| Nov 2014 |
Nov
2013
| ||||
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Unconditional Sales | 137 |
412
| |||
| New Listings | 195 |
698
| |||
| Active Listings | 3722 |
4017
| |||
| Sales to New Listings |
70%
|
59%
| |||
| Sales Projection | -- | ||||
| Months of Inventory |
9.8
| ||||
Pretty comparable sales to this week last year but with somewhat lower inventory and fewer new listings coming online.
169 comments:
"The Teranet-National Bank index of home prices rose 5.4 per cent from last year in October, led by strong annual increases in Vancouver, Calgary, Hamilton and Toronto.
On a year-on-year basis, all 11 cities measured in the index saw house prices rising, with the exception of Victoria, where prices fell 0.1 per cent from October 2013."
http://www.cbc.ca/news/business/canadian-house-price-index-up-5-4-in-october-1.2832646
Things that make you go hmmmmmmmmm. Perhaps it is HGMM™ (Hot Ginormous Millennial Money) that will arrest the slumping housing prices since HAM™ (Hot Asian Money) does not appear to be doing the trick?
Come on now, Victoria is still up a ginormous 3.51% year to date. That's not too shabby.
I assume you realize your article is about the US market? If millenials there are struggling to afford houses, what do you think is happening here where houses are twice the price? Do millennials here make double the income?
You may have a point Leo, then again, haven't younger generations always struggled to climb on the property ladder? Besides, there are numerous 1 bdrms listed in the core for 100-150k range. That ain't much of a mtg payment. As far as demographics, we're very similar to the US.
"twice the price?" I find prices are very similar in comparable US neighbourhoods. For instance if you look at comparable Seattle hoods, our prices and incomes are similar. I believe our incomes are actually higher on average, I'll check. And good luck finding much under $200 a foot near downtown Seattle like you can here.
A difference of course is how fast their prices are now rising. I at least see the possibility that we're a couple years behind as far as price movement. By that I mean they corrected from '08-11, we corrected '10-'13. Now they are up 30% and passing their previous peak, rising around 5% per year.
http://www.zillow.com/seattle-wa/home-values/
I'm certainly not predicting we'll be up 30 % in a couple years as we have a very different economy & size, but pressures from millenials, increasing in-migrants & boomers, and an improving economy make it a possibility. It's hard to say for sure where the economy is heading, although I think that's the least important of the 3 for Victoria. Newcomers more than ever live up to BC's slogan - Bring Cash. Easy to do if you're a Vancouverite, Calgarian, Chinese or Torontonian.
Meaning "easy to do" for the Vancouverite, etc that decide to retire to Victoria. Amazing how Vancouver is leading the country again for October's Teranet.
Let's take a closer look at the median for houses in Victoria and see how that matches up with Teranet.
The Victoria Core, Westshore and Peninsula had a year over year increase in October sales activity from 240 house sales to 300. A staggering 25% increase! And the median price paid also rose from $529,950 to $555,000. Up 4.7%!
Certainly puts Teranet's number right in the ball park with the median.
But what happens when you start to dig a little deeper into those numbers?
It happens that the core districts accounted for 60 percent of those sales. Year over year activity increased from 134 to 175 house sales or 30 percent in the core. Even better than 25%!! But the median price paid for a home went....
down
from $579,500 to $570,000
Hey! That's not suppose to happen!
The spread between the average and median price has also narrowed by some $20,000 too.
For all those stock market watchers what does it mean when volume increases but price drops?
The odd thing is this is a bull market. Inventory, sales to new listings ratios and days on market are all in favor sellers.
Yet the sellers are cashing out when they should be holding out for a higher price.
Two forces that have a psychological affect on prices are fear and greed. This irrational behavior of sellers is likely tied to media coverage as there's a lot of bad news coverage about the real estate market.
Come on now, Victoria is still up a ginormous 3.51% year to date
The more accepted comparison is for the same month year over year.
Oct 2013: 138.73
Oct 2014: 138.62
So dead flat here in Victoria.
"twice the price?" I find prices are very similar in comparable US neighbourhoods.
Not quite twice but close.
But what's up with condo sales?
Last October 101 sold at a median price of $300,000.
This October, 113 traded at a median of $275,000.
You'd think the Millennials would be pushing up sales volume by now? I guess they're having second thoughts.
We lost the Boomers now we're losing the Millennials. Could this be the sound of the other shoe dropping?
VREB report has different numbers than you Jack. Where are you pulling yours from?
----------Oct'13----Oct'14
Median----283k------275k
Average---315k------333k
Sold-------126------141
http://www.vreb.org/pdf/VREBNewsReleaseFull.pdf
I thought it was obvious that I'm just looking at condos in the core districts.
Not all of Greater Victoria including the Westshore and the Peninsula.
The States has it's crazy markets too... You think Van is nuts? Check this out!
http://www.zillow.com/los-altos-ca/home-values/
I think this is a key factor why BC markets are turning around. You can see it in falling vacancy rates as well.
In the first half of this year, B.C. had a net gain of 3,270 people from other provinces. It marks a reversal of fortune for B.C., which saw a net loss in interprovincial migration of 4,596 residents for the full 12 months of 2012 and another net loss of 832 people last year.
http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/vancouver-stands-to-gain-from-increased-migration-to-bc/article21449508/
Swanwick Manor, sold last November for $6.2 million, now offered at $13.2, which allows some room for negotiation while still yielding a 100% mark-up. Is the market booming, or what?
Here's the link to the Swanwick listing.
That certainly would be a dilemma for any mortgage appraiser.
The appraiser has no choice and must disclose the previous sale of the property. The property was advertised over several years giving plenty of exposure to the marketplace which would suggest that the property sold at fair market value.
With no market evidence to suggest any significant market appreciation how can you justify any significant difference in the two values?
I've had this happen to me in the past when a broker would call up for a mortgage appraisal and stipulate that I NOT disclose the prior sale. However that's a miss-representation by omission. Something the lenders, Appraisal Institute and insurance providers get pissed about.
Actually, it's quite simple you pass the low fee mortgage assignment onto the competition and accept the high fee assignment for court purposes that might arise.
A $2,000 fee is a lot better than $200
Righteous flip if they get 10! It was originally listed for 24 million a few years ago.
This says it went for 5 million two years ago. Thats some righteous dudes if they end up making a cool 5 M tax free.
The appraiser has no choice and must disclose the previous sale of the property. The property was advertised over several years giving plenty of exposure to the marketplace which would suggest that the property sold at fair market value.
It might not have had enough market exposure at the right price.
It was listed for $14,500,000 million for 6 months leading up to the sale. From there it was re-listed for $8,900,000 and sold for $5,000,000 after 30 days (including the conditional period which was likely a few weeks long).
If I was representing the seller I would argue that a few weeks on market at $8,900,000 was not enough market time and that $5,000,000 was a desperation sale. The seller went extremely quickly from $14,500,000 to $5,000,000.
If representing the buyer you come up with a different argument.
Condo market in Langford is hurting. Seeing 2008-2010 condos purchased in the 290k-310k range now regularly going in the 235k-245k range. I am surprised there aren't more foreclosures in this segment. The sales obviously must be clearing title after paying out commissions.
New OSFI regulations pertaining to risk assessment in residential lending have been adopted this week. That might make "flipping" a little more difficult.
All these new regulations are moving us from the wild, wild west days of real estate manipulation. The regulations are not meant to protect the public but the lenders. If you want the same protection, as the lenders, you'd have to commission your own appraisal.
It's a self serving statement on my part, but I think if you're unsure of value or buying into any new project you should get your own appraisal done.
Then if you have a loss from relying on an incompetently performed appraisal you should sue the appraiser for your loss. If the bank orders the appraisal, after you have made an accepted offer, then you have difficulty in showing damages from any reliance on the report.
Every appraiser carries Errors and Omission Insurance up to $2,000,000 per occurrence.
You have to have something to argue with - like evidence of comparable sales.
A gregarious personality may pay off in marketing - but not in the court room.
Don't bring a knife to a gunfight.
Usually, the only time you'll see foreclosures advertised as court ordered sales is after the redemption period has ended and the property is now vacant.
