MLS numbers courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.
October 2011 (last week's numbers) Final October numbers in bold
Net Unconditional Sales: 483 457 {358} [231] (131)
New Listings: 1,086 1,015 {799} [556] (340)
Active Listings: 4,687 4,504 {4,538} [4,569] (4,562)
Sales to new listings ratio: 44%
Sales to total active listings: 10.3% or 9.7 months of inventory
October 2010
Net Unconditional Sales: 467
New Listings: 976
Active Listings: 4,046
Sales to new listings ratio: 47%
Sales to active listings ratio: 11% or 8.7 MOI
Month isalmost over. Expect The numbers to rise rose slightly in time for tomorrow's today's end of the month report.
I'll update this post with price data as soon as it's available. I'm guessing here, but we should see an average + or - $10K nearing $600K for SFH. Average prices are: $595,836 SFH, $307,329 Condos and $428,040 Townhouses.
Prices are falling, inventory remains excessive for this time of year and sales volumes are low when compared against the decade average for October. Sitting on the sidelines has little downside these days (and arguably much upside).
October 2011 (last week's numbers) Final October numbers in bold
Net Unconditional Sales: 483 457 {358} [231] (131)
New Listings: 1,086 1,015 {799} [556] (340)
Active Listings: 4,687 4,504 {4,538} [4,569] (4,562)
Sales to new listings ratio: 44%
Sales to total active listings: 10.3% or 9.7 months of inventory
October 2010
Net Unconditional Sales: 467
New Listings: 976
Active Listings: 4,046
Sales to new listings ratio: 47%
Sales to active listings ratio: 11% or 8.7 MOI
Month is
I'll update this post with price data as soon as it's available. I'm guessing here, but we should see an average + or - $10K nearing $600K for SFH. Average prices are: $595,836 SFH, $307,329 Condos and $428,040 Townhouses.
Prices are falling, inventory remains excessive for this time of year and sales volumes are low when compared against the decade average for October. Sitting on the sidelines has little downside these days (and arguably much upside).
157 comments:
For many sellers the scary part of this season is not Halloween.
Have a safe Halloween.
to respond to Introvert's comments from the previous thread:
"I don't mind paying taxes. Taxes are what we pay for civilized society. I'm happy to pay them, especially at the municipal level."
-- I don't think renters are any more averse to taxes than owners. We still indirectly pay municipal taxes - a portion of the rent we pay is for the landlord to pay municipal taxes. If the landlord can't make their expenses (taxes being one) with the rents they collect then they are a bad businessperson and should not be speculating in property. To say that renters don't contribute is silly.
"Third, paying a contractor for home repairs and renos is not a terrible burden (or at least it doesn't have to be). Not to mention, employing contractors is good for the economy and therefore the community."
-- The houses we rent get contractors to come and do the work, perhaps more than owner-occupied homes. A portion of the rent we pay goes to supporting this group.
"Lastly, I can't wait to see how this current crop of "genius renters" will have made out in 30 years' time (the ones on this blog, that is). Too bad we'll never be able to find out. So I guess all anybody can do is argue now and speculate about the future."
-- I fully intend to buy, just not when the market has peaked at an all-time high and is on its way down - that would be silly.
Me (jokingly):While the rest of us live like parasites off the soft underbelly of society by renting, he is standing tall and keeping this community alive.
Introvert: There's a lot of truth in this (sarcastic) statement.
Somewhat shocked by this actually. Really, you are so deluded that you think renting is somehow less contributory to society than owning? Wow. Give you head a shake.
The economy as exhibited through the re-sales of a condominium on Selkirk Avenue.
$137,500 in March 1993. There was a pre-commonwealth enthusiasm with lots of construction in Victoria
$143,500 in June 1994. Commonwealth games are here and lots of jobs.
$114,900 in July 1997. BC economy has tanked. The government is embroiled in controversy from who paid for a wood deck, casino money laundering, and Fast Cat ferries. Poor construction standards during the property boom is showing up in "leaky" condominiums.
$142,000 in September 2003. Interest rates are low and construction is picking up.
$220,000 in September 2005. Lots of construction. Low interest rates and now you only need 5% down.
$272,000 in May 2008. Construction is down, but now you can get 0 down and 40 year mortgages with quick approval times and no need to verify income.
$265,000 in August 2011. OOPS, WTF,
The one consistent event during this time period was ---- the weather.
a simple man,
Fair points, all.
In terms of taxes, you are certainly correct. I will only point out that HHV started it by insinuating that taxes were a big negative of owning.
From a tax perspective, if Victoria is like most other Canadian cities and owner-occupied houses (principal residence) receives a property tax reduction, owners are being subsidized by renters and businesses.
Went to an open house yesterday. Swarms of people looking over a million-dollar-plus "stunning-in-its-day" (i.e., over a hundred years ago) Oak Bay house now requiring five hundred grand in restoration.
Which suggests that this real estate market has not died, but was merely resting. In fact, it looked yesterday as if it were roaring back to life.
Does the recent rise in inflation from less than nothing to 3%, which make real interest rates negative, explain why?
As for taxes, I think the City of Victoria is probably doing the right thing by increasing the utility rates.
Those rates are usually paid by the occupier of the home, such as the renter.
But, I don't know how that is going to play out, during rent negotiations. Both sides can argue higher costs.
The landlord paying more property taxes. And the renter paying higher utility rates for garbage, sewer and water.
In the end, I think the renter may have more negotiation room. As they might be able to walk away from the rental and find an equal home at a lower rate. That leaves the landlord looking for a tenant and most likely at a lower rental rate.
Either way utility rates and taxes have both increased 50 percent in the last 10 years. You would think, with all those new condominiums adding to the tax base, that these fees would have gone down.
So much for the theory that higher density makes affordable housing.
"HHV started it by insinuating that taxes were a big negative of owning."
It's too bad you chose to read it that way. I simply insinuated that taxes and mortgage interest are sunk costs rarely calculated into the ROI on owner occupied properties by owners... it was a response to your insinuation that rent is a sunk cost and renters receive nothing of value for their monthly payment over the longterm.
I've taken issue with that meme many a time on this blog... it's simply industry BS to spout off to get someone emotionally attached to the idea of buying.
Homes for immediate occupancy would be new, foreclosures, estates or perhaps some other form of duress sale.
For 746 homes in the Victoria core districts 108 can be occupied immediately. That's 14% of the homes for sale. From memory, I think it usually is around 10%
For condominiums in the core that goes up to 25%. Goes to 26% when you take out new condos.
Intuitively, I would expect that the number of homes available for immediate occupancy to increase as the market gets weaker.
You should bid at the very low end of the market value range on an empty home, especially if it has been up for sale more than 60 days. Chances are you're likely the only bidder and that means you are going to get a deal (relative to today's prices).
Put your one and only offer in on Friday, and ask that they respond on Monday as you'll be gone for the weekend.
Initially, the vendors first response is to tell you to go to hell. After a cool down time, they may be more likely to accept your one and only offer. Your offer should be reasonable, but on the very low side.
it was a response to your insinuation that rent is a sunk cost and renters receive nothing of value for their monthly payment over the longterm.
What do renters receive of value for their rent payments other than a roof over their head which they do not own?
Introvert - for me, I pay for safe shelter, or a roof over my and my family's head. But I also pay for time - time from renos, maintenance, etc. that has been a very important reason for me I have found. In the time that I have saved not doing those things I can consult for an amount close to my rent.
I'm assuming by "value" you mean the reversionary value upon selling discounted for inflation and less the costs to maintain the home.
For anyone who bought within the last five years, that would likely be negative.
So what did the renter receive? The same accommodation at a lower cost.
Or you could ask what did the owner loose? He lost the use of the money between renting and owning. Money that could have been spent on a 3 karat diamond ring for the wife.
Now, ask the wife which she would rather have?
Introvert’s bias towards owning real estate is pretty much the norm out there. I know a family that has no RRSPs no TFSPs no RESPs for their young kids, yet have two mortgages, one on their primary residence and another on their rental property. They think that unlike stocks and bonds real estate is risk-free. They are pretty unsophisticated as investors and were horrified when I told them that income properties are not exempt from capital gains tax. They went to their accountant and were told not to worry as they had so much accumulated RRSP room they could shelter all the gains (phew). Somehow the real estate industry has convinced the majority that prices only go up and can’t come down. I think a system that is based on this kind of blind faith is going to fall with a big thud if people ever stop believing.
"-- I fully intend to buy, just not when the market has peaked at an all-time high and is on its way down - that would be silly."
This is perfect in theory; however, in reality I can't see many people who are waiting for a correction buying in a hypothetically scenario of a 20% price correction.
For such a correction to occur market sentiment would be ridiculous bad - basically predictions at that point would be for a 50% market correction.
