An unexpected joy of homeownership came up this summer, twice even. That is scraping egg off stucco that some local teenagers tossed at the house. Or maybe it was info reminding me to put another damn post up before we hit 500 comments.
Well not much has changed in September, but more and more the market seems to be stabilizing. Is it a plateau? Is it a rebound? Is there a dead cat involved? Although we hardly fell fast enough to bounce. Time to update the spreadsheet and see if any particular graph looks interesting enough to post.
Here's one:
Since the market peak in 2010 we had steadily worsening conditions for three whole years. Every month the inventory grew and sales flagged. But since mid 2013 there has been a reversal that has been remarkably consistent. MOI has been dropping for over a year now while prices slowly creep up. Will this turn around without more government intervention? Or maybe the 112,000 lost private sector jobs in August will temper the trend all on its own.
257 comments:
1 – 200 of 257 Newer› Newest»If it is the bottom for a while, hats off to your timing Leo S.
Your stats this morning from the Heathrow Airport.....
Monday, September 8, 2014 8:00am
MTD September
2014 2013
Net Unconditional Sales: 105 487
New Listings: 325 1,106
Active Listings: 4,293 4,547
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
You can't take it with you when you die.
But, there are some condominium complexes that get you a little closer.
Those would be the care-a-miniums.
An interesting concept where someone over 55 can buy a condominium that has a food service and full time Nurse. These are freehold strata condominiums that you can buy and sell on the open market. Included in your monthly strata fee is the catering service, housekeeping and nursing staff at a cost of around $1,550 a month.
Sell Grandma's house and buy her a unit in the complex. The rest of the money goes into a financial fund to pay her monthly strata and living expenses.
When she knocks over the pail, sell the unit and make a profit.
With all the elderly people in Victoria this should be a real money maker.
But the opposite has happened. The units in the complex along Southgate have shed half their units' values from when the complex was begun in 1994. And for the last decade have only maintained their value.
Perhaps it's just a concept that was too soon. Now 20 years later it may become the hot real estate purchase for the future. Of course Mother Nature will dictate when you sell.
A one-bedroom unit just re-sold for $89,000. In 2010 it was purchased for $84,000 and in 2002 it sold for $95,000. The inability to speculate on these condos is one of the reasons why prices haven't changed in a decade. You simply don't get to chose when to sell.
JJ - "About one out of every 10 people reading this blog won't make it to 60."
A mis-reading of the actuarial tables. Only true if the blog readership is strictly newborns. A male newborn in Canada is predicted to have a roughly 9/10 chance in making it to 60.
I suspect most readers of this blog are in the 20-50 range and thus have a somewhat higher chance of reaching 60 than a newborn. 89% from age zero, 91% from age 30, 95% from age 50
Also there is no evidence in Canada of declining life expectancy http://www.huffingtonpost.ca/2014/05/17/life-expectancy-canada_n_5341660.html
A similar concept is being introduced at some Universities in the USA. Condominiums for students. Mom and Pop can buy their demon spawn a condo and 4 years later sell it and pay back all the tuition fees from the profits.
Or so they think.
I think it's just enough of a gimmick that the initial developers will make a good profit.
But again, its a tough one to speculate on as you have a short investment horizon like you had with granny.
Although, if the University was the developer they could recoup all of their initial construction costs in the initial sales, then buy back the units 4 or 8 years later at a fraction of the cost and make the units rental for students.
Isn't 91 percent from age 30 - about one out of ten?
We have more heart attacks than the generation before - but we survive them now as the ambulance carries the necessary drugs.
That makes the rising life expectancy of half the population making it to 79 or 82. The miss reading comes in believing that our natural lives are getting longer. That hasn't changed significantly since human's walked the earth. Medicine has made it so we don't die from infections and accidents and some diseases as often but medicine has not been able to make us live longer than nature allows.
The reason why the life expectancy in some third world nations is increasing more than ours is because more of their children survive due to the increasing availability of medicines.
If you are reading the charts and saying that you're now going to live 6 years longer by living in Canada that's a miss reading. You're personal life expectancy has not changed. That's set by genetics and life style.
Want to live longer, eat good food, exercise, don't work in an office and live in a small town. And most importantly pick your parents.
Good news for those that own waterfront or want to buy waterfront in Victoria.
The government has abandoned its appeal to have the home owner pay for an archeological assessment.
If it's important for society to preserve these sites - then it's the society that has to pay - not the home owner.
Victoria jobs down, unemployment up...again:
http://www.bcstats.gov.bc.ca/Files/ceee2dc5-3fd7-4adc-8bb7-bb1a4321b9bf/LabourForceStatisticsData1408.xls (page9)
Who want's to live in an assisted living facility? I think anyone would rather stay at home and pay for elder care or a live in nanny than make this move. Bad investment as illustrated by the drop in value... Better to go for burial ground plots... Maybe a place that specialized in memory care because once you lose your mind it's not your choice anymore. Then it's the home for you.
Uni Condos are a much better idea. I am surprised Uvic hasn't done this. Mind you, it would kill the basement suite market in this town if they did it at a grand scale...
“Victoria jobs down, unemployment up...again:”
Victoria still retains the best unemployment rate in Canada for cities over a quarter million population. I think it's impressive to have a lower unemployment than Alberta's big two. It only ticked up by 0.1% from last month too, so not a big deal.
Phil, Phil - it's the employment that counts not the unemployment which represents people leaving or giving up.
If you are reading the charts and saying that you're now going to live 6 years longer by living in Canada that's a miss reading. You're personal life expectancy has not changed. That's set by genetics and life style.
Actually your personal life expectancy IS improving. Many causes of premature death are in long-term decline. Death rates due to vehicle accidents and murder are down. Many previously fatal medical conditions are now curable or at least treatable in a way that significantly extends your life. There is no reason to expect those trends to stop.
Of course no statistical table can represent the outcomes for a single person.
2 reasons why Phoenix should be dropped from "info's" posts (sorry info,I'm generally on your side):
Dust storm Saturday:
http://www.cbc.ca/player/News/Must+watch/ID/2510396258/
and flooding Monday:
http://www.cbc.ca/news/world/photos/heavy-rains-pound-phoenix-1.2759705
@reasonfirst
Phoenix will be having locusts on Tuesday. ;-)
Gen Y’s financial woes are now everyone’s problem
"Average annual salaries for grads who had been out of school for six months went from $41,699 in 2006 to just $42,636 in 2011. Two years after graduation, the average declined from $49,468 in 2006 to $49,398 in 2011. This drop looks even worse when you consider that inflation averaged 1.8 per cent annually through the same period."
We have to increase home affordability again by lowering interest rates.
Wasn't gen X screwed too? We turned out alright in the end...
...after expectations were lowered :-)
there are very strong demands in certain areas... like Gordon Head, Royal Oak.... price seems keeps going up.......
snowing in Calgary :)
I realize that few of us are following the condominium market but it certainly is getting interesting.
It's once again possible for a single person to own a home in Victoria City. Granted it will be a 30 year old 1 bedroom condo.
Such as a third floor unit on Leighton that was purchased back in 2002 for $77,000 and now listed today at $145,000. Sure it ain't an oil painting but it's cheap.
There are several inexpensive leasehold condominiums for sale. As long as the remaining lease is 5 years greater than the mortgage amortization you should be able to get a conventional mortgage from several banks. Some of these units have comparable views to freehold condos selling for 3 times as much. Sure some of them look like Soviet block housing. But if you're a retiree that has come here to die in the Elephant bone yard of Canada - why not.
And how about location, location, location. Well you don't have to pay through the nose to live in hipster haven. You can get 690 square feet on a third floor for $163,000 near Jubilee. That's like 2 years income for a single nurse or a teacher?
Let's take a look at Gordon Head and try to quantify what is happening.
This hood is mostly middle income style housing. Although some upper income households are located on larger lots and along the water front.
Today there are 25 houses listed for sale. And in the last 30 days there have been 9 sales with an average exposure of 39 days on the market. The average sales to assessment ratio being 106 percent.
During the same 30 day period another 12 homes were listed for sale.
That's 2.8 months of inventory
New listings being added at a rate of 1.3 for everyone that sells
Days on market at 39
Taken collectively these is an unbalanced market that favors home sellers. At this point you'll see irrational bidding for the most commonly in demand properties. Don't make the mistake of thinking these homes are selling at market value.
According to the accepted definition for Market Value by BC courts, Appraisal Institute of Canada, International Valuation Standards and the Appraisal Foundation in the USA when the prospective buyer is not acting prudently, willingly, knowledgeably and in their own best interest they are not buying at market value.
At one time lenders were much more conservative and they would only lend at the lower of the purchase price or market value. But with automated valuation programs that don't have to abide by the accepted definition of market value these sales have regularly gotten through the system.
The heavy reliance of lenders on these AVM's as there only source were one of the causes of the bust in the USA. There is a place for AVM's as a cross check to value, but they never should be used as a primary source to determine value.
Canadians are feeling the financial squeeze
http://www.theglobeandmail.com/report-on-business/economy/canadians-are-feeling-the-financial-squeeze/article20501623/ (mobile version)
"Just over half, or 51 per cent, of the 3,211 employees surveyed by the CPA said it would be tough to make ends meet if their paycheque was delayed by one week."
Jesus H.!
Aaaaand.. Posted Mortgage Rates Below 3% Are Back :)
https://businessincanada.com/2014/09/09/bank-of-montreal-2-99-5-year-posted-fixed-rate-mortgage-is-back/
Mildly amusing... How many Real Estate agents and Mortgage Brokers does it take to make a house of cards?
http://issuu.com/seasidetimes/docs/seaside0914forweb/12
What can we say about Royal Oak?
Well, it's a pretty small area of housing. Mostly middle to upper middle income households.
Only 4 houses for sale. And 2 sales in the last month. That makes it tough to say if it's hot or it's not.
It may be more insightful to look at strata homes in this hood. There are 20 listed for sale ranging from around a quarter of a million to half a million with some outliers.