Most don't get that far into the process. Usually because they have enough equity to hire a real estate agent and make a deal without the court getting involved.
I'm seeing more developments getting into difficulties like the condo project along Jacklin Road. But most are people who have owned their homes for a decade or more and have just borrowed all the equity out of their homes.
Lots of games played in the past to get high valuations to the point that the homes had more debt than worth.
We bought a place up the road from Swanwick Manor in 2009 for $975,000. We sold it in September of last year for $857,000 after 18 months on the market.
We sold it in September of last year for $857,000
Surprising since at least early 2009 was a low point in the market. Can I ask why you sold?
We bought it with my parents intending to create two seperate living spaces. Ultimately we couldn't agree on an approach so selling and going our seperate ways was the remaining option.
you should get your own appraisal done.
I've personally had three appraisals done (as per request of lenders) on three different properties with three different appraisers in the last 12 months and was utterly disappointment with all three of them.
For example, my Promontory unit came back at $240k+ (I forget exact number, I think it was maybe 246k) when at the time market value on the unit was $215,000 on the high end. I remember my mortgage guy phoned me and was like, "how on earth did you pick up a 240k+ unit for under 200k," well, "Mr. mortgage guy the unit isn't actually worth anywhere near 240k+." Funny thing is I had clients that bought at the Promontory that paid 30k more (better unit, higher floor) and their appraisal came in lower....what?
The other two appraisals were just as bad. One I think the appraisers had not seen any of the 3 comparable properties he used (I had personally seen two and they made no sesne).
I think appraisals are important for lenders just as a double check, but I wouldn't toss around my cash based on information from an appraisal.
We bought it with my parents intending to create two seperate living spaces. Ultimately we couldn't agree on an approach so selling and going our seperate ways was the remaining option.
Interesting you say that.
Over the last 4.5 years I've had 10 plus buyers approach me with the intent of buying together with their parents or children. Haven't closed one deal yet with parents and children buying together! Usually both parties give up and buy separate properties.
Biggest problem is finding homes with equivalent quality in two living spaces. No one wants to live in the dark basement suite!
New homes also limit suites in the majority of municipalities to 90 square meters so even in a new home you just don't see bright 1,200 to 1,400 sq/ft suites one party would be with happy living in.
When I had the new house at 2529 Shakespeare listed we must have had at least 10 people look at the place with parents or children, but the suite was only 750 sq/ft or so. Biggest complaint was from parents..."how do I put my king size bedroom set into this 11x11 suite bedroom!"
I remember my mortgage guy phoned me and was like, "how on earth did you pick up a 240k+ unit for under 200k,
Same experience here. The bank's appraisal was something like $570k, bought for $550 and the broker made a comment about it being good that the appraisal came in so high. Of course it wasn't actually worth that much, the new BC Assessment was a much more accurate $535k or so.
Biggest problem is finding homes with equivalent quality in two living spaces. No one wants to live in the dark basement suite!
We pulled it off by using the grandkid as leverage. You ever want to see her you will move into the basement and be our babysitter! Muhahaha.
This was very much the situation when we were originally looking. We know a couple that were successful in modifying an existing residence to everyone's satisfaction in Saanich. Saanich allows two kitchens so they didn't create a suite but rather finished an attached three car garage as living space with a second kitchen and put a "no man's land" room in between.
So Marko and Leo S what are you doing about "bad" appraisals?
"COMMITTED TO EDUCATING AND PROTECTING CANADIAN CONSUMERS
The Appraisal Institute of Canada (AIC) is committed to ensuring that consumers and clients understand the appraisal process and the roles, responsibilities and expectations of a professional appraiser. AIC is a self-regulated designating organization and has established a standards-based Professional Practice model that is responsive, transparent and accountable to the public.
AIC’s Director of Professional Practice serves as the first point of contact for consumers and is a dedicated resource that will respond to various questions and concerns related to the services of an AIC member. The Director is responsible for registering consumer concerns and complaints in a confidential and expedient way.
Any concerns regarding the work product or the conduct of a member of AIC can be directed to AIC’s Director of Professional Practice at 1-866-726-5996 (toll free) or via email at directorprofessionalpractice@aicanada.ca.
AIC has a Complaint Resolution Process that is focused on maintaining the excellence of the appraisal profession and the services AIC-Designated Members provide to the public. A complaint must be submitted in writing by completing the Complaint Form included in the Consumer’s Guide to AIC Professional Practice. The AIC focuses its investigation and adjudication on formal complaints where it is alleged that a member has contravened the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP)."
http://www.aicanada.ca/
If you're not willing to make a complaint you're continuing to allow alleged "bad" appraisal practices to continue.
Just Jack; is there an expectation that an appraiser using 3 comparable properties would have viewed at least some of them? In a day of professional photography and wide angle lenses what appears in our database is often quite different from real life presentation.
Marko, after a property has been sold - how do you then get interior access from the new owners a month after closing? I can't and neither can you.
Or is it your expectation that an appraiser must go through every property listed for sale?
There are some 500 condos listed for sale in Victoria City. If you arranged access and viewed each one and on average spent 1 hour to do so it would take you over 70 contiguous days or roughly 3 months with weekends off to view just the condos in Victoria. By that time there would be another 500 new listings added.
Yet, the appraiser must demonstrate that she is familiar with the neighborhood, complex and types of housing being appraised. For example, if the appraiser has never appraised a property on Pender Island, she has to inform the client before proceeding with the appraisal of that fact. The client can then chose to use her services or continue to look for another appraiser.
How many agents have that requirement to pass on listing of a property because they have no experience selling in your condo complex?
Now how about those 3 comparable sales. I'd generally research several hundred sales before selecting 3 to present in the report as economic indicators of value. They simply have to represent alternative properties that were sold in the last 90 days that would appeal to the same target market/buyer as the subject property.
Then an appraiser would reconcile these presented sales along with neighborhood medians of similar properties, or a time trended analysis of a similar home along the street or in the complex, a time trended analysis of the past sales of the subject, and possibly the sales to assessment ratio of similar properties in order to test the final estimate as being fair and equitable. There is no requirement that all of this data collected be presented in the report. As the report is simply a summary of her findings.
All of these different values are then reconciled into a range of value for the subject property showing the low end of the range for a quick sale or the high end of the range for a seller willing to wait for that "right" purchaser. Out of this market value range the appraiser selects one number which is his/her opinion. That's a lending requirement as the loans officer is not allowed to use their own judgement and select within the market value range depending on the strength of the covenants.
That singular dollar opinion doesn't have to be the same as your opinion because the appraiser isn't trying to guess what you and the seller have come to an agreement after several back and forth days of negotiation. She is estimating a value in the marketplace that is reasonable, reliable, fair and equitable to all parties.
Most of the above you will get when YOU order the appraisal. You get to speak with the appraiser and to express your concerns.
Your broker and lender are most likely using an intermediary company like NAS, SOLIDIFY or CENTRACT that charge you $325 and pay the appraiser $200 for the appraisal. Consequently, you are more likely to get a "bad" appraisal through an AMC that selects appraisers on low fees and not quality of work.
So Marko and Leo S what are you doing about "bad" appraisals?
Nothing as it doesn't affect me. If the bank is happy I'm happy.
Pretty good discussion on CBC Radio's The Current yesterday: Non-aboriginal Canadians need to wake up to the rising power of Aboriginal Peoples
Contextless excerpt: "...there has to be a massive transfer of wealth, transfer of land..."
I know everyone here loves anecdotes so here's one for the bears! Rejoice bears! It looks like at least one tradesman is hurting
here's the ad text in case it's deleted :
hello,
im just looking for some feedback here, im hopeing some of you will take the time to send me a quick note regarding this.
im currently experienceing a major slowdown in work. ive been working in victoria for the last 25 years and ive never seen it so slow,
are there no renovations going on in victoria, are you also experienceing a slow down.
is there just a lot of contractors for the work available.
any feedback on this would be greatly appreciated.
thanks for your time
ya right... probably one of the morons that worked on my bathroom a few years back...(He says while he is redoing the wall system around the tub properly this time). The boom days are over when all you needed was both eyes, arms and legs to get a job that's all this guy is experiencing...