I know my father bought a property in early 2009 when the market corrected and he certainly didn't think he was getting a great deal. It was more along the lines of "wholly crap I am taking a massive risk and could lose my retirement savings." Only a year later did it turn out be an awesome deal(worth approximately 30%+ more).
I've come to a personal conclusion that the market is impossible to time and sometimes you just have to take some risk.
I bought a little pre-sale condo in 2009 that would now cost me $30,000+ more; however, at the time the sentiment was "developer will never get this off the ground."
How many people bought in early 2009? Not very many.
What do renters receive of value for their rent payments other than a roof over their head which they do not own?
What do food customers receive for their money other than food which will rot away in mere days!
Marko, your comments seem to fall right in line with a credo that is attributed to Warren Buffett: "be fearful when others are greedy and greedy when others are fearful. "
Marko - do you see house values being steady, increasing or decreasing by this time next year and why?
Real Estate prices move very slowly. So when timing the market you'd use a calender not a stop watch.
Trends are very important, because it has never happened that a market that is falling by 10 percent in one month turns around and increases by 10 percent the next month. This is NOT the stock market. Real Estate is an illiquid asset.
So if you're seeing falling volumes and your seeing soft or falling prices over time- that's the best kind of timing your going to see in Real Estate.
Trends like that do not reverse themselves quickly. Real Estate is a multi-billion dollar ship that takes a long time to change course. - Unless it hits an iceberg.
Having said that, can you get a good deal on real estate today. Of course you can - you just have to buy under market value or sell over market value. And that means you usually have to be the only bidder on a property or conversely, the buyer is not knowledgeable of local market conditions and overpays.
So, in 2009 could a builder under price his condos. Of course he can, these fellows are not rocket scientist or mystic all knowing guru's. There human beings trying to guess the price on a new complex of suites, or they probably got bad advice from someone at that time.
The best deals I've ever seen are when the real estate agents just f@#k up.
Like on Meadow St last year (earlier this yr?) when the place sold for $30K above a prior asking price. Agent asleep at the wheel. Should return all commissions and buy them a Kia.
What do food customers receive for their money other than food which will rot away in mere days!
This is analogous to renting: you pay for something you need to live, but end up with nothing tangible of value.
For houses, the number one mistake I find is that they get the square footage wrong. Mostly because they rely on a past listing that was wrong or didn't show later additions.
For income properties, its because they calculate the lease area wrong or miss entire floors of income.
Its those simple things that people just assume ...
but introvert, we all pay a cost for shelter and food. Even owners.
I don't get the food analogy. You can't rent food.
I do know that you can only rent beer.
"Marko - do you see house values being steady, increasing or decreasing by this time next year and why?"
Increasing - No
Steady - Probably
Decreasing - Maybe but I wouldn't place a bet on it.
I am a big proponent of buying the right property rather than trying to time the market.
If right now you buy a brand new poorly building Langford condo you might get burned in a flat market as the improvements depreciate and new condos hit the market.
If you buy an older house in Victoria, at the right price, that has a decent lot with possibilities of adding a garden suite, duplexing, etc., down the road you will fare better in my opinion.
I try to thinking down the road. When I bought my place at the834 in 2009 the Atrium was a hole in the ground but it was being built. Now Chard development has also bought the huge parking lot next to empire theatre and there will be two large towers there as well so I think the condo has better upside than let’s say something in Langford.
One of my clients just bought a unit at the Bayview Promontory and while that area right now is not the greatest fast forward to 2015 (Bayview will be finished in 2014) you will have a brand new bridge with new approaches, brand new BMW dealership instead of a rundown parking lot, and maybe dockside will do something by then too. I see some upside especially given the attractive pre-sales.
but introvert, we all pay a cost for shelter and food. Even owners.
Right, but my cost for shelter will eventually yield a shelter that I will own outright.
I know my father bought a property in early 2009 when the market corrected and he certainly didn't think he was getting a great deal. It was more along the lines of "wholly crap I am taking a massive risk and could lose my retirement savings." Only a year later did it turn out be an awesome deal(worth approximately 30%+ more).
That's how it works. Buy when there's blood in the streets? Or, you can buy when everyone is feeling rich.
Buy at the top, when everyone else is buying overpriced assets, or buy at the bottom, when everyone is fearful and can't dump fast enough.
What do renters receive of value for their rent payments other than a roof over their head which they do not own?
They receive the difference between renting and ownership costs.
"That's how it works. Buy when there's blood in the streets? Or, you can buy when everyone is feeling rich."
I think everyone has heard some variation of this 100x. Yes great theory, how many people bought again in early 2009? It was one of the slowest markets ever in Victoria.
Also, when prices started dropping in Vegas when was the right time to buy? Obviously not at a 20% correction.
Theory and real life are two different animals.
"That's how it works. Buy when there's blood in the streets? Or, you can buy when everyone is feeling rich."
I think everyone has heard some variation of this 100x. Yes great theory, how many people bought again in early 2009? It was one of the slowest markets ever in Victoria.
Also, when prices started dropping in Vegas when was the right time to buy? Obviously not at a 20% correction.
Theory and real life are two different animals.
I think everyone has heard some variation of this 100x. Yes great theory, how many people bought again in early 2009? It was one of the slowest markets ever in Victoria.
That's the whole point of that saying. Most people don't do it, that's why it works. It could have been a good deal to buy real estate in early 2009, but it was a hell of a lot better deal to buy equities at that point too.
Also, you have to consider the low volumes. Yes the average dropped by something like 17% during the 2009 dip, but there was also incredibly low volumes. Not like you were going to be picking up any house you wanted for that much of a discount. It's only the few that really had to sell that sold at that time for a big haircut. Everyone else held on and now we see the high listings wave.
Marco, you seem to be implying one may as well buy now because no one can correctly time the market. You are also giving the example of how buying in a falling market takes courage and can yield big gains. That sounds like market timing to me. I say let the market fall 20% and then we’ll criticize if the bears, having finally got what they asked for, fail to act.
I am not really saying buy now. My message is more buy when you are ready and comfortable because there is no way you will buy at the bottom unless you get very lucky.
I think that RE is heading down. I see houses that haven't sold for months in good locations. RE is very serially correlated which means that the prices are very persistent up and down but when the prices start declining it will be sticky and harder for it to go up for an extended period of time.
I'd wait to buy but having said that it would be harder to sell. So my advice is to buy the right house the first time and save the $ and hassle of moving unnecessarily. But I'd wait a few more years that's for sure. Renting is cheaper than buying. But who said $ isn't emotional.
Introvert. You may one day own a home you own outright and that's great but quite a few of my friends have recently told me they will never be able to pay their houses off.
S2 (JJ's wife)
@LeoS wrote: That's the whole point of that saying. Most people don't do it, that's why it works. It could have been a good deal to buy real estate in early 2009, but it was a hell of a lot better deal to buy equities at that point too.
Back in February 2009, I purchased ETF index funds when the TSX was about 900O. I sold them all when the TSX was at 13500 two years later. Could I have made the same ~50% gains in real estate in just two years?
Just Jack wrote: ... quite a few of my friends have recently told me they will never be able to pay their houses off.
I'm hearing this sentiment more as well. There appears to be many people living beyond their means, with no plan to get out of debt.
I own most of my home, and plan to be mortgage-free within just a few more years. However, if I didn't have the foresight/serendipity/blind luck to buy a house 9 years ago ... I would be renting, waiting for the inevitable market correction.
"Right, but my cost for shelter will eventually yield a shelter that I will own outright."
That is totally wrong. Your cost for shelter is the rental value of the house. It's the principal part of your mortgage payments - which is an investment not an expense - which is paying for the house.
And you are throwing away the difference between rental value and ownership expenses - that's assuming you bought recently at an excessive price. That's not a cost of anything, just a dead loss.
Like the general public, you know squat about investing and finance. And like the general public, you won't listen to people who do know something.
Marko said: I know my father bought a property in early 2009 when the market corrected and he certainly didn't think he was getting a great deal
You and your dad timed a pretty good dip in the market. You are actually giving examples of yourself and your dad 'timing' the market, whether you did it intentionally or not. If you sell while you are ahead anyways.
I watched someone buy a million+ home for well under assessed in 2009. A smart buy. He knew the market, and saw that it was a good price on a home he really wanted.
I repreat. He knew the market, and saw a good price, on a home he wanted. He also was willing to walk away if he didn't get his price.
When you are buying your oil stocks, are you just buying anytime, or watching for ups and downs in the market and buying/selling accordingly?
There has been so much money made in history by those that take advantage of market swings that saying it cannot be done is absolutely ridiculous.
'Buy, Hold, and Prosper' is an investment tagline of self-serving investors that want you to leave your money in the market to ensure their own commissions. The investors I know are always looking for well timed deals with their own money, and the great ones are looking for well-timed deals for their clients money as well.