MOI is 2.5
NLS% is almost 1:1 - that's tight
Median DOM under 30 days
Median Sale to Assessment at 106%
That's hot
Someone should create a fantasy RealEstate website, where you can buy and sell real properties online. Prices and stats are based off of real data so you get a good idea if your property has gone up / down.
All the fun without financial ruin.
That's not all that far fetched of an idea. Maybe we need a fantasy place to make money along with the stock market. There are companies listed on the stock market that don't produce anything but an idea.
Maybe we can use bitcoins too.
But what about those areas that are outside of the golden circle of real estate commissions?
Well they're half the price of these urban homes. Who wouldn't want to be mortgage free in half the time. A 3 level split designed home along Pyrite in Sooke Village sells for $243,000. A comparable Victoria home along Blenkinsop is $500,000.
So why are so many of us shackling ourselves to the oar of the ship called indebtedness? Mostly because we are not that bright. And we don't think of the long term effects of our actions.
If you buy a home with high ratio financing in Victoria you will most likely never pay off the mortgage. That's because over the next 25 years you will re-mortgage that home several times at higher rates and extend the mortgage out to its maximum. Start making a dent in the mortgage and the furnace needs to be replaced, then the roof, then the windows, then your kids university, annual holidays, marriages, divorces, etc. etc.
Never get a car loan for more than 6 months wages and never have a mortgage more than 3 times your annual wages. Anything more and your on the never, never plan. A slave skirting the shores of bankruptcy and cast adrift on the insolvency.
Did I mention that you could have bought 1.2 acres of waterfront with a small home in Sooke for $435,000.
http://lifehacker.com/5848665/the-true-cost-of-commuting
Interesting article but I think the comments are much more enlightening.
Canada's housing party plays on as world warns of risk
"Don't tell me what to do World" -Canada
Not really. If you make minimum wage your choices are greatly reduced... Hardly enlightening.
JJ says....."Never get a car loan for more than 6 months wages and never have a mortgage more than 3 times your annual wages. Anything more and your on the never, never plan. A slave skirting the shores of bankruptcy and cast adrift on the insolvency..."
--------------------------------
You are preaching to the choir. Unfortunately, the people who should be hearing this, will never hear it. Life now is about living and buying up to what your paycheque and max credit limit is. Hence why car dealers now stick in bold letters on the side of cars, Only $186 (and in much smaller letters - per week). Or Bell, Telus and the rest tell you you can buy a iPhone 6 for $199 and a mere 5 year contract and on and on it goes.
Gen X,Y and Z are living hand to mouth and if they keep it up we will probably be feeding them. IMHO
Very true, an entire generation of buyers have never had to pay back a loan. They've been able to blend interest rates and extend their mortgages.
Credit card too high - roll it into the mortgage. Need a new car - roll it into the mortgage. New roof, new furnace, education, Disney Land, mistress, toyboy, divorce.
We'll have another economic down turn, however the next time the cash machine may be broken. Then a generation of buyers will see that to lower their expenses by $500 a month, they'll need to pay down the mortgage by $100,000. Few or I might say none will be able to do this. And its off to file for bankruptcy.
---crystal ball alert...
The banks and CMHC will eat this next one. A couple of credit unions and trust companies will go under the next time we slide into a depression.
A two bedroom condo in Central Park along North Park for $187,000 or $271 a square foot. Or you can buy 4 blocks away at a full asking price of $372,000 or $508 a square foot for a new condo along Fisgard.
Why not let someone else pay the depreciation and be mortgage free in half the time.
I know, I know when you add up the costs of the 4 block longer commute back and forth to work each day it isn't worth the $186,000 savings.
...Turning off the sarcasm momentarily.
This does illustrate how fragile the condo market can be. As city counsel continues to allow more and more condo towers farther out from the core that action destroys the wealth of current condo owners. It's great for the developer all he needs is a gimmick to sell the skyboxes be it a rent to own scheme or a water fall feature. Worst comes to worst, the developers will rent the unsold units out and destroy the downtown rental market. There goes your rental income.
But the future for skyboxes is clear. Just like used cars - as they get older they'll get cheaper. That will cause the chasm between condo and house prices to get wider through time. Effectively cutting out the move up crowd from condos to houses. Which is the opposite from what was happening a decade ago.
You buy a condo today you are less likely to move up to a house unless your spouse gets hit by a bus - or pushed into one.
If you love your spouse you should stop the condo madness.
Another just out of curiosity question.
It's been 50 days on the market so far - why hasn't someone vultured 920 Mary Street in Vic West?
It's empty - it's under foreclosure. It's the smell of napalm in the morning.
https://www.youtube.com/watch?feature=player_detailpage&v=bPXVGQnJm0w
@JustJack
I think that you are just having fun with 920 Mary Street (MLS: 340559) ...
It looks like the basement (500 sq ft) is unfinished, and has just 645 sq ft and the first and second floors. Although cute, it's a tiny house listed at $485K. With 1,290 sq ft - this works out to $375 per sq ft.
You could get a 30-year old house that is double the floor area and double the yard area in Saanich West for the less money.
Because they priced it too high:
Land size: 2904
Living space: 1290 Sq
Heating: Baseboard (an indication of the build quality)
plus:
"It has a reverse floor plan - the kitchen, dining, and Family Rm or bedroom are upstairs"
They should have listed it at $449... even that's too high IMO but it probably would have sold.
Any thoughts on Cordova Bay? Those who live there seems to say "that it is different here". They seem to think they are safe from any price adjustments. I find that hard to believe.
Absolutely you can get more house if you move out of the golden commission circle and into Saanich West. But that's what so strange about this market. This 7 year old home is within biking or even walking distance for all those high paying downtown urban professionals.
Otherwise the hipsters are off to the 60 year old Fernwood ratter shacks which cost more money.
I hear over and over again about gentrification. How Vic West was going uptown. Was that just BS?
By the Sea, by the Sea, buy the beautiful Sea. The Cordova Bay neighborhood.
I like the hood. And that should make you wary and a little frightened.
It has a school that won't rain bricks on your kiddies heads during an earthquake. Far enough away from downtown so that you'll never see a shopping cart loaded with someone's personal belongings and facial and barbed wire tattoos are not kool. Like they ever are. And a Mayor that knows when to close the municipal's check book.
33 houses for sale ranging from a low of $510,000 to a country estate on 59 acres for 2.9 million. So lots of variety and best of all - NO CONDOS.
That makes it difficult to pin down a typical property for the hood as you have everything from new homes on regular sized lots, acreage, water view and water front.
I'd feel quite at home with my Range Rover in Cordova Bay along with my 2.5 children, 0.5 dog and 6.3 cats.
CMHC could force banks to pay deductibles on mortgage insurance
Put a banker at the helm of the CMHC and suddenly providing insurance without deductibles and government insurance for second homes doesn't seem like such a good idea.
It is. It's been a process that started in the late 80's on Arthur Currie Lane. That used to be where one might park the care and pay a professional 20 bucks the pleasure them... It will just take another 20 years...Bridge, Roundhouse, the e&n trail, dockside green, railcards all need to be finished first... Then maybe one could fetch over 500k for a little house like this. I guess you bought into the Dockside Green hype that it would only take 7 years (starting in 2005). Now that was BS!
Oh, and I would rather by a 60 year old house on a 5000 sqft lot that has way better bones than this house any day! It would probably last longer...
20 bucks! I know where my paper route money would have been going.
Oh, and I would rather by a 60 year old house on a 5000 sqft lot that has way better bones than this house any day! It would probably last longer...
I grew up in a 1950 home and love coved ceilings and other character features of that era but other than "better bones," 50s/60s homes are only a step up from early 40s homes (knob and tube avoided)....your typical 50s home will have non-grounded wiring, various asbestos products, concrete drain tiles prone to collapse, questionable plumbing, usually no insulation in the walls, inadequate basement ceiling height, etc. So yes, you can buy a 60 year old home on a 5,000 sq/ft lot for the same price but it will need another 100k sunk into it to bring to par.
I've shown the Mary street home on two different occasions (it has been on market and sold a number of time) and I think the layout is what holds it back a bit. The kitchen and living room are on the top floor with the bedrooms on the main. A little unorthodox. Other than that a great alternative to a town home. The basement is begging to be finished and would make an excellent media room plus extra bedroom.
It will just take another 20 years...Bridge, Roundhouse, the e&n trail, dockside green, railcards all need to be finished first.
I live in the Bayview right now and probably at least 10 years, but as you note 20 is a possibility too.
Area is livable right now as is. Every evening we walk across the bridge downtown, groceries are walking distance and its super close to the galloping goose.
One thing I definitely enjoy at the Bayview versus the 834 (where we previously lived) is it's very quite at night versus at the 834 where it wasn't uncommon to be woken up by yelling matches at 4 am.
yelling matches on the street that is...
I live in an 80 year old house in the hood and love it here. I have seen tons fixed up since 2003. One of the biggest things has been the trail and fixing up the roads. Ten years later I have a better feel for the pace though. In ten years it will be even nicer but some scars will surly hang around a while longer....
I might add that I have sunk about 45k over ten years to bring my house "up to par". Another 55 would put it well past par! I'm not saying Mary is a bad place. I just think they over priced it. Especially with the funky layout. cuts out everyone with a bad knee. I would say the location is worth 100k over the westhills which would be a similar size lot and build quality. So about $450k is spot on! Either the estate agent screwed up or the home owner was stubborn. If I was interested, I would offer 400K... http://www.vicrealestate.ca/listing/338408-3028-urban-creek-way-langford-bc-v9b-0l9/
Sounds like somebody with the initials JJ missed the $boat in last year's depreciation scare :-P
You should consider using your appraisal knowledge to do the odd flip. Double your plea$ure by living in it for a bit. Make more than in the 8-5pm hamster wheel you shall, young Jedi ;-)
I was down in the heart of the old Fairfield swamp last week. The city has a crew digging up parts of May street and some intersecting streets. The old brick lined drains were exposed and the workers told me the quality of work those brick-layers did 100+ years ago was remarkable because most of those big brick culverts are still in good shape.