How about some deals so far this month.
A 1,085 square foot condo in Fairfield described as having location, location.
What only 2 locations!
No updating and no kids allowed - sold for $190,000 or $100,000 below assessed value. 179 days to get an offer. Obviously not the right location, location, location.
Historic residence on Terrace Avenue sold for 1.6 million. And yes I have been through this home - just not in the last decade.
Purchased five years ago for $2.3 million. Assessed for 2.5 million.
So much for using the assessment as any guide to value.
How about a house along Rock Bay, on an industrial zoned lot for $380K. Agent originally listed at $475. I guess it isn't just appraisers that can be way off the mark.
A house on Davida described as lot value only sold at $277K. Same property sold in 2003 for $157K as lot value only too. Problem with these lot value only homes is that they rarely get a new home built.
AND
An oceanfront home in the Saseenos area of Sooke. 1600 square foot character home on 60,000 square feet of water front zoned for a duplex.
Drum roll..........
$495,000
Did I mention .... it's water front. Makes that war shack in Fernwood that people pay a half million look like crap.
Oh, I forgot its location, location ....yada yada yada.
For instance if you look at comparable Seattle hoods, our prices and incomes are similar
How do you find a "comparable hood" in a metro area that's 10 times the population?
How about being objective and just comparing price versus rent.
Price versus rent would be near Victoria. West coast cities are all near 30 price to rent; Portland, Seattle, San Fran, San Jose, Oakland.
West coast cities are all near 30 price to rent; Portland, Seattle, San Fran, San Jose, Oakland.
That's where they were at the top of the bubble.
Seattle seems to be in the high teens, for example:
3847 23rd Ave SW, Seattle, WA 98106. 4 beds1.75 baths1,960 sqft
And note no suite income.
This site has March 2014 price rent ratios. Come to think about it, I'm not sure Vic is higher than 25. A family would have a tough time finding a house for less than 25,000 per year.
http://www.deptofnumbers.com/affordability/metros/
Portland 26
San D 33
San F 39
San J 44
Seattle 26
Any body know what Vic is?
Anyone have an opinion/inside information about the Savoy at 777 Blanshard Street?
To be fair JJ there are bidding wars and stuff going for 64K over ask & 130K over assessment too like 1-2277 oak bay ave. 21 DOM and $532/foot for an old box! How come you don't mention those???
Totoro I think that's one you cant put washer/dryers. The only other issue is traffic i guess.
Yep, no in-suite washers/dryers, limited rentals and downtown traffic. Seems like low strata for hot tub/sauna/worksop and low prices though.
To be fair JJ there are bidding wars and stuff going for 64K over ask & 130K over assessment too like 1-2277 oak bay ave. 21 DOM and $532/foot for an old box! How come you don't mention those???
Because it would contradict his narrative of the market.
777 Blanshard Street....lots of restrictions. 18+ too and CMHC as far as I know is not insuring mortgages on 18+ buildings which means financing can be a little trickier for those with less than 20% down. (Have to go via Genworth or similar but on the odd occasion I've seen Genworth flag older buildings for various problems and then you really have a financing issue).
Other inside info, best to read the minutes in detail. As far as I know they had a substantial fire last year and have had some issues with balconies/water in the past that they've been working on.
The hallways are crazy dated! Takes you right back to 1975.
To be fair JJ there are bidding wars and stuff going for 64K over ask & 130K over assessment too like 1-2277 oak bay ave. 21 DOM and $532/foot for an old box! How come you don't mention those???
That is far from an old box. The pictures don't make it look that good but it is solid (for example, the units have 9 foot ceilings which you can't gather from the pictures). Probably one of the best built 1990s buildings in Victoria. $532/foot for a concrete penthouse in that area is not insane when you look at what Abstract is fetching for the woodframe down the street in at the corner of Foul Bay and Oak bay.
Or is it your expectation that an appraiser must go through every property listed for sale?
I guess my expectation would be that an appraiser see 5 to 10% of properties sold in the market they are appraising. For example, if 1,400 condos sold last year is it too much to expect that an appraiser doing a condo appraisal saw 70 to 140 of those?
This is where I would put the most value in a good appraiser, otherwise, if he or she hasn't seen any product that has sold what difference is there really between an electronic appraisal like Landcors and an appraiser?
With houses it is especially important. For example, in Oak Bay you can have two houses that are built in 1914, both 2,500 sq/ft, both 5,500 sq/ft lots, same street, and one sells for 200k more than the other. You can tell a few things by the pictures, but often having looked at the properties tells the true story like despite the advertised basement height of 6'8'' one had a 5'11'' basement and the other one with an advertised basement height of 6'8'' actually had a usable 6'8'' basement, etc.
Also, what is the rational behind the appraisers needing to know the purchase price on the property they are appraising?
A typical appraiser likely sees 500 properties a year. The most residential properties that I've been through, documented the interiors and measured the exteriors was 750 when the market was hot.
However, any appraiser that has 10 years of experience will likely have been through 80 percent of the condo complexes and almost every street in Victoria.
For example, I've been through the complex at 2217 Oak Bay, many times through the Savoury, the Highland Mansion on Terrace, the waterfront acreage next door to the Swanwick property. Actually I just walked the Swanwick properties beach front last month when I went to the adjoining park.
So a typical residential appraiser is inspecting, documenting and measuring about 500 properties a year.
How many did you do last year?
If all appraisers are doing 500 a year I don't have a problem with that.
The appraiser isn't trying to guess the price the property sold at. That has already been hashed out between the buyer and seller.
The appraiser is determining if the sale price is reasonable for the current market. In that way the lender can use the property as collateral for the loan. The sale price is tested against the market. If the sale price is outside of a reasonable market value range, the deal may collapse. The accepted offer forms part of this bank document and is a mandatory reporting requirement by the Appraisal Foundation, International Valuation Standards, USPAP and CUSPAP Canadian Uniform Standards of Professional Appraisal Practice.
But 90% of appraisals performed are not sales of homes. They're mortgage refinancing, relocation, divorce, foreclosures, partial takings and litigation where there is no sale price to be reported.
Where you're getting mixed up is in the purpose and function of the appraisal. The purpose is to estimate market value the function is to assist in mortgage financing.
An appraisal can also have the function of estimating a prospective market value in the future of say a new building to be completed a year from now. Or a different function if it's for court purposes when there is duress and selling limitations imposed.
A change in purpose or function will have a significant effect on the appraised value.
Thanks Marko.
And typically after splitting with an Appraisal Management Company like NAS, SOLIDIFY and CENTRACT. Then splitting again with the owner of the Appraisal Company, the appraiser is making a $100 which he has to pay his expenses from.
So it isn't choice - it's necessity that he perform 500 appraisals a year. That does make for some really sloppy mortgage appraisals being done.
But it isn't an appraisal that the broker, banker, real estate agent, buyer or prospective buyer wants. They just want a loan. So who's going to make a written complaint to the Appraisal Institute? The banks happy - you're happy.
However, if you have an appraisal done BEFORE you make an offer, then you are relying on that appraisal and you deserve a higher level of service. And if you suffer damages from a incompetently performed appraisal - sue his ass off or make a claim against his insurance.
If the appraiser wrote that the amperage is 200 and you then buy the home based on his report and find it's only 100 amps. Now you can't use that new hot tub in the back yard. You're getting a new electrical service paid by his insurance company.
VOTE STEWART
Sorry to break it to you folks...the biggest issue in this election is neither the bridge nor the sewer - it’s the immigration system!
Having saturated Toronto and Vancouver with immigrants, and refusing to admit that far too many newcomers are allowed into the country each year, the government is now intent on dumping the surplus in smaller cities such as Victoria. It should be a scandal, except for the fact that this city doesn’t have a single journalist with the guts to investigate the matter.