When we are not talking about a house to live in, we are talking RE as an investment. And then RE is no different than stocks in that regard. Markets get hot, and you avoid them while they cool and put your money somewhere else.
Nice headlines this morning: Markets plummeting, Carney predicts recession in Europe and US (maybe here, he says), Greece decides that it is going to fall after all, and food bank use is at all time highs in Canada.
But don't worry - our over-inflated house prices in Victoria will weather the storm just fine. Right. Victoria will be one of the first to fall. We are the canary in the coal mine that is Canada.
Tuesday November 1, 2011 7:50am:
October October
2011 2010
Net Unconditional Sales: 483 467
New Listings: 1,086 976
Active Listings: 4,687 4,046
Please Note
Left Column: stats for the entire month from this year
Right Column: stats for the entire month from last year
They may or may not have timed a dip in the market. Marko and his Dad could have taken advantage of someone's fear.
Fear is an extreme motivator when markets stall and fall. For example, the stock market. With lots of overextended owners who are quickly coming to accept that Victoria's home market is indeed very overpriced, a race to unload properties could happen.
And how are you going to know if this is happening? An explosion in listings from the current 4,000 to 5,000 6,000 7,000 and possibly more. That's NOT what is happening right now. There is no panic selling in the core municipalities. The market is just in a demand-driven downturn in most types, styles and neighborhoods of homes. But, some housing gluts are appearing in the outer areas in detached home markets like Sooke and the Gulf Islands and also in the Victoria condominium market.
When inventory gets that high, there will be enough property owners under duress selling that they become the market which means if you wait too long to list your home you may get caught in a downward price spiral.
The next thing you're likely to hear will be that the home in your neighbor undersold because they had to sell quick because it was:
a) divorce
b) foreclosure
c) estate
d) anything that promotes denial
I think the endless predictions here about market tops and how deep the bottom is going to be are interesting but what's more interesting is trying to call the next bear capitulation. Also, how long after capitulation will the blog owner cease to post?
Victoriatruth or whatever lasted a couple of months after capitulation I believe. Anyone wonder how long this thing will last? Also once this blog is done who will be the next Victoria bear blogger? I nominate Just Jack.
This blog will never end: the man known as House Hunt Victoria seems to just love blogging about Victoria real estate from his top-secret, non-Victoria location.
Only hindsight has shown that someone who bought in '09 timed the market well.
If Carney hadn't dropped rates or the the CMHC had come to their senses and tightened things up those buyers would have been exposed as buying near the top and not so smart.
I contend that in a decade or so anyone who bought between '04 and '11 will be exposed as foolish. Even the ones who bought the mini dip of '09.
Sorry commuter and introvert, as long as people want to discuss the real estate bubble and the internet still exists, a blog or forum will exist.
I know its bad for your business but what can you do...
@Introvert... you know me so well
Maybe the blog will just evolve to the next level.
Say, I just bought a house. What kind of repairs could I do, to improve the value of my home?
Should I put a new kitchen in my house before I sell? Or sell the home as it is and let the buyer decide?
Am I paying too much for home insurance?
Can I outsmart the BC Smart meter?
with super magnets?
My neighbor's cat keeps peeing on my flowers - where can I bury its body?
Also, how long after capitulation will the blog owner cease to post?
How is buying a house in a cheaper city capitulation?
Victoriatruth or whatever lasted a couple of months after capitulation I believe.
Prarieboy stopped posting as soon as he bought a house in spring 2009. Some time later when the comments started filling with spam he deleted them all and locked the blog.
Gotta say I expected HHV to do the same. Thanks HHV for keeping it up. I think it continues to provide a lot of value.
"Only hindsight has shown that someone who bought in '09 timed the market well."
You forgot to add "and sold later". Until that happens he's falling behind a renter every month.
Someone who buys when renting is cheaper is making a bet that he will be able to sell at enough of a gain to make up that deficiency.
I agree about the value of this blog and obviously lots of other people do, including, evidently, some serious masochists.
This blog is the only one I post to at least once a week. I come here very day to find out what is happening in local RE. It is a very important tool in helping me to decide the timing of the biggest purchase of my life.
I have often been puzzled how many people will research and pore over every detail of something like a tv, stove or computer but give little thought when it comes to buy a home. Bizarre.
"Maybe the blog will just evolve to the next level."
I could use a new level, handy around the house--never needed one as a renter though.
"Say, I just bought a house. What kind of repairs could I do, to improve the value of my home?"
Or, what kind of repairs could I do to prevent the value of my home dropping as much as my neighbours.
"Should I put a new kitchen in my house before I sell? Or sell the home as it is and let the buyer decide?"
Head scratcher. I'll let those who've sold a house before make the call on this one.
"Am I paying too much for home insurance?"
I'm fairly certain the answer to this question is a yes.
"Can I outsmart the BC Smart meter? with super magnets?"
I hear tinfoil is highly effective. Especially when shaped into a hat. Protects the brain.
"My neighbor's cat keeps peeing on my flowers - where can I bury its body?"
Seriously. It's like you read my mind. Little bast%rd ruined my wife's tomato plants. Is there a law in Canada that prevents shooting to protect private property on trespass? As soon as this gun registry list is burned I'm busting out the 30 odd 6 and building a cat blind.
I rent because it is cheaper than buying. I might not have a porch but I have a portfolio. I'm richer than you think.
Today, I thought I would tackle the problem of "affordable" housing.
My thoughts are that this can only be accomplished through a public/private partnership.
The city provides the vacant land and a developer builds the town house complex. The town houses are sold as leaseholds with the city retaining ownership of the land.
Resulting in:
Leasehold properties are much cheaper to buy than strata properties as the people are buying the improvements and renting the land.
The developer gets a reasonable profit on the construction.
The city gets an yearly ground rent from the complex which it can adjust to keep the town home prices stable and limit the price growth to an inflation rate such as the CPI.
The owner can improve their home, develop a pride of ownership and receive a profit upon selling. Even in a modest market downturn, the city can manage the ground rent so that the home owners have greater security in the capital they have invested, thereby making it easier for them to move up the property ladder.
Looking at a condo complex on Bearmoutanin in my intranet today....106 units....52 rented...a little high?
A little high in what respect, Marko - please forgive my ignorance.
Oh, how I hate the practice of re-listing properties to get the days on market down.
Like the one on Taylor street, that has been up for sale since July for $599,000, but only shows 23 days on the market because it was re-listed under a new ml number in October.
Yeah, I know it works, many an agent has told me that just by doing this simple thing, they've hooked a buyer.
But, doesn't it go to the lowest common denominator of prospective purchasers. That someone who can get $600,000 in financing can be that easily fooled.
So, how does this practice and others that you may have come across make you feel as a potential client?
Marko and sweetrealtor, do you usually recognize a relist that is being done to get the DOM down? There are obviously a lot of houses for sale in Victoria, but I know that in the range I keep my eye on, I notice relists. So ultimately the question is: should a buyer expect their agent to recognize relists and if they don't, maybe the agent doesn't know that segment of the market very well?
Ahhh the perma bears…(I used to be one but after 6 years of being wrong I gave up and now own a home I can raise my kids in for the next 10 – 20 years.)
Patriotz – this guy has been on the housing blogs for many years – Alberta Bubble, Vancouver Condo Info, HHV, etc. Has always been all knowing but consistently wrong since 2005.
Officer Just Jack – Seems to post all day long and knows the future better than anyone (by his own reckoning!)! This editorial may give an idea of why JJ has so much time on his hands: http://www.theglobeandmail.com/news/opinions/margaret-wente/police-unions-are-taking-us-to-the-cleaners/article2220283/
Think the market MUST correct? Check out what’s happened in Vancouver to the perma bears over there: http://www.vanmag.com/News_and_Features/Gone
Newbies – don’t believe everything you read here. The “imminent crash” has been predicted for years. Not saying it won’t happen just a lot more skeptical now. Life goes by while your waiting…
"Has always been all knowing but consistently wrong since 2005"
Wrong about what? Has renting remained cheaper than buying since then? Yes it has.
Speaking of Alberta, how come foreclosures have been on such an upswing lately?
"Marko and sweetrealtor, do you usually recognize a relist that is being done to get the DOM down?"
I can see every previous MLS listing on every property so I don't need to recognize it...I just click previous listings and I can see what is going on.
While getting the DOM down might be a small factor usually people re-list a property to get it to the top of automated search services and it also shows up as a new listing on realtor.ca.
Similar affect can be accomplished by a price drop.
I have been away for a month but see that EatMe and Introvert are still justifying owning a home in a falling market. As usual no data to back up their inflammatory comments. The personal attacks on HHV and others on this forum seem to give them some personal satisfaction. But thats what trolls do.