But the real interesting thing wasn't the brick culvert, it was the jello sludge the excavator was digging up from the corner of May St and Linden - it was full of seashells!!! I scrounged around looking for stone arrowheads; didn't find any, but I found thousands of seashells. As a kid growing up in Fairfield 55+ years ago, I heard the old-timers talk about the old swamp, but I never knew it was a saltwater marsh, I always assumed it was a freshwater swamp. Maybe it was both... perhaps the January high tide storm surges flooded the swamp with seawater and sea-life. Either way, not a good base for concrete foundations or big houses when it's still jello 100 years later.
Either way, not a good base for concrete foundations or big houses when it's still jello 100 years later.
If you want to build on a solid bedrock there is always Bear Mountain.
Shutters in Vic West is a massive condo complex with 185 suites. Designed by George Jetson from Spacely Sprockets this complex dominates the once naturally beautiful inner harbor.
Back in 2007 this complex was a surprise in the prices people were willing to invest in this complex. At around $600 a square foot for a sub penthouse this wasn't for the faint of heart to purchase unseen and unbuilt. It was a way of moving your wealth across borders. Not Asians but Americans were the HAM back then as the USA was looking more like a militant state.
Of course the price wasn't sustainable. As the re-sales occurred the local market set values and prices eroded so by 2010 that same condo was down to $580 and by the beginning of 2014 down to $512 with a slight bounce back to $535 today.
https://www.youtube.com/watch?feature=player_detailpage&v=FyinD6ZDqeg
Yes, if you are going to buy in FF look at the seismic map first. Some areas are okay and some areas are rated extremely high on the liquefaction risk scale.
Monday, September 15, 2014 8:00am
MTD September
2014 2013
Net Unconditional Sales: 232 487
New Listings: 580 1,106
Active Listings: 4,310 4,547
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
Say one makes an offer to purchase a house. You folks got any advise on home inspection? For example, do they look behind the drywall, and is that expected/possible?
If you have any names to recommend, I'd appreciate that.
And of course I meant "advice" :)
Barnes & co
Vey thorough. Probably won't demolish walls though. They test for moister with a probe ;-)
Also note. The real estate agent hated them.
Moister = moisture
Brookfield index shows a downtick for Vic:
http://www.brookfieldrps.com/house-price-index/public-release/
Teranet show an uptick http://www.housepriceindex.ca/Default.aspx
All just noise that will equate to flat for ten years (starting in 2008).... So expect another three years and a bit of this....
I think that some home buyers may have a different understanding of what a home inspector does and does not do.
The home inspector is NOT providing any guarantees about the property. The inspection is generally cursory without damaging the home. They typically don't provide costs to cure any deficiencies.
A misconception of some home buyers is that they can successfully sue the home inspector if the hot water tank leaks, septic tank fails or roof needs replacement six months after they purchase the home.
(Although - if I were an insurance company, I certainly would offer this service, for a fee, for the first year of home occupation of a new buyer. The home inspector could just sign you up on the spot.)
However, the home inspector is not providing the buyer with an insurance program. They have a list of what they checked about the property. They are not responsible for hidden or inherent conditions of the property such as leaking oil tanks or insulation unless it is readily apparent.
So what do you think you were going to get for the money?
No one really knows how our market will correct or what will be the precursors.
In my opinion, we'll shift from a demand-driven downturn to a supply-driven downturn. That will signal a significant market correction that may later be described as a burst bubble.
There is only one area that I'm seeing this transition from demand-driven to supply-driven. And that is Oak Bay. Listings have doubled from what has been generally historically available while the number of sales has remained constant. Today, there is just as many houses for sale in the much smaller area of Oak Bay as in all of Victoria. Oak Bay has some 8,200 homes of all types and Victoria has about 48,000.
Most of us poo poo the comparison of Oak Bay to Sooke. Yet when I look at Sooke, I don't find an abnormal increase in listings like what is happening in Oak Bay today. There hasn't been an increase in people putting their homes up for sale, despite there being more months of inventory than any other district.
Oak Bay's market is still in balance relative to its months of inventory. However the New Listings to Sales ratio indicates that more residents are desiring to sell than ever before.
What we have is a lot of people milling about the exit doors at the real estate party. All we need is someone to shout "fire" and we could be in serious doo doo. That could be an interest rate change or a change in governments or a multitude of different triggers. People just get skid-dish at the end and anything can start them off.
Say one makes an offer to purchase a house. You folks got any advise on home inspection? For example, do they look behind the drywall, and is that expected/possible?
If you have any names to recommend, I'd appreciate that.
Russ McCarthy from Barnes and Company is probably the best in my opinion.
In terms of behind the wall inspections in bathrooms moisture meters can be applied against the tile; however, my impression is that there are a lot of false positives. Almost every other newer home inspection I've attended has 90% plus moisture regarding in the shower wall (usually ensuite). This is mostly higher end homes (lower end homes you usually just have the fiberglass surround which is bullet proof).
Then you also have infrared cameras but I've seen many incorrect diagnoses as well. I remember once an inspector using the camera on an electrical panel and he claimed there was an electrical problem as one of the breakers was putting out heat. We called an electricial inspector and everything checked out totally fine.
In conclusion, I am not a huge fan of crazy inspection technology if the findings cannot be interrupted correctly.
An inspector is kind of like a GP....you get him or her in first and then if there are problems you go to other professionals.
On my website I am slowly compiling a list of resources in terms of inspections and other professionals that can assist in the purchase of a home...
http://markojuras.com/resources/
Marko,
What no Appraisers on your site!
I feel like the ex on hearing her previous is getting married.
Depends on the type of house you are buying. If you're buying an 80 year old "character house" (dump) then you probably want a "deal killer" inspector. If you're buying a house that's only a few years old then go with the cheapest because there won't likely be much wrong.
Time to take a peak at Esquimalt, Vic West and parts of View Royal generally known as View Royal Proper and Glentana.
I've lumped these hoods together as they are geographically separated by bridges and ease of access from most of the core districts.
Note: View Royal is like the hanging chad in a Florida election or Katy Perry - she could go several different ways.
There are 71 homes for sale ranging from $309,000 to $1.9 million. But for the sake of simplicity let's just get rid of the waterfront and acreage listings with development potential. Waterfront belong to a different group of prospective purchasers and should be dealt with separately.
That drops us to 56 houses for sale ranging from $309,000 for a renovation project to $850,000 for a Saxe Point home with a water view overlooking the Salish Sea.
14 sales in the last 30 days ( offset by a week to allow for stragglers not yet entered) The sales ranged from a low of $265,000 to a high of $650,000.
And during the same time period another 21 were listed.
That's 4 months of inventory and a New listings ratio to sales of 1.5:1 which means for every house sold another 1.5 are listed. Generally 5 to 8 MOI and a NLS% between 1.5 to 2.5 is considered a balanced market between buyer and sellers with stable prices. Less 5 MOI and a NLS% less than 1.5 would be a Bear market favoring sellers that may lead to higher prices. So Esquimalt is not a balanced market but one that favors sellers.
How about prices? 14 sales isn't much to go on. When I expand that to the last 90 days, I get 41 sales at a median price of $510,000 and an average market exposure of 53 days-on-the-market.
Compared to the same time period last year there were 42 sales at a median price of $466,500 with an average exposure of 51 days. That's an increase in price but with only 41 sales I'd have to take a deeper look to commit to an almost 10 percent increase in just one year. As people may be just buying better homes today than a year ago. In other words leaving the dumps alone and buying renovated homes as house flippers give up on the market.
-The Dead Cat Bounce
-The straw that broke the camels back.
-The bigger they are the harder they fall
-Don't put all your eggs in one basket
-Neither a borrower nor a lender be
These idioms have a place in our society as they seem to originate from booms and busts over the centuries from Tulips to real estate.
And Esquimalt may be (or not) an example of what some of us may call a "Dead Cat Bounce". At the end of a market there is a shift in buyer's preferences that makes it appear that the market is once again on the rise at a staggering rate. When it really isn't. It's just the lower rung of the property ladder has been kicked out.
Thanks for the info Dasmo, Marko, JJ, and Death Plague.
I'm removing conditions next week, if all goes well. In the meantime, feel free to write about the impending crash, and I'll do my best to ignore all that :)
If I knew which property you were looking to buy, I could do a trend and bend analysis, pro bono, being that your HHV. That would give the lows and highs for that type, style, age and location.
Not really a bad idea when your about to spend hundreds of thousands.
"Depends on the type of house you are buying. If you're buying an 80 year old "character house" (dump) then you probably want a "deal killer" inspector. If you're buying a house that's only a few years old then go with the cheapest because there won't likely be much wrong." This is simply too basic of an approach. If a house is still in good shape 80 years after it was build I would hardly call it a dump. There are places built today that won't outlast my house... A newer place should require the same scrutiny. If not built properly it could already have problems in numerous areas. Shit, it's a fortune to spend! It's worth getting a deal killer to inspect the place then use your own head to make decisions....
Dasmo, physically that could be a reasonable assumption on your part.
However, homes are demolished for economic reasons. It isn't the physical remaining life it's the remaining economic life.
Maybe 20 or 30 years from now, it will all be high rise condos in your hood. Then it doesn't matter how well built or new your home is. The highest price paid will be as part of a land assembly for condos. Then there isn't much of a difference paid between the worst house and the best house on the street.
Another consideration is a shift in buyer's preferences. Character homes are not always in demand. Like antiques, they're nostalgic to some but to others they're just old. You have to gaze into the crystal ball and see who will be buying your home a decade or two from now. Generally the answer is someone who is 10 or 20 years younger than you are.
Are those millennials interested in old or new things today. Most are tech related not antique.
^ Agree. However the millennials can't afford a torn down antique with a new house built in it's place. They can afford a micro loft and probably desire it for it's i-house integration. ooo I can control my lights with my iphone?... That said, the same attitude / divide between old house new house has always existed. When I bought my place it sat on the market for a while. First because it was in Vicwest, the nicest shitty neighbourhood in the world. Second because because it was old and tarnished. I looked at the old growth clear grain cedar siding and new it was rock solid. It just hadn't been painted in a long time so it took some work, but you know, old growth cedar is tough stuff... The real estate agent didn't even want to show me the place (it did look rather rough in the MLS pic)... Then after it was painted she commented how nice it was... If you want to break in I still think good ol fashioned elbow grease might work once again. As JJ has pointed out markets like Sooke are declining and the opportunities lie in things other people don't want. A fixer upper in Sooke just might be the way to go for a smart millenial...