Vancouver Island is a special place. Don’t let the powers that be turn it into the Lower Mainland.
http://www.victoria.ca/assets/Departments/Legislative~Services/Douglas%20Stewart%20Candidate%20Profile%202014.pdf
^ jackass. And now he has hurt his own business by making his jackassery public. That's ok though, he will probably sell it to a Chinese immigrant...
mark~
thanks
+1 Totally agree with dasmo on the jackass comment. The guy is the owner of Utopia shirts downtown & has received a lot of negative feedback about his racist t-shirts. Immigrants are statistically higher-educated people who fill important roles (like helping to fill our shortage of doctors!) Also humans.
My husband is an immigrant from the USA -I can guarantee he took a job from no one.
I also spent some time in other countries & am so glad they did not treat me as terribly! Unbelievable.
Election 2014 - not much change in City of Vic.
We got rid of Dean for Lisa which I think will prove a good thing. Good campaign by Lisa to overcome the NDP machine.
We kept all six incumbents that ran again for council which is most definitely not the outcome I hoped for
^ same... Dean gone is good but I would have fired the lot...
304 - 1510 sold for $312,000 (purchased for $332,920+GST brand new)
205 - 1510 Hillside sold for $319,000 (purchased for $400,000 in 2008 and $375,000 in 2009).
Yikes....
A year ago you could find deals for a full 1/3rd off peak price. Harder to now but its another good entry point. I wouldn't touch 1510 Hillside for 300. Nice suites but on small side for 2beds. Horrible decks,outlooks and shabby location. Mall has improved but way too far from downtown &ocean. Location x 3 is still the golden rule!
Monday, November 17, 2014 8:00am
MTD November
2014 2013
Net Unconditional Sales: 234 412
New Listings: 366 698
Active Listings: 3,685 4,017
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
The Condominium market in the core districts is an odd market. The three indicators that I monitor to determine the health of that sector namely Months of Inventory, Sales to New Listings ratio and days on market all indicate a balanced market that would typically mean stable prices.
Instead I'm noticing stable prices in most newer condos built in the last decade but a shallow and dysfunctional market for older condominiums.
If you're 55 and older and want an older condo with age restrictions you may just be the only bidder for that condo. And that means you're going to get location x3 at a good price.
NOTE: a good price doesn't mean a high price paid to the seller such as the penthouse on Oak Bay Ave. A good price means exactly want it means for every other asset. When you get a good deal from a car dealer or a good deal on home renovations.
Hey Marko,
What did that place on Darwin Ave. sell for? Or was it just taken off the market?
Thanks
The Darwin place has been made "inactive," which means no showings for the time being. No sale reported as of yet.
As for detached homes in the core districts, I think there are some interesting listings of properties that lay between the Baby Boomer and Millennial target markets. Where again - you may just be the only bidder. That means a good deal. Certainly why a prospective purchaser should think outside of the norm and expand what they are looking to buy. Buy for the future and not for today.
Properties that fall between having not enough house for the Baby Boomer and too much land for the Millennial.
Millennials will pay crazy prices for location and so will BB's. That's one of the reasons I believe some of the more sought after neighborhoods are now over inflated relative to the remaining marketplace. Not just the regular inflated urban housing but more like a pimple on a boil type inflation. Where the two target markets collide. These hoods have yet be lanced unlike some other areas where the prices have oozed lower, these areas are likely to have a faster and larger correction like the pimple before the prom.
And as always all of the above is....
In my opinion
Okay. Thanks Marko!
I noticed that old house on the corner of Darwin and Savannah sold quickly. I am always surprised by the demand for some of those old homes....
However, if you have an appraisal done BEFORE you make an offer, then you are relying on that appraisal and you deserve a higher level of service. And if you suffer damages from a incompetently performed appraisal - sue his ass off or make a claim against his insurance.
Only problem with this approach is you sink money into a potential transaction and it could not work out for a variety of reasons. For example, seller isn't realistic on price, you can't get the completion dates to work with seller, the inspection uncovers major problems (that seller is not willing to absorb), etc.
I would do the apprisal after an offer is accepted ideally after the inspection and if the apprisal is way off (too low) collapse the transaction.
Costs for a buyer these days are really piling up. An older home in Victoria needs a home inspection ($450 to $500), oil tank scan ($300) and drain tile scope ($200), plus various other things that may come up. Rural properties you also have septic ($500-$750) and well inspections ($500+)
I always advise clients to do the home inspection first and continue from there. If you book a bunch of due dilliegence on the same day and the home inspection is a disaster you don't want to be forking cash out for all the other stuff.
Nice suites but on small side for 2beds.
For a 2007 build building averaging over 1,000 sq/ft for a 2 bed unit is on the bigger side of average.
At least commission the appraisal yourself. Then you can take the report to different lenders and shop around for the best rate and terms.
And then you might just get the lender to reimburse you for the cost of the appraisal if they want your business.
If the lender orders the report, many of them will not let you have a copy of the appraisal.
As I said before, if you are unsure of home prices or the property is unusual, then an appraisal may be prudent on your part. For the general type of property where there is lots of transaction in the hood, I don't think you'll need one done. Perhaps only a market review is all you really need.
A market review or desktop style report which costs about $75 and takes an hour to do. Gives you information of price ranges of similar properties in the area over the last year and a sales history of the property, before signing the contract. Then you can decide to go in at a low price, middle range or at the high end of the price range for that type, style and location.
Which may be better than asking the agent who seems to always say. "It'll go close to list"
There are people out there that you can call and talk to about the market and prices. People that are not involved with selling the property.
We are back to 2007 prices in Victoria!
. . . . . . .Price Increase/Decrease. . . . . .
. . . . . . . . Since October 2007. . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+50%. . . . . . . . . . . . . . . . . . . . . . x. . .
+48%. . . . . . . . . . . . . . . . . . . . . . . . . .
+46%. . . . . . . . . . . . . . . . . . . . . . . . . .
+44%. . . . . . . . . . . . . . . . . . . . . . . . . .
+42%. . . . . . . . . . . . . . . . . . . . . . . . . .
+40%. . . . . . . . . . . . . . . . . . . . . . . . . .
+38%. . . . . . . . . . . . . . . . . . . . . . . . . .
+36%. . . . . . . . . . . . . . . . . . . . . . . . . .
+34%. . . . . . . . . . . . . . . . . . . . . . . . . .
+32%. . . . . . . . . . . . . . . . . . . . . . . . . .
+30%. . . . . . . . . . . . . . . . . . . . . . . . . .
+28%. . . . . . . . . . . . . . . . . . . . . . . . . .
+26%. . . . . . . . . . . . . . . . . . . . . . . . . .
+24%. . . . . . . . . . . . . . . . . . . . . . . . . .
+22%. . . . . . . . . . . . . . . . . . . . . . . . . .
+20%. . . . . . . . . . . . . . . . . . . . . . . . . .
+18%. . . . . . . . . x. . . . . . . . . . . . . . . .
+16%. . . . . . . . . . . . . . . . . . . . . . . . . .
+14%. . . . . . . . . *. . . . . . . . . . . . . . . .
+12%. . . . . . . . . . . . . . . . . . . . . . . . . .
+10%. . . . . . . . . . . . . . . . . . . . . . . . . .
+8%. . . . . . . . . . . . . . . . . . . . . . . . . . .
+6%. . . . . . . . . . . . . . . . . . . . . . . . . . .
+4%. . . . . . . . . . . . . . . . . . . . . . . . . . .
+2%. . . . . . . . . . . . . . . . . . . . . . . . . . .
..0%. . . .x *. . . . . . . . . . . . . . . . . .*. . .
-----------------------------------------------------------
. . . . .October . . June. . . . . . . . October
. . . . . .2007. . . .2010 . . . . . . . . .2014. .
x = Toronto
* = Victoria
(source: Brookfield’s index)
From October 2007 to October 2014, house prices in Toronto increased 50% while prices in Victoria decreased 1%. (link)
Victoria’s October data also indicates that:
* Prices in Victoria were lower in October than in any month since August 2007 (even lower than 2009’s lowest point).
* We would have to go back to 2006 to see October prices this low in Victoria.
* Prices in Victoria were down 4% year-over-year.
* Prices in Victoria were down approximately 1% month-over-month.