Meanwhile Just Jack, Animal Spirit, Simple Man, Marko and others keep posting facts and stats for the rest of us. These guys and others like them are what make this blog great.
Ahhh the perma bears…(I used to be one but after 6 years of being wrong I gave up and now own a home I can raise my kids in for the next 10 – 20 years.)
Bet you're kicking yourself for not buying at the start.
You know, when house prices were actually going up by 10% a year.
Since we started looking the prices have been flat (modulo dip in 2009). So far we're ahead by tens of thousands. That's good enough success criteria for me.
So you waited for 6 years, and then bought at much higher prices? Sorry about that bad luck man.
I am getting a little stock-market-crash-recovery-Greece-will-default- no-it-won't-US-in-trouble-G20-emergencied out.
anyone else?
Yup, crisis fatigue for sure on the markets simple man.
The markets have turned into a Casino... a little good news, everyone in, a little bad news, everyone out.
The strange thing is that lately, things seem OK, everyone out, nothing is said for a day, everyone in.
I think there are a lot of investors just trying to time the swings now. Do we now live in a world of day traders?
Short-term, emotional trading on a global scale? Look out Mr. small investor with late information and no ability to sway the markets.
My post simply points out the bear blogs and the experts that post on them have been calling for the drop in prices for years and we have yet to see it actually come to fruition. During that time kids grow up, the economy changes and time passes you by. Marko made a good point in that you buy when it makes sense to you and when you can afford it. You can always look backwards and pick a variety of dates to show what brilliant or terrible decisions have been made. Will our house plunge in value? Perhaps but we have a home we can afford, that we’re comfortable in long term and will have it paid off in the not to distant future. If you want to compromise and try and wait for the drop in prices of course that’s your prerogative. What drives me crazy is the absolute conviction posters on these blogs have about the price drop that is (always) just around the corner and the view that people are idiots for thinking anything different. It’s been the same shtick for years now with year after year of renters missing out on huge gains! Not saying gains will happen as they did in the past just that the predications of an imminent collapse have been made for years. Now let’s all hear from all the experts who (of course…) bought early and sold at the peak!
Eatme
There are a couple of points you never seem to touch.
1. Life changes, and a lot of people no longer have the option to hold on to a house for 10 years. People move a lot more now, especially young families. Until you are sure you are going to stay, I probably wouldn't buy in Victoria. Mortgages are long-term agreements and a lot of work to get out of, especially with lots of inventory on the market.
2. Debt burden is very hard on a family. For a lot of people out there, buying a house in Victoria is a very serious investment and takes up a lot of their monthly cash flow. A white picket fence is nice, so is a new car, a big TV, and reno's. But, not when you are struggling every week in other areas of life.
3. Housing as an investment. I'm pretty sure that lots of people read blogs like this because they are thinking about an investment property, and not a primary home. In that case it is about ROI, and comparitive investment returns.
August 4th, 2011 I posted:
"I bought some more Suncor today at 33.15 and BCE at 35.80 (5.8% dividend).
There are some good companies out there with solid balance sheets and decent dividends."
Responses: "BCE @ 36? Drive away!," "Suncor @ 33? Back up the truck!"
This morning sold BCE for $39.80 (11% more) and Suncor for $32.80 (the BCE dividend plus Suncor dividend more than covered the loss and cost of trade).
The odds of CND banks, telecoms, utilities, etc. cutting dividends are pretty slim in my opinion - I don't see huge massive downside risk. When dividends start getting up to 5-6% on solid companies I see it as a buying opportunity.
I am an unsophisticated swing trader in that I only follow 10 CND companies, only above 3% dividend with the exception of Suncor.
When I get stuck on a downside, with the exception of Suncor, which I have sold at a loss one other time this year, my strategy is to hold and collect the dividend. Once I got stuck holding Rogers for an entire year before I was on the up side.
What drives me crazy is the absolute conviction posters on these blogs have about the price drop that is (always) just around the corner and the view that people are idiots for thinking anything different.
Agreed on that one. A bigger drop would be nice, but I'm not banking on it. This kind of flat market for a few more years is a definite possibility.
It’s been the same shtick for years now with year after year of renters missing out on huge gains!
Not since 2008. But of course the averages are deceiving since you can still make or lose money in a flat market with the right/wrong property. But in general, I would argue that doing the "property ladder" is no longer the right thing to do. Buying a condo with full intention of selling it within 5 years to upgrade to a house is a losing proposition. Better to rent for 3 years and buy a house then with a plan to stay for 10+ years.
Unit 303-1007 Johnson came on market yesterday.
Asking price: $208,888
Currently rented for $975/month
Let's assume you pay full price.
20% down - $41,777.60
Interest Rate (Variable) 2.2%
Amortization 30 yrs
Principal & Interest $633.67
Monthly Property Taxes $95.00
Monthly Strata Fees $130.00
Total Monthly Payment = $858.697
Good or bad investment?
One more thing... I wouldn't be surprised if the anonymous HHV capitulated and actually bought in Victoria. Obviously can't be verified and I know he has said otherwise but he maintains an interest in Victoria real estate and it saves face by indicating otherwise after years of blogging.
Hi EatMe;
I actually did get out around peak (2009) and am renting until market forces have corrected the housing market here.
My wife and kids still have a roof over their head and are very happy with all of our freedoms. I have more time do to things I enjoy - in fact, I am fitter now than I have been in 20 years because I have had the discretionary time to devote to my health.
Renting can be a very positive experience. And in the Victoria market it may be one that saves my family hundreds of thousands of dollars for waiting things out before buying again. By our estimates we have already saved over 100K on the house we would buy.
eatme said about HHV - saves face by indicating otherwise after years of blogging..
I'd say you have a very public committment to a position that you are defending there too Eatme.... No?
For the most part I have found HHV to represent pretty consistently the perspective of a new family and their struggle and frustration with high housing prices and lower incomes in Victoria. I can't say that I don't see a valid point of view there. If I was starting out, it would not be here.
I also don't think anyone can say that the market has not changed.
This blog has brought a lot of information and deeper thinking to folks in a world that had the blinders on when it came to RE, and the downsides.
@Marko
To me that would be a bad investment. In the very best case (no maintenance and no income taxes) one would make about 1400 per year (but in reality it'll probably much less if not nothing).
On a down payment of 41,777 that's a best case return of 3.3% with is incredibly meager considering the significant interest rate risk.
So this would only work when betting on either the potential of significant rental increases (unlikely) or significant appreciation of the property (also unlikely).
Ergo I'd give this one a pass.
Well Marko, for me - and that is just for me, I would like to see a lot more upside on that property.
Can I increase the rent next year? In otherwords is the current rent under market value?
How about property expenses. The strata fees are they likely to go up? And is their any "special assessment" coming up. How about the size of the complex's contingency fund - is it adequite?
Has the strata council been deferring maintenance over the last few years. How about the efficacy of the strata council. Have they been letting infractions slip by them. What about the size of delinquent strata fees? Are those strata fees of $130 the developers estimate or are they actual?
How about the turnover rate? If the suite is rented over market rates, I'll be getting a lot of turnover. Which means painting, cleaning and minor repairs and a lost month or two or rent.
When I look at the return on the my equity on this condominium am I being compensated enough for the risk of ownership?
What are some of my other options on investing the down payment in other assets. Like a savings account, GIC's, bonds, equities, a 1972 Volvo P1800 - which might be a lot safer of an investment, more liquid, less management and more fun to drive.
Depending on your age, one might buy an individual condominium with bank financing because of the long term upside for appreciation in 20 or 30 years.
But, if I were close to retirement, I might want to buy without bank financing, because I'm after cash flow - not asset growth. But do I want to be a landlord at 65?
Or, I could just say damn the torpedoes - full speed ahead, close my eyes and cross my fingers. And hope that by mortgage renewal time the property has appreciated by more than 15%.
It is interesting that some people who have pulled the trigger and bought in Victoria keep reading and posting. That seems masochistic to me. Occasionally I research and buy a new TV, Camera, cell phone, computer or car. The last thing I want to do after that is keep shopping to see how much better I would have done if I had waited. Everyone has to make the choice that is right for them. The net sum is zero as we all take turns being buyers and sellers. The only people who are always ahead are the banks and realtors who really don't care whether the trend in prices is up or down or sideways as long as properties keep changing hands.
Here's a question for someone looking to buy a condominium for rental reasons. Do you go variable or fixed? And if you go fixed for what term?
If I was buying to live in the condominium, I would likely go variable and get prematurely gray watching the rate change every midnight.
For a rental, I would most likely go fixed, probably for three years, because I want the continuity of the income stream.
How much should I put down? I think CMHC is the devil, I won't be extorted 2.75 percent for a mortgage insurance fee. So, I'm going in with exactly 20 percent down. Not a penny more - not a penny less.