In 10 or 20 years from now the Gen Y'ers will be older and making more money. But its unlikely they will have grown up with an appreciation of antique or quality.
Star Wars figurines are antiques to them.
In 20 years most all of the housing stock anywhere near the city will be old...Unless the quake hits before then...
Just Jack said...
"If I knew which property you were looking to buy, I could do a trend and bend analysis ..."
I don't know what a trend and bend is Just Jack, but go ahead, have fun with it, and thanks! :) mls# 341905
An appraisal was conducted recently though, looking at the subject and comparing with recent sales - although of course, things are never the same, I mean houses are never the same.
Get the inspector to spend extra time on the addition, they are commonly bungled. Also watch for people setting your porch on fire. Otherwise looks nice from the limited photos. I assume the inside is not a dump and the owners have fired the realtor?
Leo S, I assume your porch+fire comment is a reference to the dodgy neighbourhood?
LOL @ firing the realtor ... sometimes you get better results by showing less skin.
The addition is causing an error in my analysis that can lead to an over valuation. As the analysis is treating the addition as though the home was originally built with this same square footage. There is also some doubt that the basement has the same finished floor area as the main floor.
Generally speaking the home should be valued excluding the addition. Then an adjustment is made for the additional square footage created by the rear extension.
The home likely started out in 1941 as having only about 900 square feet of main floor area and the same in the basement. Later a 200 square foot addition was constructed to the rear of the main floor.
That makes the main floor some 1,100 square feet today. Yet it only has two-bedroom. A home that originally had 1,100 square feet on the main floor built in 1941 would have had 3-bedrooms on the main living level and subsequently a higher utility than a 2-bedroom. Thus the potential over valuation.
This is a problem with all Automated Valuation Models. You would have to run the model twice. One with the original square footage and again with the current square footage. The market value range would therefore lay between the median to high range based on the original square foot that over lapped with the median to low range of the current square footage.
It can be done, but the print out would go for several pages, that wouldn't fit onto this blog.
for ppl reading the blog:
http://business.financialpost.com/2014/09/16/renewing-your-mortgage-heres-why-you-should-pick-up-the-phone/
>> Leo S, I assume your porch+fire comment is a reference to the dodgy neighbourhood?
Nah the neighbourhood is fine, I really like that summit park area, but a friend's neighbour on Prior had an arsonist try to set some fires a few weeks back.
http://www.timescolonist.com/news/local/greater-victoria-plagued-by-six-suspicious-fires-overnight-monday-1.1275322
I rented one of the apartments on Prior on the other side of Hillside when I was a student. Didn't have any problems with the neighbourhood although it was a bit seedy.
A few years later a coworker was renting a basement suite on Prior over on your side of Hillside and mentioned her bike was stolen from behind the place.
That was years ago now though.
Dave3
In the past 12 months there have been 23 house sales in this neighborhood that ranged from a low of $376,000 to a high of $605,000. The median price being $500,000 or $251 per finished square foot. The average price came in lower at $484,000 or $255 per finished square foot. The average home selling at 107% of its current BC Assessment.
There are currently 7 houses for sale in this neighborhood ranging from $441,000 to $590,000. And on average for the last 6 months about 3 homes sell each month. (2.2 Months of Inventory). During the same time period another 25 were listed (1.3 homes listed for every house sold). On average homes take 33 days to sell in this hood.
All of which are indicators of a Bull market in favor of sellers that may lead to irrational bidding on some of the more desirable properties in the neighborhood.
Time to look at some of the sales this month that I consider to be good deals.
Beginning with 1.2 acres of low bank pebble beach on West Coast road just outside of Sooke Village. It comes with a home in need of tender loving care. $435,000
Oak Bay home near Henderson and Gibbs. 2,700 finished square feet and almost 20,000 square feet of land. Yes the house has some problems. $600,000
A condo in Langford at $209,000. Just 6 years old with 2-bedrooms and 980 square feet. And a bonus of over 500 square feet of patio. Originally bought from the developer for $310,000 in 2008.
Finally the Haliburton property that was under foreclosure sold. After 2 years on the market. Started off at 1.1 million and went to the highest bidder at $725,000. You gotta love foreclosures.
A renovated single wide manufactured home on First Nation's Land for $108,000 or $113 a square foot. If the government wants affordable housing don't let the "White Man" build it. The only people who have ever successfully been able to provide affordable housing are the First Nation's.
1.14 acres of low bank waterfront on Lochside in Central Saanich. Along with a 2,100 square foot home for a cool million or 2 Fernwood war shacks.
Lots of good deals. All you have to do is stop following the crowd. They don't know where they're going anyway.
Sure we all think of our house as an investment. But really it isn't. You don't buy and sell a home on its income stream. You buy it because its pretty or you're cheap. Buying a condo that gives you a return of the equivalent of two packs a cigarettes a day isn't investing either. If it were, then the bottle collectors would be our financial Gurus as they make more money every day with no skin in the game.
Investment properties begin at 4 self contained units and more. Then you're in it for the money and the bottom line. A revenue stream of $4,000 a month will cost you $750,000 today. You'll have expenses to pay out of that $4,000 such as property taxes, maintenance and other operating expenses. That won't leave you much left over for servicing any mortgage on the property. Not much wiggle room for when the roof blows off or the boiler explodes.
Of course if the bottom line is essential you'd be looking elsewhere such as Duncan where a 6 suiter generating $54,000 a year is only listed at $600,000.
That so few true investment grade properties ever sell in Greater Victoria signify that the "Real Men" investor know that Greater Victoria is overpriced.
@Just Jack
Finally the Haliburton property that was under foreclosure sold. After 2 years on the market. Started off at 1.1 million and went to the highest bidder at $725,000. You gotta love foreclosures.
Yeah, I'd been watching that property for a while. Looked really nice (and quiet). The 16 ft. of vertical climb from the garage to the main floor could make it a challenge for some. I wonder when the neighbouring lots will be developed.
Just Jack,
You are the ENGINE of this blog! Thanks for all the insights, it is true people buy on it's cheap or they really like it "it fits the build"
All the analysis afterwards is their own inherent way of justifying the purchase haha.
There are some GREAT DEALS if you just stay away from the crowds. I followed this blog for about 2 years now and post infrequently and all I can say is being a CONTRARION in real estate pays in most instances.
We finally made the plunge and purchased a home close to Willows Beach @ 79% of the assessed value. It is a complete piece of cr@p, been on the market for a long time, and an unloved property.
So what to do? Renovate the POS and throw $250K into it OR build new for double that...no brainer.
So if you have any good builders, designer/architects to recommend that would be great.
This blog is more about buying. But for those interested, I can blog our experiences in building our new home.
BTW Marko for a 9000 sq ft property in Estevan with a 4000 sq ft new house, how much do you think I could sell it for? Thinking whether to keep or sell after I finish haha!
Long time reader, occasional poster here...
I'm surprised 920 Mary St. is not selling. I almost bought that place a couple of years ago; thought it was very nice. Sure, small sq. footage, but very usable space, set up like a ski chalet, with the living space upstairs. Basement could be useful for many things - workout room, workshop, etc. The deal killer for me was that we have close family who are disabled and couldn't visit (and make it up the stairs to the living rm).
CBC, Sept 18
Canada’s aging population expected to head west
Globe, Sept 18
B.C. population could grow by more than 2 million: Statistics Canada
New population projections from Statistics Canada suggest overseas immigration will swell B.C. Population
Numbers Hack, I would be careful holding larger homes (4000 ft) for the long-term. The market is about to undergo some compression between the high and low-end. Smaller to mid-size homes near amenities will see the most demand for the next 15 years from downsizing zoomers and cash-strapped millenials. If we start getting more asian/mid-east immigrants like Vancouver, then larger homes will perform fine, but still won’t see the % increases of smaller homes IMO.
RE: Globe, Sept 18
B.C. population could grow by more than 2 million: Statistics Canada
New population projections from Statistics Canada suggest overseas immigration will swell B.C. Population
That's a whole 1.4%/year, marginally higher than the past 25 years and substantially lower than most of BC's history.
Was that meant to be a bullish indicator????
Lol...you had to be able to put 2 and 2 together - bullish for Victoria, not necessarily all of BC.
"by 2030, the year in which the youngest baby boomers will reach age 65, close to one in four persons in Canada would be aged 65 years or over…compared with 15.3% in 2013."
http://www.statcan.gc.ca/daily-quotidien/140917/dq140917a-eng.htm?HPA
Any way you slice it, that's an enormous jump in retirees by 2030, especially once you consider our lofty immigration rate of primarily working age (highest of any G7 country by far). I wouldn't buy in other areas of BC, but retirement cities like Victoria are a slam dunk now that US cities are surpassing old highs.
You tell me when it begins, because there is nothing showing in the marketplace suggesting the beginning of an increasing wave of retirees.
Its almost 2015 now and as you said the youngest retiree will be 65 in 2030. Not much time left for the wave to start.
BTW Marko for a 9000 sq ft property in Estevan with a 4000 sq ft new house, how much do you think I could sell it for? Thinking whether to keep or sell after I finish haha!
2001 Beach (4,149 sq/ft finished, 10,454 sq/ft lot) just sold for $1,950,000. That is a pretty spectacular house so I am going to say you are capped at $2,000,000 with $1,400,000 on the low end. Really depends on finishing. You could build 4,149 sq/ft for $500,000 construction costs on the cheap or you could spend $1,200,000 no problem.
Numbers Hack, I would be careful holding larger homes (4000 ft) for the long-term. The market is about to undergo some compression between the high and low-end. Smaller to mid-size homes near amenities will see the most demand for the next 15 years from downsizing zoomers and cash-strapped millenials. If we start getting more asian/mid-east immigrants like Vancouver, then larger homes will perform fine, but still won’t see the % increases of smaller homes IMO.
A 4,000 sq/ft at 555 Bob's Street will always sell for more than a 3,000 sq/ft home at 555 Bob's Street.