* Prices in Victoria are down approximately 3% year-to-date (since the end of 2013).
(continued)
Prices have declined in Victoria since 2010 even though interest rates have fallen significantly since that time and are currently at historically-low levels. If emergency level interest rates can’t stop Victoria’s price decline, what will?
As prices continue to fall, more and more near-peak buyers will be stuck with underwater mortgages. There are many (once happy) first-time buyers in Victoria who are probably not so happy now, knowing that they owe more than their properties are worth. Many are probably either in denial or think that prices will bottom and head higher soon, bailing them out of their poor buying decisions, but that won’t happen.
It hasn’t taken rising interest rates for prices to decline in Victoria and it won’t take rising rates for prices to continue to decline. Victoria’s housing bubble has a lot of deflating left to do.
Based on the price-to-rent ratio, the International Monetary Fund (IMF) considers Canada’s housing market to be the most overvalued and least affordable in the world (see chart). Note that house prices (overall) in the US (a country with similar household income levels as Canada) are not considered to be bubbly by the IMF.
Of the bubbliest markets in the US (in 05-06), it was the warmest cities (think Victoria) that began to correct first and ended up experiencing the deepest price corrections.
Those Victorians who have put their buying plans on hold since 2010 are probably happy they did and many of them probably realize that much lower prices are on the way.
Hardly looks like a peak... More like a plateau... A long flat plateau...
"This site has March 2014 price rent ratios. Come to think about it, I'm not sure Vic is higher than 25. A family would have a tough time finding a house for less than 25,000 per year.
http://www.deptofnumbers.com/affordability/metros/
Portland 26
San D 33
San F 39
San J 44
Seattle 26
Any body know what Vic is?"
The price-to-rent ratio can be used to gauge the degree of overvaluation/undervaluation of a city's housing market only if its current ratio is compared to the historical average of that ratio.
On its own, a city's current price-to-rent ratio doesn't reveal whether or not that city's housing market is overvalued or undervalued.
The IMF considers Canada's housing market to be the most overvalued and least affordable in the world. Canada's price-to-rent ratio has deviated far from its historic average (higher). The degree of deviation in Canada is higher than in any other country in the world.
Canada's housing bubble began to inflate in 2000. Victoria's housing market remains deep in bubble territory as prices skyrocketed from 2000 to 2010 (due to lax lending standards and emergency level interest rates) while increases in rents were left far below.
Canada's housing bubble is much larger than the 2006 US housing bubble. The bigger the bubble, the bigger the potential price decline.
Interest rates in Canada are currently at historically low levels. When prices across Canada begin to fall, it will not be possible to slash rates from near-normal levels to emergency low levels (as they did in the US) to lessen the degree of price correction. This also points to a potentially bigger price correction in Canada than there was in the US.
"Hardly looks like a peak... More like a plateau... A long flat plateau..."
Let's take a closer look.
* From October 2007 to June 2010, prices in Victoria increased by over 13%.
* Prices then peaked in June 2010 and began to decline.
* Prices in October 2014 were 1% lower than they were in October 2007.
Plotted on a chart, this data clearly appears to be in the shape of a mountain with June 2010 representing the peak. Nothing flat about that.
Plotted on a one of your famous ascii charts it looks like this
...........___-_-_____________
.........._
........_
......_
...._
.._
_
Pretty much a plateau...
For the homeowners out there, how much is your home insurance per month and who is your insurer? I'm renewing mine soon and wondering whether I should switch.
$79.75/month through TD Melloche Monnex for the standard + earthquake.
It's a bit more because of our alum wiring
I'm about the same with coast capital... Just under a grand.
$79.75/month through TD Melloche Monnex for the standard + earthquake.
It's a bit more because of our alum wiring
I'm also with TD Meloche Monnex. I, too, have earthquake coverage. And for the last two years, I've added sewer back-up coverage. Here are my last 5 years' costs per month:
2010: $58
2011: $60
2012: $31*
2013: $39
2014: $47
2015: $55
*When I phoned to ask some questions upon renewal the agent told me I was paying too much and he switched me to their "$1-Million Solution" option, which saved a lot.
I guess I'm still getting a good deal. Though I might shop around a little.
Insurance for my 1979 SFH is $88/month, purchased from Megson FitzPatrick. Rebuild cost is $355K, liability is $2M, earthquake (10% deductible) is $581 (including contents).
Really ugly employment number for the month of October for Victoria.
176,800 employed - Never went below 181,700 last year and was 184K this time last year. Don't have full month to month details from previous years but I would bet that it hasn't been this low since at least 2007.
page 9: http://www.bcstats.gov.bc.ca/StatisticsBySubject/LabourIncome/EmploymentUnemployment.aspx
For all of those home owners still drinking champagne on the poop deck of this real estate ship. You only have to look over your shoulder at housing in Langford to see how those in steerage are fairing these days.
Remember 2007 and Bear Mountain Condos.
Well back then back hoe operators from Alberta were buying these skyboxes up at a rate of two or three at a time. Such units as a ground floor one-bedroom in one of the more luxurous complexes for $335,000.
Damn - take two at that price!
Well now it's a new day and a new market and that $335,000 condo sells for $245,000.
And it rents for $1,385 a month with a Jack Nicklaus Golf course, Tennis Courts, Social/Media Center, Fitness Facility, Pool and full Spa at your door. And it came fully furnished. That's a Monthly Rental Factor of 177.
The equivalent price in Victoria would get you a condo with a view overlooking a dust bin teaming with rats.
The people in steerage know what it's like to be up to their necks in water off the banks of the Insolvent sea.
http://www.bnn.ca/News/2014/11/19/Canada-may-actually-need-MORE-housing-CIBC.aspx
Attention retirees – Sarnia has $100,000 homes to spare
Keep waiting for all those boomer retirees from back East.
The condo action has mosied on over to Cowtown.
Yesterday’s paper 252 units…sold in the span of three days late last week.
Prices range from $289,900 to $2.3 million…spring-summer 2018 completion.
http://www.calgaryherald.com/homes/Parkside+development+most+successful+Calgary+condo+launch+since+recession/10388992/story.html
Why would anyone move to carcinogenville Sarnia
"according to 2014 World Health Organization data, which monitors outdoor air pollution levels around the world, Sarnia's outdoor air quality remains one of the worst"
when you could retire to Parksville or Sooke for the same price?
http://www.realtor.ca/propertyDetails.aspx?PropertyId=13564137
http://www.realtor.ca/propertyDetails.aspx?PropertyId=14261933
If guess if you wanted to 'retire' early, chemical valley S Ontario would sure do the trick :(- lol
Why would anyone...(fill in the blank)
Why would anyone pay a $90,000 premium on 970 Cloverdale Ave. Assessed $351k. Sold for $441k and it desperately needs a new roof.
Leo,
How did it look inside? Any renos?
There simply isn't enough supply of starter homes within a 2 kilometer radius of the property on Cloverdale.
People act irrationally after they've been beat out on other homes. They tend to buy junk at any price.
The rational person would not be caught up in this market. Those that are buying today are making poor choices due to emotion not information.
If the banks were doing their job, then they would cut back on the loan to value ratio in these bullish markets. That's what OSFI wants them to do with the new B-21 guidelines. But no one knows how to enforce these guidelines.
Not until the loan originators have skin in the game will it happen.
Why would anyone pay a $90,000 premium on 970 Cloverdale Ave. Assessed $351k. Sold for $441k and it desperately needs a new roof.
Any house that sells over assessment sells at a premium and anything under assessment is at a discount?
Home was purchase 5+ years ago for $401,500 and has had improvements since that time. $441,500 isn't off the rocker.
Keep in mind anything under $475,000 there is no PPT for first time buyers that qualify so the $425,000-$475,000 segment is a little more attractive then it use to be.
Marko said...
Any house that sells over assessment sells at a premium and anything under assessment is at a discount?
-------------
Yes Marko, basically that's correct in today's market. George Carlin said it best:
"Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?"
TIMING THE MARKET
In the used home market, generally speaking between 5 to 7 Months of Inventory, a sales to new listings ratio between 40 to 60 percent and a market exposure between 30 to 90 days would be considered a balanced market that neither favored buyers or sellers. Prices would be stable.