If you are unfortunate to go into foreclosure with a CMHC insured loan - be prepared to be screwed over royally.
If the bank has some skin in the game, they will hold out for the best offer on the property. If CMHC is to pay out - they will burn your ass.
That's what happens when you dance with the devil. He calls the tune and tells you how long your going to dance.
There, for a while anyway, was a general, very basic, rule of real estate investing: a place should rent for at least 20% more than it costs to own. Given the example of Marko's is only yielding about 12%, I'd say stay away from it if you think investments should return you money every month.
@EatMe, I moved out-of-province with my wife. We didn't go so far east that travel time doesn't mean we can't come "home" to Victoria for a 3-day weekend. I maintain this blog because I enjoy the discussion and regular readers/commentators indicate they get something out of it. It's a hobby that costs me nothing but time and returns nothing but knowledge, which I'd say is a very generous trade.
So, you want to buy a "foreclosure".
Actually in BC it's called a Court Ordered Sale. But since we are so heavily influenced by the USA and those god forsaken money mongers east of Winnipeg, we can call this rose a foreclosure for simplicity sakes.
How much cheaper is a foreclosure than a property that is not under duress circumstances?
Look no farther than a recent sale of a condominium on Jubilee Avenue in Fernwood. Originally purchased in December 2007 for $235,000.
Fast forward almost four years and the condo sells after 42 days on the market for $215,000. For the sake of some of the readers on this blog, let's just say that the property went NOT UP by $20,000.
But what did the condominium market do for non forclosure's during that same time period. The core condominium median price increasd from $263,250 to $275,000 or 4.5%.
That's a difference of say between 10 to 15 percent on a court ordered sale in today's market.
Back in 2007 when the market was hot and this property sold in 18 days, there was almost no difference between a court ordered sale and a non duress sale.
Sharpen those talons and happy hunting!
regarding unit 303-1007
It's easiest to assume you pay cash to determine cap rate. Your net rent per month after tax, strata, management fee (10%), vacancy allowance is approximately $550. Or $6600 net per year. We'll leave out future assessments, closing costs, turnover costs, suite renos, non-payments, etc. $6600/$208000 = 3.2% on your money.
Far better to put it in a long-term GIC or buy two condos for that same price somewhere East of here with the same rental rates (6.4% cap rate).
Who has 208k in cash laying around for a GIC?
303-1007 - MLS: 301253 is 376 sq/ft in a 2010 wood-framed building.
You can buy a pre-sale right now, 205-1090 - MLS: 298883 in a concrete building, 401 sq/ft, large patio terrace, for $172,900 HST Included. Completion spring 2013 and 10% down required.
Is this a better investment?
What's nice about capitalization rates are that they enable you to compare the risk of owning one asset to that of another.
Which is the riskier investment, a house or a nuclear reactor?
I'm betting most of us, guessed nuclear reactor. That means you want a higher rate of return to compensate you for the risk.
Where the asset is located and appreciation should have no affect on the cap rate.
So, if the national cap rate (there really is no such thing - be nice if there was though) is twice that of Victoria for the same kind of asset, you can bet we are overpriced by twice too.
So if there was such a thing as a cap rate for a house it should be the same in Flin Flon, Alberta as it is in Victoria.
So, which is the better investment a 6 suite apartment building in Windsor returning a cap rate of 7% or a similar apartment building in Victoria returning 3%?
Who has 208k in cash laying around for a GIC?
The same person that has $208k in cash laying around for a condo of course.
Well, I would have to read the contract or the option to purchase for the condominium.
I'm wondering why the developer is factoring in that property values will be lower by the spring of 2013?
In this case, I'd want to know what other projects the developer has done. And find out what has happened to those.
Hopefully, this condominium isn't sold by the time you get to the sales office and there are only higher priced ones left.
If I were 25 and single and thinking of spending the next decade or two in Victoria - I would buy a condo.
But, then again I might also buy a manufactured home in Sooke for $16,500 and get a facial tattoo.
Both seem like good ideas at the time!
JustWatching - welcome back from your sabbatical. Glad to have your thoughtful contributions return.
What drives me crazy is the absolute conviction posters on these blogs have about the price drop that is (always) just around the corner and the view that people are idiots for thinking anything different.
I once posted how silly it was to read all the "next month will be telling" lines that were so common. Thankfully those sort of statements have since tapered off.
Folks here have been pointing to "downward pressure" on house prices dating back to the blog's inception in 2007. Since 2007, average prices in Greater Victoria have risen every single year. Quite the downward pressure, indeed.
But you know what? Even a broken clock is right twice a day. Average prices will decline one of these years, and then the bears will feel vindicated.
Introvert - I agree that the market is broken and I fully intend to take advantage of when the time is right on the clock.
One of the things that puzzle me about Victoria is that with all of these retirees coming to the city to retire and die, why aren't leasehold condominiums more expensive.
I mean you can't take the condo with you when finish your bucket list.
And yet co-op condominiums along Beach Drive with 1,115 square feet and $250 a month fees sell for $175,000. I mean the nutters down the street are paying $385,000 for the same thing only strata titled. $200,000 buys a lot of Alpo. Maybe they think their kids will love them more.
I can see them, laying in their bed, a crystal globe in their hand with a snow covered sleigh inside. As the globe falls to the ground and shatters you here them gurgle....
"it's the weather"
Meanwhile the kids are in the living room signing a listing contract. The didn't like old grumps that much anyway.
"Since 2007, average prices in Greater Victoria have risen every single year."
Perhaps you've missed all the posts that discuss property mixes and average prices?
The annual price appreciation of a great many of the houses in Victoria has been basically flat since 2007. Even the October 2007 to October 2011 numbers only show a 6% increase. 4 years for 6%. Or, in other words, 4 years of "appreciation" wiped out by one sales commission.
"But you know what? Even a broken clock is right twice a day. Average prices will decline one of these years, and then the bears will feel vindicated."
This is a good sign...Troll capitulation! The crash is at hand my friends...
The crash is at hand my friends...
You bet. It's just around the corner.
I took a look at the median price of homes in the Victoria core for the months of June, July and August and Introvert is right, prices have not gone down (at least during that period I sampled). Here are the numbers
2005 -$450,000 450 sales
2006 -$465,000 402 sales
2007 -$547,000 530 sales
2008 -$550,000 490 sales
2009 -$560,000 467 sales
2010 -$585,000 301 sales
2011 -$586,000 323 sales
We went through 0 down, 40 year amortizations, and emergency interest rates to stimulate the economy since 2007.
Our market topped out in volume in 2007 and we have around 40 percent fewer sales today than we did then. So all of this fuddle duddle stuff that the government has done has only kept prices stable but at the cost of the number of sales.
If the government hadn't messed with the housing market where would we be today?
In my opinion, we would have more sales but at lower prices. And that would be much better than what we have today with fewer people maxed out in their home equity lines of credit.
There's a lot of cans of soup on the wall to choose from and not much room to add anymore. With some starting to fall off the wall from the stress. We just have too much product and not enough buyers.
Heres some links for all you absolutists to jump all over. For your convenience, I've included both extremes.
What no rapture?
Everythings fine, in fact it's going to be even better soon
Everyone else that doesn't need to to cling to absolutes, keep the general discussions going and voice those opinions. The best discussions here fall between collapse and nirvana.
I don't buy the numbers. i know what they say but the fact is prices are declining. Hear me out:
The reason "average" prices have stayed steady is because the measurement itself takes the ENTIRE region. This is flawed and very misleading because most of the sales (aka dollar volume) are happening east of the Transcanada = location, location, location.
Because these houses are already higher priced to begin with and are still selling (relatively), it SKEWS the "average price" measurement upward.
If you have been studying RE for anytime longer than the past 10 years,location location location is the mantra.
If the more expensive houses are the only houses selling to begin with, its no wonder the "average price" has remained steady. But if you dig deeper you will see prices declining in all areas, less in Oak Bay and Saanich East but faster in the West Shore.
PLUS when you have low sales volume and all the houses are selling on the EAST side of town, it's no wonder prices for the whole region have remained steady.
Take it from me you can have the numbers tell you anything you want them to.
Its medians Joe, and I'm only using sales in the core districts of Saanich, Esquimalt, View Royal, Victoria and Oak Bay.
The sample size is never less than 300 and never more than 530. That's a very good sample size.
So even if you had a dozen sales in the million plus range, it wouldn't significantly skew the median.
But, I would like to know what location, location, location means.
No one has ever defined it and no one has ever found out where it is. Yet everyone knows what it is.
Kinda like God.
Just Jack, median just says the # 50% of houses sold over or under. It doesn't tell you anything useful IMO, just like average price. What would be more useful is the % of homes sold in Oak Bay, Victoria and Saanich East and how much it contributes to the average price (and a trend line). Eye balling it makes me think that it has been increasing over the past 3 years, skewing the #'s making it look rosier than it is. To be honest I am not inclined to figure that one out.