In this scenario Numbers Hack already has the street address, a very expensive one at that. He would be foolish not to spend a bit more on construction and go 4,000 sq/ft.
There is a reason why almost all brand new homes in Oak Bay are maxed out on buildable square footage. No one is going to drop 500 to 800k on a building lot to build a 1,500 sq/ft home.
And if you want to go with what statscan is saying. They are prediciting the capital region to grow at less than 1% for the next 25 years. You gotta dig a little deeper Phil.
http://www.bcstats.gov.bc.ca/StatisticsBySubject/Demography/PopulationProjections.aspx
I agree with Marko, there is a cap to what you can sell a property in Estevan.
Build too much home and the property becomes an over improvement for the neighborhood.
The median price for a home in Estevan is currently $710,000 with most properties laying in the range of $550,000 to a million. For a house to sell outside of this range it has to have an Ocean view or be Waterfront.
Being a significantly larger than the more typical 6,500 square foot lot will push your home's market value outside of that $550,000 to $1,000,000 range. But you will also have a much more limited market appeal. That generally translates into an extended time to effectively market the property.
The down side is if you are forced to sell in a shorter time period. Also the more expensive the property the more sensitive its market value is to interest rate changes. And banks can not get these jumbo homes insured anymore. That means bigger down payments for a prospective purchaser which again limits the demand.
I think these are some of the reasons why there is such a big supply of million plus homes in Oak Bay these days. Lots of people trying to sell to a smaller pie of prospects.
I think so to. I think that a 4,000 square foot home is not an over improvement for Estevan.
But build a 10,000 square foot home and you might only get the same price as a 6,000 square foot home. At some point each additional square foot you build adds a smaller and smaller amount to the home's value until it flat lines. Then a 6,000 square foot home sells for the same price as a 10,000 square foot home.
Numbers Hack, you want to stay out of the crowds, be a contrarian. Building a house with the idea of selling it is as vanilla as it gets, in my opinion. Maxing out on square-footage to get the greatest buck, it's been done before. Look at all the new builds, see if you can find one that's under-built and modestly priced. Didn't think so, they all want to squeeze the max out of the overpriced lots.
Talk to people in the business, they'll all tell you the same thing Marko said, "why not add that extra bit of space since you paid for the land anyway".
If you "finally took the plunge", I'd say build a house for your own needs. Be a contrarian.
And, Numbers Hack, if you do decide to build it, blogging about the experience would be awesome, and I'd really appreciate reading that.
But build a 10,000 square foot home and you might only get the same price as a 6,000 square foot home.
I agree with this...once you go over 6,000 sq/ft each additional 1,000 sq/ft doesn't seem to weigh on price.
At over 6,000 sq/ft finishing/features are probably more important than whether it is 7,000 or 8,000 sq/ft.
I agree, go for larger in Estevan.
I know this market well and houses that are new build and 4000ish command a premium.
Just look at http://realtor.ca/propertyDetails.aspx?PropertyId=14556482
Mind you, finding a buyer for this particular home may take some time. 1.85 and no water view or uplands makes it seem a bit overpriced to me.
Building a house with the idea of selling it is as vanilla as it gets, in my opinion.
I'd say build a house for your own needs. Be a contrarian.
Someone of the most difficult homes to sell that I've ever come across have been designed for the "owner's needs." Too bad they didn't hit any market needs whatsoever.
The listing on Dewdney is a good example of what both Marko and I are trying to explain.
Its had one price reduction of $150,000 so far. If there was no limit or a premium to what people would pay, then there would have been no necessity to lower the price.
I wouldn't tear down in OB and build a house myself.
I'd rather pay more to buy a home that is already pretty good and just in need of a few renos.
My take is that tearing down and building new is more expensive by quite a bit, and you'd be hard-pressed to recover the money on resale. Not to mention the stress factor.
If you have trades skills and contracting as a background maybe it is a different story.
Absolutely, let someone else pay the depreciation buy a pre-owned home.
Wow! Thanks for all the insightful posts:
1/ Just Jack
- great points in terms of not overbuilding or overspending given the area
- also well noted the higher the price, the more limited the market for selling
2/ Marko
- thanks for the insights into pricing
- an experienced professional like yourself will definitely be an asset should we decide to sell.
- and yes, wouldn't drop big money on a lot and not try to max out the size.
3/ Totoro
- looks like you know the area
- Yes, we will build and if we will try to build on the bigger side of things.
- don't know if this is the right train of thought, but much easier to err on the side of larger as opposed to smaller. The cost of adding on and the mechanics would be both timely and significant costs!
Build Update One (lookingforhomeinvic)
Try to make this short. If you planning to buy a house to teardown, here are from my own personal experience what to be cognizant of:
a/ oil tank, underground
b/ remediation of oil tank
c/ in OB, nearly 89% of homes had underground oil tanks at one time or another
d/ asbestos, commonly used in building in the 40s and 50s, there will be some there
e/ whatever your contractors budget you for time, multiple by 150%.
f/ land surveys, older neighborhoods like OB will not have "pins" showing your property line. If you have to reset the Pins telling where your property should sit, that would cost a few thousand dollars.
All this before you even start to design your house. I'll save that for next week.
It is actually quite fun to do, but try to finance with available funds or a LOC as opposed to a construction loan; the banks have too many conditions for a construction loan (e.g. milestones) as opposed using a LOC and then converting that into your mortgage later.
NEXT WEEK: OB Demo Permit and working with the designers.
Very interested in hearing about this build! Please for your sake and ours start your own blog so you can share pictures etc! Just post updates here. Free design reviews!
As you'll find out designer quotes vary. I had everything from $3,000 to $27,000 for a 4,400 sq/ft home. After that you'll also need a structural engineer to stamp the plans, not cheap either. You'll also need an HPO letter and a few other things. It's crazy how much $ goes out for paperwork before you even start construction.
In terms of construction mortgage financing there is a guy at Van City specializing in owner-builder construction mortgages. The conditions and terms are better than anything else I have seen. Most importantly they will do draws before lock-up stage should you need it so you don't have to be in a panic as to whether you'll have enough cash to get to lock up or not.
https://www.vancity.com/Mortgages/Specialists/PaulDaniels/?xcid=redirect
It's worth it to spend upfront. Cheaper than changing later. Visualize the design! The less you change your mind during the build the faster and cheaper that stage will go. Build a well designed modern home in that area. Don't cheap out on the design! This ain't sun peaks!!!
Go online and google Jenish Home Design. Lots of selection. You don't have to start from scratch, someone has already done the work.
It's worth it to spend upfront. Cheaper than changing later. Visualize the design! The less you change your mind during the build the faster and cheaper that stage will go. Build a well designed modern home in that area. Don't cheap out on the design! This ain't sun peaks!!!
I don't agree with you. Having looked at a few thousand homes in Victoria I can't say that spending more on design necessarily equals a better design all the time. Sometimes the opposite is the case.
Just look at the real estate industry. 95% plus of the public is still paying 6%100k+3%balance to sell their home.
Go with a designer that offers the best value (combination of cost and expertise).
You have to think if one designer is $3,000 and one is $27,000 is the second designer really better by $24,000 or should you use that $24,000 to spend on custom cedar and rock work on the exterior?
Every decision must be weighed. I was extremely happy with our designer and he was approximately $1.00 per square foot. If we had spent $5.00 per square foot on design that would have taken money out of our kitchen, flooring, HVAC, etc. budgets.
If your construction budget is $2,000,000 than obviously design costs is less of a consideration.
Also, careful with architectural details as many designers will not discuss cost in detail.
For example, throwing in a half round dormer onto building plans is no problem, looks good. Problem with a half round dormer is it costs a small fortune. First of all you need a really good carptener that knows math and has experience with some like that (calculation a radius, etc.), then the flashing for the roof, then roof installation cost is more. Once you move inside drywall becomes very complicated and you go "****" when you order your dream chandelier which arrives with a square base to secure but the ceiling is round. One small architectural detail can increase 4 or 5 trade costs.
A good designer will be "Scalable". An off the shelf plan can help but designing a house that is site specific and needs specific will be worth it. Someone can bang out some pans for you for 3k no problem. If you are planning on spending over 500k to build it's worth spending some money up front to make it the best possible design. This does not mean adding frivolous details.... Do your own upfront research to minimize this cost. List out your needs, collect images, plans etc online. Do you want faux heritage? do you want modern? do you want a modern arts and crafts blend? What about the function of the space? recycling and garbage are usually over looked... What about the fundamentals of the building design? passivhaus? ICF? Advanced Framing? Post and beam and SIPs? etc.... If you aren't going to do it right why do it at all?
So it's worth it to have a house inspector and a real estate agent but not a designer?
So it's worth it to have a house inspector and a real estate agent but not a designer?
I don't get it. I said I was "extremely happy" with our designer?
I said "95% plus of the public is still paying 6%100k+3%balance to sell their home," implying that the vast majority of people are paying a huge amount of money for a service that can be had for much less.
One of the best inspectors in Victoria, in my opinion, also happens to be one of the lowest priced.
There is a place for designers, realtors, and inspectors but because one spends less on a service does not mean they are "cheaping out." There are many industries where you can spend more and get less.
My moto is shop value. I felt that my $4,400 designer could do just as good of a job as some of the $20,000 plus quotes and I felt he offered more than the $3,000 quote (hence why I didn't go with the cheapest designer either). I also felt like the $27,000 quote maybe had some added value but I pegged that value personally under $5,000 not the difference between $4,400 and $27,000.
Someone can bang out some pans for you for 3k no problem. If you are planning on spending over 500k to build it's worth spending some money up front to make it the best possible design.
If you are selling a $1,000,000 home wouldn't it make sense to spend a little more money in commission and higher the best possible REALTOR® who will achieve the highest selling price for your home?
Makes sense right? Yes it does. Reality, homes sell at market value.
Same with design. It is either good or it is bad irrelevant of how much you spend. Is there a correlation there, yes. Is it a very strong correlation like the car market (i.e. a 50k car is probably better than a 30k car)....not in my opinion. Therefore, it is up to you as the consumer to educate yourself and figure out where the value is.