So when is a good time to sell?
When the market is in your favor. That would be under 5 months of inventory, a sales to listings ratio greater than 60% and the median market exposure under 30 days.
The opposite when it's time to buy.
More than 8 MOI, a SNL% under 40% and a DOM greater than 90 days.
If you are a prospective buyer, then reverse the above.
So you can time the market - just not with a stop watch or a calender.
Using the sale on Cloverdale as an example. There are only 10 listings like this property within a 2 Kilometer radius.
The MOI is 1.5
The SNL% is 91%
The DOM is 23 days
The median price paid for homes like the one along Cloverdale over the last 6 months was $459,000 as compared to a year ago when the median was $435,000.
The numbers get even more extreme when you add in the need for additional income from a basement suite. Then you're getting into an auction envrionment and people over paying just to get the house.
The market for starter homes around that location is strongly in favor of sellers which may lead to irrational buying behaviour by some prospective purchasers.
It's highly unlikely that this is going to change in the next 90 days. But it will change. And that historically is in the Spring Market and that has a potential of eliminating the premium buyers are paying for starter homes today.
Or to put it another way. You may be paying $460,000 for a home that might only be worth $435,000 in March of 2015. Good for a seller - not so good for a buyer.
With Cloverdale MOI, SNL, DOM would it not it make more sense the home will be worth near $500,000 in March 2015? Canadian cities that neared those MOIs recently were rising nearly 10% annually.
Wouldn't the other CND cities MOI be the average for the city across a variety of properties? Our average is much higher than 1.5 MOI.
I'm wondering if any HHV regulars care to muse or speculate about the potential impact on the development climate as a result of new Mayors being elected in Saanich and Victoria?
Obviously the market is the major driver for developers, but in case anyone followed the Saanich race more closely than I, what are the odds that Atwell may apply a more critical lens when developers want to book him a tee time?
Marko
I was using the Cloverdale property as an example.
Those indicators were for a starter home in that location. Not the general market. Why would you want to include million plus homes when it's the starter home market your isolating?
No Chris, because the Winter market has cyclically fewer listings while the Spring market experiences an increase in listings. To reach $500,000 you would have to sustain a shortage in the Spring Market. History shows that that is unlikely to occur.
Also if prices for starter homes go too high, then that would have an effect similar to an increase in interest rates and prospective purchasers would stop buying. And that would change those indicators as well. And we know we are close to the price ceiling for starter homes because of peak prices experienced in 2010.
How about the one-bedroom non water view condo market in the core districts?
There's about 4.8 MOI
And a SNL% at 60%
DOM is 47 days
This shows a balanced market that does not favor buyers or sellers with stable prices. Although it is at the edge of becoming a bear market.
Median Price for a 1 bedroom is $212,000 which is about the same as one year ago when it was $214,000.
To me, it shows a market that you can spend some time looking around, with no worries of prices increasing in the next 90 days. Yet with a strong possibility of more listings in the Spring leading into a Bear Market you might want to wait for some good deals. Yet today's prices are still reasonable.
You might want to unload that one-bedroom rental condo as I don't see prices rising in the short or medium term. In otherwords - this is as good as it gets.
“And a SNL% at 60%
Although it is at the edge of becoming a bear market.”
Looks as though our resident appraiser has been drinking again ;) 40% is the edge of becoming a bear or buyers' market. 60% is the edge of becoming a bull or sellers' market. Additionally if sales increase faster than new listings by Spring as is my prediction, ergo we rise above 60%, we will be in a full-fledged sellers’ market.
Under 40% is bearish or a buyers market as less than 40 percent of the listings are selling. A Bull or Sellers market would have more that 60 percent of the listings selling.
Never happens SJ. Spring is the time that listings increase. The Winter market is when fewer people list their property. That's why there is a shortage in starter homes in this Winter market. Historically each Spring the MOI increases. The SNL% decreases and the DOM will increase.
As new product becomes available only then do buyers become interested again. Then sales begin to pick up as there is more to chose from.
Never happens SJ
Happens often where S/L rises during Spring and above 60%.... '05, 07, 09
I'm wondering if any HHV regulars care to muse or speculate about the potential impact on the development climate as a result of new Mayors being elected in Saanich and Victoria?
I can't see things possibility getting any worse in Victoria for development in terms of larger development. It takes years to get anything approved. Even a simple single family permit (no re-zoning involved) takes three months to get approved. Other municipalities approve the same single family home in a 5-7 business days.
Never happens SJ. Spring is the time that listings increase.
As new product becomes available only then do buyers become interested again. Then sales begin to pick up as there is more to chose from.
What I'm saying is good news for agents selling properties. Selling more properties is much better than higher prices with lower sales volume. ie more commissions.
It's good news for those wanting to sell their homes too. Your getting your best price today.
As for those buying, well someone has to take a hit for the team. You've already decided to buy, so nothing you read is going to stop you.
You'll pay whatever price you have to, until the bank says no more money. 6 months from now if prices drop 5%, you won't care. You will have bought and you're no longer part of the marketplace.
The only time it will be meaningful is when it comes time to sell. You'll just make less money on the home and it'll take you longer to pay off the loan than someone who waited for the bear market. That and there will be better selection in the Spring. You'll just pay the same price for a home on a busy street today when you'll get the same house on a quiet street come Spring.
Real Estate has its cycles. It's how you time your purchase and sale that's important. Having the information to make an informed decision is a good thing. Or do you want to keep hearing unsubstantiated comments "that's it is a good time to buy" when you're a prospective buyer and then the same agent will flip to say it's a good time to sell if you're the home owner. And that the market is always "in balance"
I don't think anything I've written is new or shocking. Or perhaps some people want to keep up the illusion that real estate is a mystery.
Selling more properties is much better than higher prices with lower sales volume. ie more commissions.
+1....in Victoria where a commission may be 6%100k+3%balance what the property actually sells for isn't significant in terms of commission (the highest % is on the first 100k and almost every property hits that mark). Volume of sales is far more important, but the majority don't grasp the concept.
Jack, if what you said twice now "as new product becomes available only then do buyers become interested again" were true, then S/L ratios would have to spend time sloping downward in Spring. Yet here's another one of our capital clearly showing that EVERY Spring since 2005, sales have ALWAYS outpaced new listings during the months of Spring - March to June - debunking your nutty claim.
https://pbs.twimg.com/media/BqRCC42CMAAfgNS.png
“I don't think anything I've written is new or shocking.”
No, just unintelligent.
Why do you have to lower this discussion to the level of personal attacks?
If your argument had merit it wouldn't be necessary for you to gutter snipe.
Talk to the hand.
Sorry Jack. Most of what you say has alot of merit. I shouldn't have used the u word.
Monday, November 24, 2014 8:00am
MTD November
2014 2013
Net Unconditional Sales: 357 412
New Listings: 516 698
Active Listings: 3,639 4,017
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
@JJ Interesting theory. Here is where we need Leo to bang out a chart to prove or disprove it. So you are saying that the best time to buy is early spring just as the inventory shoots up but just before the action starts. Makes sense but this is also the time when most listings would be new. Sellers would be full of hope and bravado and thus price stickiness would be the highest then as well. Don't you think?
"I can't see things possibility getting any worse in Victoria for development"
Victoria's new mayor has said that she wants to change the culture of "NO" at city hall. We'll see if she can pull it off.
Marko says..."...commission may be 6%100k+3%balance..."
--------------
Bit opportunist aren't you Marko? The average is 5% and yet trying to get that extra 1%? Must be so you can show the Vancouver realtors (no caps here) charge up to 7+% so you are being generous. This is why REALTOR®'s (used the trademark just for you) need more oversight by gov't and legislative watchdogs. These fees look at the short term in making money. I would bet you give your repeat customers and "friends" a better deal everytime, not this (put number in here) % charge.
I get it. It's a free market etc etc...but it also works on referrals and consistent pricing both grey market and published pricing and fees. That is why the 1 & 3% agents are starting to flourish. In your past posts you imply that maybe these agents give you what you pay for, in my experience they give what you expect, just like the 6%+'ers.