I have lived (and own) in Gordon Head for the past 12 and houses that would have sold last year with multiple offers are sitting idle for months at a time, with 100k reductions and still nothing.
IMO RE is a dead and declining asset for 5-8 years. People's incomes have to increase before we see price increases.It's simple economics. And don't give me that everybody wants to live here. Here comes the 6 months of grey!
And then how would you compare one time period to another to say that prices are increasing or decreasing.
As in all stats, you can't take the numbers as precision, there will always be a margin of error. Using several hundred sales in determining a median reduces skewing substantially. But there always will be a small error. But that doesn't mean you throw up your hands and say this is useless!
Sounds like you want something to show you what the typical Gordon Head home is worth? Can you tell me what the typical home is, how big the home is, how big the lot is, is it a quiet street, is it 30, 25 or 50 years old, and is the neighbor cute?
The typical home, like the typical Canadian family doesn't really exist. Especially in Greater Victoria, there is a huge variation from neighborhood to neighborhood. Its just something used to judge how the market is performing. Its a benchmark that you can use to compare your home to. Is your home better or worse than the typical? More or less valuable?
This ain't the stock market, things move slowly in real estate - most of the time. So, if an anomaly does occur, you can dismiss it and move on.
Thought I'd help you out Joe, on the Gordon Head area.
The median price for Gordon Head is $630,000. Last year the median was $638,000 or 1 percent difference.
So, the math says prices have come down, but common sense tells us that 1 percent is statistically insignificant.
I'm thinking that if you have seen your neighbors list price dropped by a hundred grand, your not in the typical price range. The typical price range being being between $500,000 to $755,000 for Gordon Head. Your probably in the upper range of properties that are over 3/4's of a million bucks.
And yes, there are fewer buyers in that price range, but there are also fewer (in relation to the typical) homes too.
Yes, a hundred grand is a lot of money, unless its mortgage money, then it's only like $400 bucks a month for almost the rest of your life and ends up costing you almost $200,000 in addition interest charges. Maybe that's why prices tend to be "sticky" on the way down - money means more to those that have it.
Since 2007, average prices in Greater Victoria have risen every single year.
March 2008 SFH average: $597,000
October 2011 SFH average: $595,000
Yep those are some serious increases in 2.5 years!
Has the quality of the entry level home improved in the last year? Here's one measure. Price/finished sqft. The data is pretty volatile, but perhaps there is a trend here.
Tales From the Trenches:
A family we know from my kids' school in Oak Bay told us last week that they really want the weather to improve. They live in an old character house behind the tweed curtain (ie. drafty, no insulation) that they say is expensive to heat. As of last week they hadn't turned on the heat this fall. They have young children. As I listen to my furnace labour this morning I wonder if they are shivering.
They are local small business owners.
To attempt to answer Joe's question about distribution of sales in different areas, I pulled off the annual sales figures (all house types) from VREB and plotted the %sales by area from 2003 to 2010. Unfortunately the data isn't specific to SFH nor does it have 2011 to date.
I'll pass the results on to HHV for a potential post. Here is my initial read on the graph/data:
1. relative amount of sales for Saanich East has stayed remarkably similar, ranging only between 20.5 and 22% of total (if anything decreasing between 2003 and 2010)
2. relative sales has increased by far the most in Langford (going up from 11 to 13%).
3. Oak Bay, View Royal Sales vary the most of any areas.
4. Interestingly, high points for North Saanich, Victoria/Victoria West and Oak Bay (all of which have higher average prices) occurred in 2010.
4. Three of the lower average areas - Esquimault, Sidney and Saanich West had relatively low sales volume in 2010.
So, without 2011 data easily trollable, I would say that Joe could be partially right -there may have been a shift to more expensive selling areas - at least in 2010.
Nothing conclusive though.
Some friends have told me that they moved from west of View Royal into the city because they wanted a safer investment. Their just having a problem selling the old house. Some have taken the home off the market and signed a year's lease with a tenant.
The numbers do support this as most of the sales are in the city and the months of inventory is near double east of View Royal and north of Saanich.
Which is why the inner city prices had remain stable with some increasing areas like Fernwood and Oaklands, while Sooke has over 200 homes for sale with a population of 11,000 is suffering. Compare that to Saanich with close to 400 homes for sale and a population near 115,000.
I think some city vendors are still reluctant to lower their prices after having a home sell for more than 30,000 6 months ago on their street. So, in some areas you find a few homes that have been on the market for over 90 days with no price reduction.
Not only does their have to be downward pressure on prices, that pressure has to be sustained for what seems a long time. Its amazing how people can hold out, making payments on two homes so that they don't have to lower the asking price by $10,000.
The Gulf Island is a good example of how long vendors can hold off from chopping prices. Salt Spring Island has a population of 10,000 and some 200 homes for sale, but their inventory is a staggering 22 months! And has been for most over 11 months for most of this year.
Looks like some municipalities are looking at policy to mandate all new homes be built with trusses that can support solar panels....
If this moves ahead you can add another $800-$1000 to build a new home on top of the $10,000's that have already been added in recent years. Not due to inflation but due to structural changes in the system (city fees, city policies, HPO fees, WCB regulations, etc., etc.)
A lot of these regulations have been put into place so that builders do the right thing instead of the cheapest, fastest way. or to protect the health of workers.
Not all bad things.
BC sheds nearly 11,000 jobs in October
Ahh, who need jobs when we have our homes as money machines.
Please, everyone do your part in helping us through these difficult economic times by purchasing a home. It has a bigger impact than you think according to this infographic http://blog.buzzbuzzhome.com/2011/11/your-home-purchase-impacts-economy-more.html
Us renters, on the other hand, are such a drain on the economy (we must be on welfare or something, right?)
Not all are bad but some don't make much sense and in reality are designed to protect jobs at City Hall and other institutions.
For example, if you go to Home Depot or Slegg Lumber and buy a pre-manufactured glass railing system that has been engineered to meet all code requirements and has been stamped by an engineer the City will still require you get onsite engineering (approx $500).
If you want to build a small deck with a permit the city will require drawings from a designer, a survey, and an engineer (if you go with glass railing)......seriously? The paperwork required by the city in some cases may exceed cost of building the deck. But when you think about it, you have to go down there multiple times. Everyone time you bring in drawings, surveys someone sitting down there has to take a look at them, make some notes, return them for changes because one thing is not labelled, etc...
I won't get into a long discussion about WCB and their latest asbestos push but take this into consideration:
WCB has defined asbestos: "means any manufactured article or other material which contains 1% or more "
Local company, Pacific Environmental, if you look at their reports at the bottom it says: "Method Detection limit is 1%."
I've had 6 cases this year where vermiculite has come back at exactly 1.00%
Above post was referring to City of Victoria...I am not aware of any other municipalities requiring on-site engineering for a pre-bought glass railing system.
You mean the trusses of today can't support solar panels? Now, you have me worried about snow loads!
I believe that it isn't cost effective to install solar panels in Victoria. The payback period on energy savings is into the decades.
For that reason, I wouldn't think that the home on re-sale would get any more than a home without solar panels. So, like most of these "green" initiatives its the first buyer that absorbs all the costs. That makes it tough for builders to sell their product at a competitive price. Now $800 bucks by itself isn't a lot of money. That's probably the cost of the dope in the drywallers lunch boxes on any one job site. It's just that its a cost that might not be able to be passed onto the consumer. While everyone knows you can always pass a joint onto a consumer.
In my opinion its a silly idea, few homes are situated to take advantage of solar energy with the lots in a subdivision laid out for maximum profit, not maximum sun exposure. And I would think that some newer subdivisions would have building scheme restrictions on solar panels too. Because solar panels are butt ugly and would bring down the value of the neighborhood.
Better luck in banning wood burning fireplaces, vaulted ceilings, and incandescent light bulbs. Or bringing back TV Antennas. I understand the premise of saving energy, so BC hydro can sell energy cheaper to Americans while over charging Canadians.
It's the Canadian way.
"You mean the trusses of today can't support solar panels? Now, you have me worried about snow loads!"
They have to be able to support solar panels and a snow load on top of the panels. I guess currently they are just designed to support a snow load.
Not all are bad but some don't make much sense and in reality are designed to protect jobs at City Hall and other institutions.
Agreed on that one. Everyone has to justify their jobs and find new projects to keep busy. Isn't there anyone running for council that wants to do something about that?
Marko - if it is the case where there are people creating rules to justify their existence then then I am against that completely.
I deplore inefficiency.
Then its simple, build lighter solar panels or don't put so many on the roof or put them in your back yard and not the roof, or or or.