Just Jack (or anyone else with an opinion): What are your thoughts on value in Esquimalt, particularly around West Bay. I know locals like to hate on the municipality but there seem to be some great neighbourhoods around there. Is it up and coming or will it always be a laggard? Will the development in Vic West creep up and improve the area further into Esquimalt?
^^ ESQ aint that bad. It's just blue collar and military... If you are looking there because it's close to town and has nice pockets (sase point is very nice!) and it's own Timmies then do it for that and don't worry about the "gentrification". That'l take a few decades and will come from it's own nucleus, not VicWest. That cavernous corner along esq rd cuts it off from a pedestrian flow. Plus you will always have the military and the First Nations reservation... Not that there is anything wrong with that.
@just jack
"Oak Bay home near Henderson and Gibbs. 2,700 finished square feet and almost 20,000 square feet of land. Yes the house has some problems. $600,000 "
I happen to pay attention to this sale. It is a great deal given that the land values at 630k. not surprise that that are some problems with the house. would you mind elaborating a bit more that? just my curiosity.
Dasmo
Promise won't give you guys any updates that are off topic on this blog.
Marko
You share some really good points. In terms of finding "value" in the designers in Victoria, the market is completely INSANE.
What I find completely crazy is that for residential homes, you do not need to be a designated architect to draw buildings. Yes, you can be a draftsman or whatever; and it is completely fine. From what I discovered, there is not such thing as a real certification.
There are professionals on this forum and they had to earn some sort of certification before they can practice, but not here. Not that there are not talented people out there without certification; but geez you would think there should be some safeguards put in place.
My final rant is that there are people who are charging big city prices; e.g. Vancouver/Toronto/NYC which has bylaws the size of text books and it seems like it is okay to charge the same in Victoria for some really average work.
Just Jack's website has equal or better homes at 1/10th of the cost. Just my two cents. Wish there was a Marko of Architects because the value doesn't reflect the price in Victoria!
MD80
Esquimalt is neighbourhood; convenient, safe, and affordable. If you are looking for a place to live, it is not bad. If you are looking from investment, IMHO, it will be a laggard. Stupid, but perceived as a place for the "have nots".
location location location
perception perception perception
You might want to check this house in Estevan, don't know why it hasn't sold. Went through it, other being old, it looked okay.
http://www.realtor.ca/propertyDetails.aspx?PropertyId=14469229
It probably hasn't sold because it is a very busy road, it is listed over assessment but has so so landscaping and finishing, and it likely has perimeter drain issues. The house next door had them replaced not too long ago. Houses on busy roads often take longer to sell.
Gentrification may start out as a good thing but you have to think a decade or two ahead.
Fernwood for example was a bad ass neighborhood to live in the 1990's. Then as the old timers died off, younger people moved in and fixed up the homes and had babies.
When those babies get older and turn into tween and teenagers that's when Fernwood will once again be known for break ins and violence. Fernwood is just too damn close to the downtown core for tweens and teenagers not to get into trouble.
Esquimalt's has the same problem but with the addition of Navy brats.
This is history repeating itself. The first time Fernwood gentrified was in the 1960's and 1970's.
Gentrification is like sex. Every new generation thinks they invented it.
^^^ way off base...
Navy "base" that is
Darn it missed a perfect chance for a clever post!
In my opinion, Esquimalt and Victoria are not going to be the up and coming neighborhoods.
You have to look at areas that are elderly citizens with homes that have been untouched. Those areas would be Brentwood Bay and Sidney. Those areas will be the ones to "gentrify" in the future.
The pendulum swings back as people move away from the cities because of crime and taxes.
I think you have your time scale off in regards to gentrification. Fernwood had it's first wave in the 70's sure, the 1870's when it was taken over from the First Nations. Maybe the very first seeds of the next wave were tossed around in the 1970's because it was at it's low point then... To Gentrify a place needs to convert from poor to wealthy. I would hardly classify sidney and brentwood bay as poor neighbourhoods.
Fernwood hasn't become wealthy. It is still the working man's neighborhood. The same with Vic West and Esquimalt.
What has happened is that the neighborhood is now populated with young families rather than old retirees. The new families come in and renovate great grandpa's house with floors, cabinets and paint and create economic activity. But they aren't making the homes bigger they're just making them funkier. As the family grows, the small post war starter house is too small for their needs and they move up to "middle income" houses in "middle income" hoods.
The mistake you're making and others is that you are assuming that because the homes are more expensive, the people buying have a higher income or have given up their drywaller job and have become cardiac surgeons.
That's not true. Fernwood, Vic West and Esquimalt is the hood of plumbers, roofers, builders, electricians and now IT workers. It hasn't moved up to doctors, lawyers and Indian chiefs. Go back 4,500 years ago and Fernwood would be equivalent of the workers' village that built the Pyramids. That worker's village never became a place for the Pharaohs.
These hoods have a high turn over rate. As the family income rises, they leave these hoods and move up to areas like Maplewood and Gordon Head.
These worker hoods are highly effected by the local economy. Construction slows down or stops and these homes and hoods slide. No sense in having a worker's village after the Pyramids were finished.
Just jack that all sounds very unfair and unequal which in of itself according to current leftist dogma is a drain on economic activity.
Why is this unfair or unequal?
What is so unfair about being a plumber, teacher or electrician?
Oaklands school will likely never have a Rhodes scholar. Lots of drywallers and health care workers but no Nobel Prize winners.
Is that so bad?
I should have said "wealthier"... It's relative and the very definition of gentrification. Families moving in and converting rooming houses back into single family dwellings is exactly that. This is what has happened in VicWest...
These areas have always been mostly made up of starter and middle income houses. Of economy design, outdated materials and small in house size, these homes are not good candidates for additions. Furthermore, high construction costs, development fees and land values have made it difficult to sell a newly completed home with a reasonable profit left over.
That wouldn't be true if the area was moving up the pay scale. Then the bulldozers would have started at one end of the street and plowed the hood under. Building 4,000 square foot homes on tiny lots.
That's maybe the next level. Vicwest fit's the very definition of gentrification. In particular the vast areas of abandoned industrial land that used to be hobo camps. From the Wikipedia definition of gentrification" "Old industrial buildings are often converted to residences and shops. New businesses, which can afford increased commercial rent, cater to a more affluent base of consumers—further increasing the appeal to higher income migrants and decreasing the accessibility to the poor.[3][4]" I personally have witnessed many homes fixed up over the last ten years. My house was abandoned and boarded up for many years. When I bought it it was very unloved. Friend bought here and many houses along their street have been fixed up...
You really have no idea what's going on over here...
Vic West still has a long way to go before it could be considered an alternative to the upscale markets of Oak Bay, Fairfield or James Bay.
I don't see that happening unless the city puts in major public improvements. And the political will and deep pockets aren't there. I applaud you and your neighbors for fixing up your homes. Most people when they first buy a home do the same thing.
We have a lot of neighborhoods like Vic West that have a better chance of going upscale. Neighborhoods like Hillside, Quadra, Mayfair. And they don't have the problems of bridges to cross.
You bought in Vic West because it was lower prices than the adjoining hoods. A decade or two from now, the person that buys in Vic West will be doing so for the same reason.
Monday, September 22, 2014 8:00am
MTD September
2014 2013
Net Unconditional Sales: 362 487
New Listings: 810 1,106
Active Listings: 4,280 4,547
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
"Vic West still has a long way to go before it could be considered an alternative to the upscale markets of Oak Bay, Fairfield or James Bay." Yep, except James Bay. Tough to get out of there... I guess you are coming on board now with the scale of gentrification....
"I don't see that happening unless the city puts in major public improvements. And the political will and deep pockets aren't there." Like I said, you have no idea what's going on over here... http://www.victoria.ca/assets/City~Hall/Media~Releases/2009/091120_pr.pdf
http://www.johnsonstreetbridge.com/
https://www.crd.bc.ca/project/e-n-rail-trail
"We have a lot of neighborhoods like Vic West that have a better chance of going upscale. Neighborhoods like Hillside, Quadra, Mayfair." And what are their seeds that will make them go upscale? The Malls?
"You bought in Vic West because it was lower prices than the adjoining hoods." Yes that was one reason. The others were that I could walk to work in under 20mins. I was a block away fro the waterfront and the westsong walkway. The hood has good bones and was apparent even in 2003 that it would get fixed up. All that abandoned industrial land! The Railyards development sign going up was my starter pistol. I also liked that VicWest was central to many areas of town. Thankfully there is more than one bridge. It had or has nothing to do with "going upscale" it just has to do with the potential for a place to get fixed up and become nicer without having to pay for that. In a few decades the bridge will be done, the roundhouse will be built and leased, the dockside green, bayview, railyards etc will be finished and the roads will all be done. The E&N trail will also be finished. Then the neighbourhood will be "established" once again. No more deals to be had...
I certainly can see how places like Uptown will shape the future of how Victoria will grow in the next decade or two.
A lot easier for businesses to relocate away from the downtown core to the billion dollar development of Uptown. Those surrounding neighborhoods will then morph into high density areas. There are lots of good size junks of land that can be re-zoned and you don't have to deal with bridge bottlenecks.
It isn't that Vic West is a bad area. It's just that there are better choices. Maybe some time in the future when all of the other choices are gone, it will be Vic West's turn.
A lot of people already disagree otherwise the development / redevelopment wouldn't be happening here.
Uptown had so much potential but they failed (or I should say got a c-). You can see how in the small success they have. Just see how many people pack into the tiny pedestrian only space next to mallwart. Then step out of there and it's vacant of people. Their original vision called for underground parking and total pedestrian oasis up top. They just couldn't do it... It's too bad for them because it just might have been a downtown killer. It would have been a great location for the busking festival even. Same with the chalk art festival. The office space would be fully leased by now. It truly could have been a destination experience. They just couldn't do it and gave in to the worship of the car. All for what? A few dozen parking spaces up top that you can never get? As it is now, it's just better than what was there but far from great.
Well you sold me. I suppose if an individual has as much tenacity to defend his hood there must be something to the neighborhood.
When you sell the home you're in now - what neighborhood are you going to move to?