Had to pipe in when I see this type of casual up pricing going on...
Actually, I'm trying not to say that Dasmo.
What I was trying to convey, and not very well, is that you have to look at the supply and demand for the specific property.
When the MOI, SNL% and DOM are all heavily weighted into a bull market that's when you will get your best price when selling. Doesn't matter if it's the Spring or the Summer
When the MOI, SNL% and DOM are in deep into Bear territority you're going to get better selection and you're not likely to be under pressure to make hastey decisions. The market is in the purchasers favor.
The example for the starter home along Cloverdale was that the indicators all were showing that it's a good time to sell. The year over year price for starter homes had also increased from $435,000 to $460,000 in that area. The number of sales that happened in this area, between the two time periods is almost identical. Demand did not increase. What changed was supply.
A temporary shortage of housing because the Winter months are historically a time when fewer people list their homes for sale. That shortage will likely continue for the next 90 days as people don't usually list their homes in the Winter. However, in the Spring (typically) listings increase. That would likely bring the market for starter homes back into equilibrium. But you have to look at all three indicators not just one. Higher prices will also bring on more listings.
Black Swan events occur like radical changes in lending policy creating zero down and 40 year amotizations in 2005 or the economic crisis in 2008. You can't forsee these. So while historically listings increase in the Spring, it's wrong to generalize that the sales to new listings ratio will always go into bear territory in the Spring. One of the indicators alone does not make a bear or bull market.
That doesn't translate into all cities, all countries and all properties should be sold in Winter and bought in Spring. It is specific to your type, style and location of property. You can have a shortage of starter homes and an over supply of McMansions at the same time in the same city. One might be showing it's a good time to sell and the other a good time to buy.
Wouldn't you like to know when it's in your favor to sell your home and are likely to get the best price? To sell when there is a shortage and buy when there is an over-supply for your specific property?
Bit opportunist aren't you Marko? The average is 5% and yet trying to get that extra 1%? Must be so you can show the Vancouver realtors (no caps here) charge up to 7+% so you are being generous.
Commissions are 100% negotiable. That being said in Victoria one may see a commission of 6%100k+3%balance. In Vancouver one may see a commission of 7%100k+2.5% and in Toronto one may see a commission of 5%balance. Keep in mind that 6%100k+3%balance is a lot less on a $600k home ($21,000) than 5%balance ($30,000).
That is why the 1 & 3% agents are starting to flourish. In your past posts you imply that maybe these agents give you what you pay for, in my experience they give what you expect, just like the 6%+'ers.
Have you ever looked at my website or any of my blogging/videos? My entire business model is based on a lower fee structure. I am a huge proponent of lower real estate fees and giving the consumer as many options as possible.
I personally offer 2.5%balance full service and a $799+$699 mere posting option. There are 1212 REALTORS® in Victoria and less than 5 even offer a mere posting option. I am being generous when I say 5.
That is why the 1 & 3% agents are starting to flourish.
My personal business has done well; however, as part of the greater market lower commission models just aren't breaking through to any significant extent. It's been very disappointing.
My conclusion is the average person just doesn't have enough analytical thinking capacity to drive for things to change.
Here is a perfect real life example. I got called earlier this year for a listing presentation. Awesome home in a great core area, newer build, legal suite, etc. Basically the type of homes that sells itself so I suggest a list price of $xxx,xxx and I offer a commission of $5,000 flat fee ($2,000 discount from my 2.5%balance fee just because house was a slam dunk) on listing portion plus 1.5% cooperating commission. I tell the seller,
"You have a very desirable home, as long as you get professional photos and the data input is correct, price is reasonable, this will sell really quickly irrelevant of who you list with. Honestly, it does not matter who you list with as long as they meet some sort of minimum level of competency, the difference is I can save you money on the commission. I'll also beat any listing portion of the commission that includes professional photos and floorplans by 10% to secure this listing."
Seller goes and lists the property with full commission realtor (approximately $9,000 more in commission versus what I was offering) and at $15,000 below what I suggested in terms of asking price. Place sells first day on market and not over asking. Played out exactly how I told the seller it would play out, although I thought list price could have been a little higher.
Reality is the on a lot of people I would be better off using lines like, "If I can't negotiate my own commission, how can I negotiate on your own behalf to get the top dollar for your home?"
It is mind blowing how many people fall for sales tactics.
6% first 100k + 3% balance is an average commission for Victoria realtor in my experience. Where are you getting 5% from?
Now that foreclosures are becoming more prevalent in some areas of Greater Victoria, you may notice a kind of Dutch Auction listing practice.
The law firm will continue to lower the asking price every fortnight until they get an offer. And that asking price drop can be quite dramatic. In some areas of row houses or small lot subdivision of near identical homes that have been selling at $330,000 to $350,000 you'll get a listing at $295,000.
If you're a home owner in the subdivison and you experience this, it could have an affect on your perception of the market. Same again if you're a prospective purchaser.
You should also be aware of this when it comes time to re-finance your home. Some lenders are asking for listings in the appraisal reports and the computer valuation tools make use of listings too. This practice may lead to the lender under valuing your home.
A good reason why you should challenge an appraisal or computer valuation if there is a significant discrepancy between what you've declared and the bank's estimate.
This happened and is happening quite a bit in the USA with many brokers and agents complaining of low valuations. And it will likely happen in Canada as both our systems are nearly identical.
@Jack
To sell when there is a shortage and buy when there is an over-supply for your specific property?
It would be nice to know specific market segments. The media and professionals keep prognosticating the larger suburban homes (E&W Saanich) will tip in favour of smaller core Vic. When is the question, as MOIs for the former remain lower than the latter.
http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/canadas-home-prices-may-have-surged-but-less-so-than-some-markets/article21665668/
One-person “households are expected to show the fastest pace of growth to 2036, making it the single biggest type of household by the 2020s,” according to Canada Mortgage and Housing Corp. statistics for 2013. And home ownership by one-person households is also on the rise as seniors become wealthier and young people delaying marriage flock to budget-priced, one-bedroom condominiums.
Marko, can you please tell us what the average number of sales per year is for a realtor in Greater Victoria?
http://www.theglobeandmail.com/report-on-business/economy/housing/housing-market-modestly-overvalued-cmhc-says/article21724011/
This CMHC report doesn't seem very credible? Greatest risk of overvaluation in Quebec?
Marko, can you please tell us what the average number of sales per year is for a realtor in Greater Victoria?
6,500 sales this year and approximately only 5% are double-ended so using some crude math 6,500 x 1.95 = 12,675 REALTOR® transactions.
12,675 divided by 1212 REALTOR® = 10.4 deals per year.
12,675 divided by 1212 REALTOR® = 10.4 deals per year.
As we see, on a $600k house, a realtor would get $21,000 using the 6%100k+3%balance formula. How much of that $21,000 goes to the realtor's brokerage firm? And are there any other expenses that get taken off?
As we see, on a $600k house, a realtor would get $21,000 using the 6%100k+3%balance formula. How much of that $21,000 goes to the realtor's brokerage firm? And are there any other expenses that get taken off?
If the cooperating commission is 3.0%100k+1.5%balance each REALTOR® would take $10,500 to their brokerage. How much a brokerage takes off really depends on where you work. It starts as low as $150/month flat fee plus $250 per transaction and goes up to over $1,000/month flat fee plus transaction or some brokerages will do 10% up to $150,000 and then 5% after $150,000. Tons of different set ups out there.
There are other expenses. VREB charges $50 to upload a listing and $50 when it sells, monthly lockbox fees, VREB monthly fee, insurance, etc.
The fees aren't a big deal if you do a lot of transaction; however, if you do only 10 deals a year it does eat into your gross income.
While I am not adverse to anyone making a living as they choose. To cherry pick your responses is why Realtors become victims of their own postings, blogs or whatever.
ALL of your stated expenses are tax deductible so pleading costs as a factor?, c'mon. Even your gas you use on your weekends and trips to "wherever" are deductible.