Regulations are there to protect municipalities from legal recourse in the future. A lot of municipalities have been hit with lawsuits over leaky condo's from the 90's.I know it's onerous in some parts of town but the industry can't always be trusted and in the end the buck stops with the inspector. I imagine you will see shoddy work come haunt some municipalities in the West Shore 10 years from now.
March 2008 SFH average: $597,000
October 2011 SFH average: $595,000
Yep those are some serious increases in 2.5 years!
I was citing VREB's official stats, which only go to 2010. But your 0.335% decrease has been duly noted!
The stats provided the other day by (I believe) Animal Spirits showed an uptrend in the sale of houses in the lower price range. Yet overall, prices are essentially flat. The implication must be that increased sales at lower prices are being matched by higher prices or an increased number of sales at higher prices.
This seems inherently plausible. Single family homes near downtown are beyond the reach of many young people who must, therefore, be turning to lower priced condos, townhouses or houses in the outer suburbs or beyond.
But sales remain brisk in OB and East Saanich, which suggests that the more prosperous baby boomers, professionals, and DINKS still think it a good idea to sink large amounts of capital into good quality property, which, considering the state of the economy and the gyrations of the stock market, is entirely understandable.
To the best of my knowledge, the city no longer inspects multi-family housing. The city has the developer hire an engineer who signs off on the complex.
Feel safer buying a condo now?
Last month 12 homes sold in Oak Bay and there are currently 79 up for sale. That's 6.5 months of inventory. BUT, the days on market was ONLY 22.
Compare that to Victoria with 27 homes sales and 140 listed. That's 5 months of inventory but the average days on market is double that at 48 days to sell.
It sure looks like buyers are anxious to get into what most people would perceive as a safer place to park the family wealth.
It's probably just relative to where you're leaving. People in Sooke think Saanich is safer. Those in Saanich think Oak Bay is safer. And those in Oak Bay are going to ...
I don't know, what happens when you reach the highest rung on the property ladder? Maybe their leaving because they can no longer afford the property taxes.
I believe that it isn't cost effective to install solar panels in Victoria. The payback period on energy savings is into the decades.
I calculated the cost and break even point if I installed a 4000W (theoretical max) solar panel array on my roof. The cost would be ~ $45K and it would take 26 years to financially break even. Solar hot water is much better investment ...
"I imagine you will see shoddy work come haunt some municipalities in the West Shore 10 years from now."
Interesting to note that Langford requires rain screen on every home as where Victoria does not require a rainscreen on SFH homes...
"I bought some more Suncor today at 33.15 and BCE at 35.80 (5.8% dividend).
There are some good companies out there with solid balance sheets and decent dividends....."
Marko: Your swing trading is very likely to under perform the markets. In particular once you consider tax implications etc. You will most likely not be able to outperform the market over any length of time and this is aggravated by the tax burden you put on yourself by swing trading.
The thing with investing in stocks is that a few years of great returns don't mean much. There are very few people worldwide who have demonstrated to be successful in the long term. Most have a few great years and then dramatically under perform the market.
"Some friends have told me that they moved from west of View Royal into the city because they wanted a safer investment."
You mean they sold low and bought high?
Well, someone has to be on the other side of buy low and sell high.
1563 Westall recently listed for $799,000. Doesn't really fit the neighbourhood and it's going for well above the average for the area. Any thoughts on the demand for this one?
"1563 Westall recently listed for $799,000. Doesn't really fit the neighbourhood and it's going for well above the average for the area. Any thoughts on the demand for this one?"
It is going for well above average because it is a well above average home for the area. A similar home in Fairfield or Oak Bay would go north of $1,000,000 and in Oak Bay you wouldn't have a two bedroom suite option.
Demand for this type of home is low but supply is even lower. If you want to buy a home less than 2 years old in Victoria options are limited:
1 - $599,990 - 3108 Mars St
2 - $799,000 - 2529 Shakespeare
3 - $799,000 - 1563 Westall
4 - $899,000 - 1249 Richardson
5 - $925,000 - 1059 Clare
6 - $999,000 - 211 Robertson
7 - $1,390,000 - 1978 Fairfield
8 - $1,400,000 - Runnymede
9 - $2,200,000 - Windermere
On that list the only homes with suites (both 2 bedrooms) and lots over 5,000 sq/ft are Westall and Shakespeare.
Conclusion: If you want to live in a newer home in Fairfield be preapred to spend 100-300k more for a smaller home, on a smaller lot and no suite.
The most obvious comparable is 1516 Westall (2010 build) which sold for $740,000 after 149 days on market. I am not suppose to speak negatively about other listings...all I can say is drive by it and then compare it to 1563 Westall.
Thanks Marko, for putting it in perspective.
Monday, November 7, 2011 8:00am
MTD November
2011 2010
Net Unconditional Sales: 90 479
New Listings: 201 722
Active Listings: 4,503 3,723
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
Thanks Marko. Looks like we are keeping pace from where Oct left off, so far.
The Westall property is a tricky one. Is the typical buyer for this property first looking for location or is it a new home that's more important?
If its location, then few prospective purchaser are going to be looking to spend $800,000 in this neighbourhood where the typical property is selling in the $360,000 to $550,000 with a median price of around $450,000.
That's a BIG premium for being a new home in that neighborhood. A premium that is lost, upon re-sale. Lost, because it's not new anymore.
If its a newer home, then the prospective purchaser will be casting their net over a wider area and looking in Esquimalt, View Royal and Saanich West. The positive thing about these outer areas, is that their contemplated home will be in a newer subdivision of similar homes and most likely similar income levels. Which is more secure than being the new house surrounded by far less desirable housing. And asking prices in this outer areas start at $100,000 less.
Having said that, there have been a couple of successful newer home sales in that neighborhood in the low to mid $700,000 range including GST. The builder just has to be prepared to wait longer to find that specific buyer.
That buyer could come along tomorrow or 300 days from now. A buyer who is willing to pay a high premium for being the first to live in the home. It happens, its not likely, but it happens.
"The positive thing about these outer areas, is that their contemplated home will be in a newer subdivision of similar homes and most likely similar income levels"
And you forgot to mention that most new homes in these new subdivisions are bare land strata.
Also as far as renting a suite goes it is a lot easier when you are within walking distance to downtown, Jubilee Hospital, Camosun, etc. etc., not to mention buses are 1 to 2 minutes away.
The other thing is the average family could probably downsize to one car on Westall; whereas, in View Royal you probably still need two depending on the situation.
"Having said that, there have been a couple of successful newer home sales in that neighbourhood in the low to mid $700,000 range including GST. The builder just has to be prepared to wait longer to find that specific buyer."
One sold for $735,000 and the other $740,000. They also turned the garage into "finished" spaced and advertised a very high finished sq/ft. Totally spec built. Everything that costs money was cut out (tiles, landscaping, etc.)
Tear downs are going for about $350,000 (plus $10,000 to $25,000 to demolish), plus City of Victoria requires installation of new curbs, services, sidewalks, and driveway at the expense of the builder/owner....you are looking at minimum $400,000 just for a fully serviced lot.
3000 sq/ft home x $150 = $450,000 construction costs.
For price to go down on new homes in the core a lot of events would need to occur.
a) market needs to crash so lot prices go down.
b) WCB would have to cut all regulations regarding demolishing homes with asbestos (almost every teardown has asbestos).
c) City of Victoria would need to waive about 30k in fees/required upgrades by builder
d) China would to stop buying raw good so material prices go down.
e) Trades people would have to cut their wages significantly. For this to happen a lot of events need to occur as well such as oil prices would also have to crash. My friend (electrician) is now working in a camp in Alberta, 15 days on, 15 days off back in Victoria. Not ideal for him but he is making very good money. No way he is going to work in Victoria for free.
That's a BIG premium for being a new home in that neighborhood.
@JJ: A few months ago you said (I'm paraphrasing) that in a slow market, one should buy the best house on the worst block (as opposed to the worst house on the best block in a hot market). This comment struck me at the time. Isn't this Westall house just such an example? BTW, I'm not trying to attack you, this is an honest question. I'd like to hear others' opinions too
In rising markets, building costs lead the market.
In flat or declining prices, the market leads. Because what it costs to build has nothing to do with what people are willing to pay.
The starter home or tear-down in the neighborhood just has to drop to hypothetically say $300,000. Then the Westall property would have to drop to compete with lower priced housing. Because, it doesn't matter that the builder had to buy the land at $350,000 or more, six months ago. Markets change.
So, as I said, with flat or declining prices, its the market that leads and builders have to follow.
Am I saying that the builder will not get a full price offer. No, its possible. There are people that will pay a premium to own something that no one has owned before. Will that property still have a premium after the new owners have lived there for 6 months or 6 years if they go to sell. No, that premium will be gone, especially if you've over bought for that neighborhood.
And, a builder may be able to carry 300 days to sell a home. The typical seller of a pre-owned home does not usually have that luxury. They want to move on quickly or a least quicker than 300 days.