I already bought a fixer upper in Fairfield ;-)
Have to agree with Dasmo. What is going on in Vic West is absolutely classic gentrification.
It's not really about Vic West prices catching up to Oak Bay or Fairfield. Most likely they will never catch up, though they may have proportionally more increase in value. Looking at Vancouver the gentrified neighbourhoods have seen huge increases in value, but prices still didn't catch up to the already desirable neighbourhoods. Kitsilano - an early gentrifier - still hasn't caught up to West Point Grey. Commercial - later gentrification - still hasn't caught up to Kitsilano.
Why not some other neighbourhood instead of Vic West? Waterfront, proximity (but just enough separation) from downtown, greatest gap between actual and potential land use, trails, decent road layout, etc..... Other areas will follow but it is indisputable that Vic West is gentrifying...
I don't think you could find any neighborhood in Victoria's core districts that isn't gentrifying under that "classic" definition.
The phrase gentrification becomes a spin word when used in that "classic" context.
I would think that areas like Humboldt Valley, Selkirk Waterway, Uptown, Yaletown, Coal Harbour are what most people envision.
It's not like people are beating down the doors to move into Vic West. There have only been a dozen homes sells in the last 12 months. The only hood to have such a low number of sales activity was Burnside around Washington.
Compare that to Oaklands that had 57 homes or Fernwood with 35 sales over the last 12 months. You can see that gentrification acts in mysterious ways.
But sure, under that "classic" definition Vic West is gentrifying.
And I have to disagree with Dasmo - at least about Uptown. Every day I went there this summer there were kids playing in the fountains, families sitting and picnicking there or watching their kids. Starbucks is always packed. Hardly 'vacant of people.'
Strong B for me.
Dave3
^all in the area I described...it's vacant elsewhere except the other pedestrian spot in front of the yogurt shop...
There aren't many home sales in VW because there aren't many SF detached homes...
"In decades past, crossing the bridge from downtown meant entering the ’hood. Residents routinely found needles in their yards. Today, poverty still exists but it’s under the radar. If any stigma lingers, it hasn’t stopped the masses from moving here.
Vic West was identified by the last census as the city’s fastest growing neighbourhood, by raw numbers. In a five year span ending 2006, a net total of 410 people moved in. A population estimate predicts well over 1,000 more will follow by 2016, due to the progress of several large-scale developments, such as Dockside Green, Railyards, BayView and Roundhouse."
JJ
In the case of Fernwood weren't you saying that high turnover indicates the neighbourhood is undesirable? Now for Vic West LOW turnover means it is undesirable?
Also methinks that your stats are only for SFHs. If so the comparison is flawed as Oaklands and Fernwood have way more SFHs.
Personally, it never occurred to me to think of Vic West as a classic example of gentrification. It was just always some place you went through to get to Esquimalt or to buy a case lot of baked beans.
You learn something everyday.
I don't recall saying "undesirable". Clearly, Fernwood and Oaklands are desirable as the success rate of selling is very high in these hoods. I think its close to 75% of the houses listed in a year -sell. Vic West is about 40%.
I do recall saying that the Fernwood homes are mostly small and as the family grows people move on to more middle income neighborhoods like Maplewood and Gordon Head where the homes are larger and meet the needs of the typical Canadian family.
I suppose the only way to judge the desirability of a neighborhood is took rank the homes by average price paid. The more desirable the neighborhood - the higher the average or median price paid.
I wonder where Vic West would lay on that ranking? Would it be more or less than Oaklands?
My guess is Oaklands. I assume there are bigger houses and bigger lots... Do I win the prize?
Success rates in selling a house in each of these neighborhoods
12 sold and 30 were listed in Vic West in the last 12 months.
Mayfair 41 listed 25 sold
Hillside 32 listed 24 sold
Oaklands 98 listed 57 sold
Fernwood 53 listed 38 sold
A success rate of 40% in Vic West
with the others at 58% to 75%. People just prefer to live on this side of the Gorge and Harbour.
Interestingly more people preferred Esquimalt over Vic West. Even though it is farther from the downtown core. The adjoining neighborhood to Vic West known as Old Esquimalt had a success rate of 50%. Probably because there are a lot more things to do and community events in Esquimalt than Vic West.
You would have to account for the differences in house and lot size. That would make it difficult to do a comparison using averages.
But for the most part, neighborhoods that were built in the same decades like the 40's, 50's or 60's have identical housing on standard sized lots.
The best I can figure is that people will pay a premium of around $50,000 to $75,000 to live in Oaklands over that of Vic West. About 10% more for the average house.
First prize is a house in Vic West.
Second prize is 2 houses in Vic West.
^ So do they just get delisted really fast? There are only 6 active detached homes for sale right now in Vic West. Marko, can you shed some light on this?
Expired or cancelled listings in Vic West this year had been on market for an average of 86 days before being pulled; therefore, no fast delisting on average.
A success rate of 40% in Vic West
with the others at 58% to 75%. People just prefer to live on this side of the Gorge and Harbour.
Each transaction has a buyer and a seller. From the data presented there is no way of telling whether it is the buyers or the sellers who are more eager in Fernwood.
The fact that JJ and apparently many other people don't like Vic West (yet) is NOT evidence that gentrification isn't happening.
Commercial Street area in East Van was beyond the pale in the 70s. When it started gentrifying in the 80's new residents were welcomed with slogans like "Yuppie scum out of East Van!" spraypainted on their vehicles.
If an area is near universally considered desirable (Fairfield, Oak Bay) it can't gentrify. Either it already did a long time ago, or it was "always" a desirable neighbourhood.
The gentrification cycle starts with an area with: (1) good location and other amenities (2) often inhabited by "undesirables" such a poor people, renters, First nations, and recent immigrants, (3) vacant or underutilized land, (4) crappy or run down housing stock. At this point the area is universally considered undesirable (and usually is).
Pioneer gentrifiers move in often attracted by low prices and proximity to core and maybe also attracted by the "alternative" feel of the neighbourhood. The early adopters make it easier for other families to move in (safety in numbers). New residents start upgrading the old housing stock. Developers buy up vacant land and launch new developments, new businesses open.
Many many years later the now fully gentrified neighbourhood shows little evidence of its humble origins. How many recent migrants to Vancouver would realize that Kitsilano was once a rough working class neighbour hood filled with "immigrants" before succumbing first to the hippies and then to the yuppies.
Vic West? Gentrification far from complete but definitely ongoing. Check back in 20 years :-)
Dasmo convinced me.
Vic West is gentrifying.
But I also think Cook Street Village has been gentrifying too. As the lower income retirees move out of the neighborhood and are replaced with young families with kids that are willing to spend money on home improvements and open new businesses in their community.
Even Uplands would be considered to be gentrifying as the older houses are demolished for new contemporary designed homes.
Gentrifying is a positive word. A "hot" word that can be used to describe any place with renewed economic activity. It can also be used if there is a perception of future economic activity.
It's like the phrase location, location, location everyone knows what it means. It's just that it means different things to different people. It can be used to explain why you bought a downtown micro condo or waterfront in Lands End. It's all location, location, location.
And this is the decade of "hot" words. When I read the brochures of the Mayoral candidates it's all hot words. Casting their net over the largest demographic possible by not limiting themselves to specifics.
If I hurt your feelings about Vic West, then I'm sorry.
If you're paying $400,000 or $500,000 these days for a roof over your head - you don't need someone calling down your hood.
If you take any Canadian city, the differences between a good neighborhood and a bad one is marginal. Not like in the states, where picking the wrong hood gets you killed.
You really can't tell the difference between someone from Oak Bay or Vic West in the soup line at the Upper Room.
Gentrifying is a positive word.
Depends. Positive for the new residents and for economic development. Perhaps not so positive for the folks that get displaced from their previously affordable digs.
It's practically a swear word on Vancouver's Downtown East Side.
http://www.thestar.com/news/canada/2013/05/25/vancouvers_vision_for_downtown_eastside_stokes_antigentrification_protests.html
In the past being an early investor in a neighbourhood that gentrified was very financial rewarding. You got both the general increase in real estate values plus the relative boost in value that your neighbourhood enjoyed.
For instance in Vancouver if you bought in West Point Grey in the late 70s you have only increased your money 10-15 times, versus buying in Kits at the same time and increasing 15-20 times.
Now that real estate seems so expensive everywhere I am not sure that being a pioneer gentrifier will be so rewarding..... at least that was my excuse for spending the big bucks to buy in an established hood.
@JJ or someone have an opinion,
what about the neighbourhood of Northridge? Any gentrification potential?
Vic West lots on average are a bit small at under 5,000 sq/ft for the median. By the time you get to Oaklands you are up to 5,400 sq/ft and Oak Bay boasts a 7,800 sq/ft median.
Now that real estate seems so expensive everywhere I am not sure that being a pioneer gentrifier will be so rewarding..... at least that was my excuse for spending the big bucks to buy in an established hood.
+1.
I wonder if what Caveat Emptor suggested would be a good test of how or if a neighborhood has gentrified.
If you look at pre boom neighborhood prices relative to each other. Then look at today's neighborhood prices.
If there is a change between the relative value of the hoods that might show the impact of gentrification? Or it might show that gentrification is simply a marketing tool to sell houses to people?
^ Would be very curious to see that data.
relative price would be a very strong indicator.
I would say Fairfield would be the most stable and established hood in Victoria so would love to see VicWest compared to it over the last decade excluding condos.
Marko, is that possible?
Since January 2005 (HPI = 100)
to now
Fairfield East: 137.6
Fairfield West: 140.6
Fernwood: 147.8
Oaklands: 150.0
Vic West: 147.3
Oak Bay: 137.9
Interesting. So nothing before 2005? I'm curious since the action had already started then.
I compared the median price in each of the neighborhoods for all of the year 2000 with the median sale price of homes for the last 12 months in each of the same hoods.
That allowed me to rank the different hoods by the percentage increase each had.
Damn interesting stuff
If Marko wants to do the same and show it to you Dasmo that's fine, but if I do it I'll be accused of bashing Vic West again.
