Vancouver real estate agent Sebastian Albrecht, 35, reached the top of the mountain trail for the 14th time since he began at 6:30 a.m.
CBC link
9/197 price reductions today on my PCS/matrix, probably one or two more relists. Basically 5% of all SFH and townhouses <525K in core areas View Royal and east had price drops on the same day.
This damn thing looks like it is going to crash hard.
THE MONTH OF JUNE, 2010.
The volume of homes sold in the Victoria CMA declined 20 percent from May 2010. Prices declined some 3.8 percent from the month before. In relation to June 2009, the volume of sales plunged 44%, bringing the annual appreciation of detached homes down to 5.3%.
The sales to new listings ratio of 0.51 and 6.3 months of inventory show a balance between buyers and sellers. The balance achieved by sellers lowered expectations of the price of their homes. In order to keep an orderly liquidation of homes without the market falling to heavily into a bear (glut of listings) or bull (shortage of listings) market, house values would have to continue to decline around the 3.8 percent per month rate.
The condominium market for the Victoria CMA.
The volume of sales has drifted down some 16 percent from the month before, with prices slipping 2 percent. In relation to 12 months ago, the volume of condominium sales is down 33 percent with the rate of annual appreciation slowing to 8.7 percent.
The sales to new listings ratio of 0.48 and Months of Inventory at 6.4 indicate a balance between buyers and sellers. Again, as in the detached home market, an orderly liquidation of condominiums by keeping the market balanced requires a monthly price decrease of some 2 percent per month.
The current demand-driven downturn is deflating home prices in an orderly manner. Home owners still feel security in owning real estate and are not flooding the market with listings. Currently, there are enough prospective buyers to meet the supply but at lower prices.
The house and condominium market have similar sales to new listings ratios and months of inventory. However, home prices seem to be declining at nearly twice the rate as condominiums. Suggesting that condominium sellers are holding off from "moving up" the property ladder to a house. As the longer they wait to purchase a home, the larger the down payment they can make.
Just Jack,
Thanks for the stats. I wouldn't buy a condo in Victoria - to risky. But in Toronto it is a surefired moneymaker. The Toronto Sun had this enlightening article.
Real estate investment 101 - Thinking return on investment? A condominium in the Greater Toronto Area is the perfect place to start
When you purchase a condominium suite early in the building’s development, chances are that the price will go up before you even move in. Even in years when the economy suffers, there is usually a 5% increase, and in good years, that percentage can go into double digits.
Who wrote this revealing article?
Barbara Lawlor is president of Baker Real Estate Inc. and an in-demand columnist and speaker. A member of the Baker team since 1993, she oversees the marketing and sales of condominium developments in the GTA and overseas.
Just Jack,
That makes perfect sense when you think about it logically based on the experience of the past 12-18 months. Condos have been fairly flat price-wise; the majority of people in Victoria prefer to live in SFHs.
The price appreciation post January 2009 in SFH reflects the lopsided demand. It makes perfect sense that this segment deflates more rapidly, initially as demand will fall disproportionately based on natural factors and the mortgage lending changes.
Once public perception changes to "prices are falling," look out below, all segments of the market will fall somewhat in unison. Based on the consistent and rapid change to the market on the price-side, it's quite likely that any suspected annual price gains could be erased entirely, solidifying the "prices are falling" paradigm in the public and preventing VREB from spinning a falling market into "one that rose last year."
"Over the decades in Canada, time and again, real estate has proven to be a wise investment."
"...probably the best investment you will ever make."
"Even in years when the economy suffers, there is usually a 5% increase"
Yikes.
Today is the last day of the month so I thought I would put up some more graphs for those interested.
If we take a look at June MLS sales from 2002-2010 we see that this is the lowest month in this period. click here
Active listings this month are at the highest level for June in 6 years and the sales/active listings ratio is at the lowest. click here
This months MOI is the highest for June in the last 6 years. click here
VREB only publishes monthly stats. We calculate stats every Monday based on the previous 4 weeks of activity. This allows us to see trends earlier. You can see that the market peaked for sales and new listings in early May. Active listings however continue to climb. click here. Every week we calculate overall MOI and other sales ratios. Note that MOI has been steadily climbing. click here
BTW - This will be my last post for some time. It is summer and time for a vacation with my family.
ummm just jack - it's only the 30th, how can the stats be out already. are you causing trouble again?
Double-Agent, have a nice vacation and thanks for all the data....
:-)
Perhaps they should've named that block of Humboldt between Douglas and Blanshard "Humboldt County."
Marijuana seizure worth $500,000
Turns out the police found the guy had an outstanding warrant for drug possession. I'd've guessed they were drawn to the only lit window in the condo complex.
I don't know Jack....about your condo assessment.
The way I see it is.....the young first time buyers who have bought in the last four years....CAN'T sell. They have absolutely no equity thus are unable to "move-up".....and they won't have equity for years to come. And the older condos in Fairfield WON'T sell because they for the most part are owned by retired or nearly retired people. They bought these condo's as their final home. The only time they are up put for sale is when the owners die or when they must go into a rest home.
Alexadrahere, funny you should say that. Just yesterday, I was at a friend's house party, whose group of friends is usually pretty bullish on real estate. I try to contain myself and remain as quiet as I can because nobody likes to hear how their all-in-one-basket investment is about to tank... but I didn't have to say a word. A friend of mine who was planning to sell, so he could move up, was explaining to everyone else around how the past few weeks the sales have been extremely slow according to his realtor, and also his own experience since he's trying to sell to move up. He also mentioned that most people are waiting to see what happens after July 1st with the entrance of the HST.
His new philosophy now is that he should just sell to get out of the market as close to the peak as he can (even though he admits now he should have sold last year), and to just wait it out as much as he can for prices to drop significantly.
Everyone around the table was just nodding in agreement.
Happy Canada Day... this may be the last 'happy' one for many real estate indebted Canadians for a few years, so get out there and enjoy the (metaphorical) fireworks. This year's show is likely to go on for a good while.
Mr.4AM
This market seems to be unravelling quickly, some huge price reductions today on some properties I find very interesting (development wise). I think we are certainly going to take a wait and see approach for the month of July before we start making any offers on future projects.
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