The home on Westhall has a nice 2 bedroom suite which throws a small curve ball but assume it didn't not have a suite.
Is it a good investment for the next 20 years?
Obviously not, you are better of buying a dump in Fairfield on a large lot for 800k. In 20 years it will probably be worth more than the home on Westall. At the same time you just lived in a dump for 20 years.
Not everyone buys a home with appreciation in mind. Some people just want to live in a new home and they happen to have careers or resources to afford it.
"So, as I said, with flat or declining prices, its the market that leads and builders have to follow."
Great in theory. In real life builders don't follow they stop building. There is only one home in the Muncipality of Victoria that is new and has not been lived in under 1 million.
Westall is not the worst lot or location. $350,000 for a lot is far from the poverty line.
A good portion of the properties around the Hillside mall are mostly comprised of land value with a much smaller portion attributable to the improvements.
What I meant when I said that you should be looking for the best house on the worst street is that it is the land value that will fall the most. When prices are going up, then its the reverse. You want the worst house on the best street because of the big upside swing in land values. Obviously, the best advice is not to buy at the highest point in the market. Even buying the best house on the worst street will not save you. It just will be a lot nicer to live in a good home while prices are coming down. Rather than cramped yourself into a 900 square foot starter home in South Oak Bay for the next decade or two with the wife giving you evil stares.
But, also buying the house that is at the very far end of the value range for homes in a neighborhood isn't a good idea either. Especially when the home's price is 75 percent greater than the other very livable homes that surround you. And will continue to surround you for another decade or more. You're buying with a home to land ratio of close to 2:1
When your neighborhood has a home to land ratio of 1:3
Neighborhoods do change with time. And I remember that these older neighborhoods were redeveloped with new housing on the west side of Vancouver. But a very different scenario. The builders were starting up the bulldozer at one of the street and going right through the block. So you got whole new neighborhoods of similar housing. Which is different that the patch work we have here. Maybe if the sewers hadn't been extended then the bulldozers would have been busy in Victoria.
Well, if you can get your land for cheaper and hopefully still make a profit - why would you stop building?
What happens is that builders just stop building homes on spec. New homes will continue to be built as there will always be a need to replace some housing because of fire, etc.
But the jobs will be on a contract basis.
True Marko, but when you say new housing. Few people think of Victoria or Oak Bay.
You can get a new home in a new subdivision in Saanich, but rarely does this happen in the built up areas of Victoria and Oak Bay.
I think people moving to the city and looking for new homes, quickly move on to Saanich, View Royal or Bear Mountain. Just like if you're looking for a turn-of-the century character home, you don't look in Langford. And there are a few in Langford, but not enough to command premium prices like they do in Fairfield. In Langford there not viewed as character homes - there just old houses.
"Well, if you can get your land for cheaper and hopefully still make a profit - why would you stop building?"
Because it is extremely difficult to make a profit.
Want to build a spec 3,000 home in Langford? Great. Plans approved in 5 to 8 business days...start framing...no sidewalks to put in, no old services to replace, no teardown to demolish.
Want to build the exact same home in Victoria? I am not going to go into every single detail but to start seriously be prepared to wait 2 or more months for the EXACT SAME plans to be approved while they bounce from one department to the next.
There is a reason why there is only one brand new home under a million in the municipality - a builder can't make money selling homes 800-950k or the small profits are not worth the risk. I know this is difficult for many people to grasp but the bills you run into are huge. Thing like 50' of sidewalk and new curbs, etc. are not cheap.
PS. Don't assume just because it takes two months to get plans approved in Victoria that the homes are better. Langford REQUIRES rainscreen technology on every single home, Victoria does not for SFH. Go figure.
For price to go down on new homes in the core a lot of events would need to occur.
Nay, only one event required. A Euroland recession next year would do it. That one’s as close to certainty as they come. The rest is simply the domino effect - China’s exports to Euroland slow, our exports to China slow, commodity prices fall.....
That's because the builders are competing with home owners for the same property and driving up the prices.
Could you build houses in Victoria if starter homes were $250,000 or $150,000? Yeah, you could. But you're not going to get $800,000 for them. That means very little construction on speculation. Unless you can get 2 or more home from one lot, but that would probably mean a bare land strata where the buyers would have to pay $50 a month for common road maintenance.
A builder is caught between a rock and a hard place in Victoria. The land is too damn expensive because of the demand for starter homes and the new home buyers are too few to get a high price.
But that was true in 1971, 1981, 1991, 2001 and today.
And yes it would be nicer if Victoria and Oak Bay could stream line their process and eliminate costs for the builders. But that may not mean new home prices would come down. Builder's may just take a bigger profit like they do in Langford. Which probably means Victoria is the smart one, as it isn't leaving the money on the table for someone else.
But, rising costs are a good thing! That means the fellow who starts building 6 months after you, faces higher costs. That means he can't undercut you.
But if costs are falling...
Falling commodity prices would be bad for our housing market.
Prices can only go up, if there is an increase for builders that is common to all builders like materials and labor.
But when commodity prices fall and unemployment rises.
I suppose you can ask yourself, will a sheet of plywood ever come down to $25. If you answer yes, maybe house prices can come down too.
Looking at the interior photos for 1520 Winchester Road (MLS® 300890), it looks like someone must see the world through different coloured glasses than me ... This can't be the only reason the asking price has dropped to $42K below assessed value.
Slowing fall sales, world economic problems and recession talk are not good for real estate agents so Remax decides to start pumping the market again. This time they talk about 10 year real estate market price gains hoping buyers believe the train will keep on rolling.
Remax Press Release
Remax - Full Report (PDF)
Carla gets a copy of the Remax press release and with a little cut and paste TC readers get this...
Victoria house prices up 123 per cent in a decade
When it comes to the core districts, the strata home dominates the real estate market.
930 strata homes from condominiums, town homes to half duplexes for sale just in the core districts versus 700 single family homes.
Yet, in number of sales there were 1,800 strata homes sold during the last 12 months versus 1,700 single family homes.
And Victoria City is ground zero in the condo wars with almost 850 of those strata sales there, but only 330 detached home sales over the course of the last 12 months.
The typical home in Victoria City will set you back $580,000 and the typical condo at $315,000.
Of course there is nothing typical about Victoria's housing stock. Its a kaleidoscope of ages, house size, lot sizes, styles and views from the ludicrous water glimpse to the sublime panoramic.
The one thing that seems the most consistent in the homes though is what they are not. And that's new. From Carpenter Ants to Post Beetles, Victoria has them all. Only in Victoria could you call a 6 foot crawl space that should only be used for storage - a basement and then finish it as a suite or a couple of rooms for foreign students. A city where the home defines who you are and perhaps what you might ever be. Where living in Fernwood is not good enough - you now have to live in Oaklands. Just so that those who live on the wrong side of Bay street know who they are.
Next month, I plan on publishing a list of all the people that believe they bought in the right location, location, location.
Its called the yellow pages.
Hi All,
I'm interested in what everybody thinks of these two lake front Highlands properties.
*Disclaimer*I am a firm bear and am not thinking of buying either house anytime soon, BUT I would love to raise my family in a rural lakefront acreage setting like this someday (ie post-correction)*
It's an interesting comparison because both houses are on the same lake and at a similar price-point but in one you're paying for land, and the other you're buying the improvements.
House 1 (295478) looks like a nice move in ready family home, but is only on .5 acre.
House 2 (296561) is really only a cottage and would require a substatial addition or building a new house and possibly using the cottage for Grandma. But it is on 3acres with 180' waterfront and a couple of out buildings.
Assuming you kept both properties pretty much as-is, my thinking is that over the long term (30+ years) you would be better off owning the larger lot as the land value would appreciate more than the improvments on the smaller property?
Thoughts?
Also, Does anybody have any experiences with the Highlands? Is it feasible permit-wise to build a new home and keep the existing cottage?
These homes are a fair way out of town, Do you think in 25-30years with creeping urbanisation these home's won't seem like such a daunting commute? Possibly Prospect lake felt like the end of the earth 30 years ago?
Would appreciate any feed-back. thanks
One thing to keep in mind about Munn Rd is that it is a popular sportbike riding road. Not that it ever gets super busy but it's probably not quite as quiet as you might expect in the summer. Maybe those two places are far enough off Munn though.
And if you don't like the commute now you are likely not going to grow to like it even if the average commute time increases over time.
Those look like beautiful places though.
"In real life builders don't follow they stop building."
No in real life builders keep building because that's their livelihood. They have to compete with resale stock and if prices go down, they will pay lower prices for their inputs - especially land.
Do a Google search on "new homes Las Vegas" and tell us what comes up.
Thank you for sharing this update, I appreciated it. Thank you.
philippines homes
Post a Comment