I'd like to see it but the HPI is probably more relevant to the gentrification notion since it is comparing like properties / qualities.
For instance, if properties in Fairfield are getting major renos and rebuilds it will skew your results. Being familiar with both hoods you simply don't see the same types of renos going on. For instance, Fairfield has had a number of waterfront tear down and rebuilds. 50 howe is another good example. Full reno with a suite built in. Vic West has seen a few new built infills here and there but it's mostly people just fixing places up. For the most part the scale of the homes here only warrant that. As does the present resale value. Tearing down a house and building a 1.5 million dollar 2500 sqft home would not fly in Vicwest. It does in Fairfield...
Marko gave you the HPI's for Oaklands and Vic West at 150 and 147.3
What does that mean to you?
However, if I gave you the medians at $496,500 and $446,500 for Oaklands and Vic West respectively what would that mean to you?
And that's the beauty of the HPI. Nobody knows what it means.
It means desirability is on the rise in Oaklands too. This doesn't necessarily mean gentrification. The more relevant numbers are the already expensive hoods like oak bay and Fairfield... This does show a greater relative increase in Vic West.
I think one of the characteristics of gentrification would be rising desirability relative to other neighborhoods. That the gap in prices between Vic West and the other hoods would be diminishing.
Ok since we're talking about Vic West... JJ, Marko, Dasmo et al. what's your take on 1143 Dominion? MLS No. 341936
First of all, I think it could work as a turn-key operation for an interior décor museum. I happen to love it, but I'm sure 90% of buyers would feel it needs a total redecoration. This house would appeal to me as a fist time buyer, and I think this part of Vic West around Pine St. etc is pretty attractive, although Dominion itself is fairly busy.
I think the house has been listed for a long while, since the spring anyway. Any thoughts from this group?
That's about the price of a starter home. That's about the price you'll have to pay.
Although I would expected a bit bigger sized lot for the asking price.
Because, if the interior doesn't bug you then you might want to think about a bigger lot.
The asking price is about 15% under the median for the neighborhood. So if any necessary repairs say in the next five years are low, you should be doing okay.
If the building inspection indicates repairs of more than $25,000, then it becomes a coin toss on this one.
^ What JJ said. Worth a close inspection. There looks to be a lot of updating there but they are also not crazy with their asking price. An estate sale? If so there might be some room to negotiate hard. Do you have the time and ability to remove all that wallpaper yourself?
Gentrification is rising desirability relative to itself. It requires the area to come from a depressed or downtrodden phase. I don't remember Oaklands being there where VicWest certainly was.
JJ, Dasmo
Thanks for your thoughts. I agree that the lot size is a major draw back to this relative to other houses in the price range. That combined with the cost and labour involved in required cosmetic updates makes me think it is somewhat overpriced. Dasmo, I agree it looks like an estate sale and it might be "time to vulch" as Mr. Turner might say.
Any strategy notes for that kind of thing?
PS, how excited is the HHV gang for the Royals home opener on Friday? Woo hoo!
I think it's a good time to develop vultching skills.
When the market is rising, agents and investors are loading up on real estate. The good deals rarely get to the data listing service as the aforementioned snap them up.
But in a downturn, the agents and investors are maxed out on real estate. That means more of these properties will get onto the system.
To be a successful Vulture you have to be the ONLY bidder for the property. And that's how you'll have to select the property. A property that is a unappealing or where there are so many of them.
-Acreage in East Sooke?
-Older condos?
-An age restricted complex in an area of families?
- A rental property that had a fire?
As a Vulture you are looking for the stragglers in the herd.
A foreclosure?
An estate sale?
You single out your prey, make your best bid. If you miss, you go on to the next one. One offer no counter offers.
You want a property that has been listed for more than 60 days. The closer to the end of the 90 day listing contract the better. And remember you're not bidding against the home owner. You can run off a great spiel to your agent of how you're not prepared to move on your bid - the owner will likely never hear it.
You're bidding against the listing agent. You have to motivate the listing agent who then will convince the home owner, lender or executor to accept the deal.
And the more people you have between you and the seller, the less likely is success. Too many buffers between you and the home owner.
An experienced Vulture won't need a selling agent. That dangles the prospect in front of the listing agent of double ending on the commission. Something you can use to your advantage near the end of the negotiations.
It's the closer.
Want to make the deal happen - then chop 5K off your commission. You're having the listing agent invest his/her time. They become a stake holder in the positive outcome.
https://www.youtube.com/watch?feature=player_detailpage&v=fHixbzsU9k4
I would add that that house is also in one of the worst spots in VW. It's pretty close to the ESQ power station and it is right close to the street. I wouldn't call it vulching. It's simply negotiating. Vulching and low balling is language that makes it seem like you are doing something wrong. You aren't you are simply trying to spend as little as you have to which is what an estate agent should help you with but they never do... As JJ points out there is opportunity in things other people don't want. Detaching yourself is key. Emotion and desire has no place in such negotiations. Prepare to negotiate with your estate agent first. You will probably have to force them to present your offer... I wouldn't necessarily not have a counter offer. Odds are poor they will simply accept. Your first offer should allow room to go up. It's exploritory. Make it as low as you think possible and see what the response is. The house I'm in now had sat on the market. I had to force my agent to present the "low ball" offer. She was so worried they would be offended. It was about 20% off asking. They came back right away with about 10% off. Great, they were willing to play! I have had other scenarios where the selling agent simply refused to present the offer. But that also says something doesn't it. I would consider this as lot value plus depreciated building at 320k. So offer 300 and see what they say. IMO based on pics lot and location 350k absolute Max for this place...
Marko, Dasmo et al. what's your take on 1143 Dominion? MLS No. 341936
Sold for $360,000.
They overpaid by 10K!
I had to force my agent to present the "low ball" offer. She was so worried they would be offended. It was about 20% off asking. They came back right away with about 10% off. Great, they were willing to play! I have had other scenarios where the selling agent simply refused to present the offer. But that also says something doesn't it.
Under $1,000,000 and livable you just don't see 10% off asking price.
For example, Fairfield East & West have a sample size of 70 sold homes this year and nothing has gone 10% off asking. When you look at the outliers such as 99 Moss Street (asking $649,000 and sold for $600,000 - 7.8% below asking) there is an issue. In the case of 99 Moss Street it needed to be taken back to the studs.
There is a place and time for an offer 10% below asking price; however, 10% off asking on a reasonably priced property that has been on market for two weeks is a waste of time.
People will approach me sometimes with, "my friends purchased a home for 10% off asking." When I look up the property that their friends purchased turns out they bought it 10% off original asking and only 2% of current asking. Off original asking price doesn't count in my opinion.
"10% off asking on a reasonably priced property that has been on market for two weeks is a waste of time." Of course! Was Dominion that fresh?
Was Dominion that fresh?
22 days at that price.
Oh so it was on the market for a while then. Did it sell for more than 10% off the original ask?
Offers are made on current asking price so not sure what relevance original asking price. If hypothetically homes are selling 10% off original asking and 2% off current asking it doesn't mean an offer 10% of current asking is likely to work.
I believe Marko that your latest posts are well intentioned to protect your industry and peers but they do nothing to advise dealing in the real world of a failing market place.
Offers are offers and creating a false economy of deciding, artibtrarily, what you feel is the proper percentages in that market is at best a guess. As an employee of the buyer you are legally bound to present the offer under contract. You are being paid for your advice representing the buyer but they are not bound, as you are aware, to your advice.
The same goes for double ended deals. Which usually are never a good deal for the buyer/seller on one end or the other. And my advice, never sign a BRA.
Interesting discussion. I see Dasmo's point, and I think it is relevant how far below original asking a place sells for. If I'm asking 400 for a place and drop it to 375 I'm essentially responding to the market telling me my ask was too high, just as I would be if someone offered me 375 for a house I'm still asking 400 for. It's the same effect arrived at through different means. So it would be at least interesting to know how far below original asking it sold for, even if you're not going to try making empirical claims based on that.
In any case, it sounds like we don't have many Royals fans on this board?!?
Just to note, Jack and Cate's post had not shown up for me when I typed my response - didn't mean to pile on!
Go Royals.
What homes sell off original asking price might be valuable in terms of some sort of market analysis context. (In a hot market they sell closer to original asking price, for example).
The problem I have with individuals claiming they purchased a property 10% off asking (original asking) is they are claiming they negotiated down 10% but such is not the case.
Negotiating 10% off current asking price on a livable property under $1,000,000 is outside of 3 standard deviations. For those few properties that sell outside of those 3 standard deviations my guess is a lot of original accepted offers are within and post-inspection issues pushed it beyond 3 standard deviations.
I remember one of the first offers I wrote up for $350,000 (property was listed for $419,900). The market value of the property, after extensive research, I thought was $350,000 and I provided that supporting documentation to the listing agent. Sellers came back at $405,000, my buyer went back with $350,000, the sellers didn't respond and the deal died. Three months later my buyer bought the property for $340,000 (asking price had dropped to $359,000).
Almost 250 deals later I've seen the same thing over and over again. 10% off current asking price is just not realistic striking distance in the vast majority of cases. If a seller is asking $600,000 and you think the home is worth $540,000 they really need to come down to $579,900 or lower for a $540,000 offer to have a chance.
When I go list properties and the seller decides to go $600,000 they are probably hoping for close to $600,000 whether that is realistic or not. If they wanted $540,000 they would have just listed $549,900 to start.
I believe Marko that your latest posts are well intentioned to protect your industry and peers but they do nothing to advise dealing in the real world of a failing market place.
But the market isn't failing...
In my industry, we have to disclose the original asking price of the property in the report and the listing's history for at least the last three years.
Failure to do so can mean anything from censure to suspension from the Appraisal Institute along with the requirement to re-take a university level course.
That's pretty serious stuff. So I can't just simply dismiss that the original listing price is meaningless.
When I speak with home owners about their original purchase they tend to reflect the best scenario such as we got a deal at say 10% off the price. When I research the history, I find the home owner is usually referring to the original price and excluding the last reduction in the asking price.
The scenario is that you are looking at a home listed at $500,000. The agent drops the list price to $450,000 and then you make your offer. How much of a deal did you get?
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