10.5 deals a year per realtor. Using your numbers ALL realtors are making sales. Some are part-time, some not practicing but renewing their licences and some just scrapping by. Networking is your biggest tool, I am sure and this blog does give you lots of self-service since not too many question you other than sales info.
You can break up the fees however you want them to look but if you are the broker you get more, if you rent a space at the office you get a little less and even if you get a referral you cash in for giving a name.
I certainly agree you can negotiate a % if you are good at it and not afraid of the mind games some agents play in the "look what you get for your money" schtick.
It is really all about choices whether you are a buyer or seller or realtor. Just don't try to paint the "poor me" picture and challenge people who know the industry. The wool over the eyes doesn't work....
P.S. - And as for the 5% starting commission here is something for your reading pleasure but lot's out there....
Make it up as you go...
ALL of your stated expenses are tax deductible so pleading costs as a factor?, c'mon.
So when running a business one should completely ignore all tax deductible expenses?
10.5 deals a year per realtor. Using your numbers ALL realtors are making sales. Some are part-time, some not practicing but renewing their licences and some just scrapping by.
Are you familiar with the definition of average?
You can break up the fees however you want them to look but if you are the broker you get more, if you rent a space at the office you get a little less
How do you get more if you are a broker? Please explain. Do brokers negotiate a higher commission when they take on listings? I am a licenced broker...last time I checked my clients don't pay me more.
If you are referring to the brokerage that doesn't make sense either. At my brokerage it is $250 per transaction whether you bring home $5,000 or $50,000. There is not much money in running a brokerage in the current environment, unless you have 200 realtors. If there was money to be made I would quit sales and start Juras Realty as I already have my broker's level licence but it's not worth it. Money was to be made in brokerages in the 1980s, now the money is made in sales as the splits have shrunk over the years.
and even if you get a referral you cash in for giving a name.
For every referral that is paid out means that there is someone on the other end paying out the referral so that is a wash.
It is really all about choices whether you are a buyer or seller or realtor. Just don't try to paint the "poor me" picture and challenge people who know the industry. The wool over the eyes doesn't work....
Okay, I know nothing about the industry...you win. Garth knows all.
Marko, are you able to tell us who the top five realtors are in terms of number of transactions in Greater Victoria?
Deductible does not mean "free" - it is still a cost - just means it is a before-tax cost which might mean a 15-20% reduction on after tax costs.
Why would you not count this when calculating profits again? I'm left with the distinct impression that you do not understand corporate taxation whatsoever.
As for the personal attacks on Marko... please stop. He seems to have a good business model and brings significant value to this site for me at least.
I like the insight into what is going on with the market and stats on listings and sale prices.
Oh, and what is with that link - it totally confirms Marko's percentages as accurate for BC...
12,675 divided by 1212 REALTOR® = 10.4 deals per year.
Except the average isn't particularly useful in an industry that more or less follows the pareto principle on distribution of sales.
If there was money to be made I would quit sales and start Juras Realty as I already have my broker's level licence but it's not worth it
So why bother with the broker's license? You said it was a ton of work.
Great response to my last post. Made my point....picking on Marko, naw, he's a big boy.
Post in public you takes your chances. Nuff said on this one...
You only take your chances on sites where anonymous trolls are not moderated in any fashion. Annoying.
As far as commissions on homes go, I disagree with you Marko. Although some sellers may choose a full price commission over your or other discount models, I think this is changing - and will change. How can it not in the internet age where I can place a mere listing?
It will just take some more press coverage and probably 5-10 more years for the average person to get the hang of it. I can't imagine millennials with a good understanding of technology paying for it any more.
i/ In the future brokerages might become more desirable. Shifts in the market place occur and one should adapt.
ii/ Insurance for myself. The vast majority of brokerages do not allow their REALTORS® to offer mere postings. I wouldn't want to be caught in a situation where I have no place to operate my business model under my own terms. By having a broker's licence if such happened I would just start my own brokerage.
iii/ Opportunity to get out of sales. With a broker's licence there are non-sales jobs out there. For example, most brokerage owners are not the managing brokers for the brokerage (a managing broker is someone overseeing the realtors). To get a job as a managing broker you need a broker's licence.
iv/ I get bored easily and want to get as many licences from UBC as possible. So far I have my realtor licence, rental property management license, broker level licence, and I passed the mortgage broker exam (just need to activate my licence now). I might do another one over the holidays when things are a bit slower.
As far as commissions on homes go, I disagree with you Marko. Although some sellers may choose a full price commission over your or other discount models, I think this is changing - and will change. How can it not in the internet age where I can place a mere listing?
It will just take some more press coverage and probably 5-10 more years for the average person to get the hang of it. I can't imagine millennials with a good understanding of technology paying for it any more.
In September of 2010 mere postings came around and I thought the same exact same thing....how can this possibly not take off? It hasn't. In Victoria we are going from approximately 80 mere postings in 2013 to 90 mere posting in 2014. This is not mere posting sales, this is mere posting listings. There is going to be close to 13,000 listing this year.
I've been running a lot of analytics this year and lower commission models in Victoria have lost market share since peaking in 2007/2008. I know, crazy.
People just don't get it nor do they bother to do enough research. I ran into a family friend at a social gather that recent purchased a $850,000 home....
Friend: "We know you are a realtor, but had to go with my friend from highschool as she recently got her real estate licence, she really helped us out."
Me: "That's cool, crazy busy this year, don't feel bad for me. Did your friend give you any cash back from commission?"
Friend: "What do you mean? Seller paid the commission, didn't have to pay my friend anything, it was free."
Me: "That's awesome, great she helped you out at no cost"
Regarding millennials...judging by how many of my friends purchase mutual funds I don't know if they are that smart. Had a friend purchase a mutual fund with a MER of 2.5% recently and a back end fee of 5.5% if you sell within two years. He didn't even know there was a back end fee until I pointed it out to him.
I just don't get it. There is so much really good information on websites like RedFlagDeals, etc., on various financial and real estate topics but it still barely seems to make a difference in terms of how the average Joe behaves.
Except the average isn't particularly useful in an industry that more or less follows the pareto principle on distribution of sales.
I know it isn't useful but I was asked to give an answer pertaining to the average, not the mean, mode, or other, all of which would be much harder to evaluate :)
Are you permitted to answer my previous question, Marko?
Marko, are you able to tell us who the top five realtors are in terms of number of transactions in Greater Victoria?
Difficult to evaluate and drawn any conclusions from....
1/ Many top realtors have entire teams with licenced realtors working for them; however, everything goes under the name of one realtor.
2/ Many realtors co-list all their properties with a partner. If someone sells 100 properties and each one is co-listed have they done more transactions than a realtor working on his or her own that sells 52 properties?
3/ Too many other variables. For example, does one count my 20+ mere posting sales this year as actual sales?
The VREB just reports the list of 120 or so realtors that are in the top 10% and nothing more specific. The VREB use to give out an award to the realtor with the most transactions in a year but stopped doing that like 15 years ago I think.
Are you permitted to answer my previous question, Marko?
No, as I don't have a direct and accurate source from the VREB.
I personally have a good idea of the top 10 and top 5 but I don't have numbers that I can say are 100% accurate since I put the numbers together. Last thing I would want to do is associate my potentially incorrect numbers with competitors' names.
As mentioned in my post above, the numbers don't mean much as there are so many variables.
Mutual Funds!!! arhg! Save your friends... It's not that hard. Open up an online brokerage set it up as a TFSA and buy a suite of ETF's...done. (I say that so Leo won't bash me for my caviller stock picking)...
I sat on mutual funds in my RRSP for way too long not giving it much thought. They did nothing for a long long time.... Hey, I was young and dumb, there was less internet. At least I stepped up and changed it!
I say that so Leo won't bash me for my caviller stock picking
Haha you show me that you've outperformed the market for another 5 years and I'll be happy to eat crow.
I've been running a lot of analytics this year and lower commission models in Victoria have lost market share since peaking in 2007/2008. I know, crazy.
"It's a tough market, you don't want to take chances."
"You get what you pay for"
"You might be able to go FSBO in a strong market but these days you need an agent that can sell your place in a slow market"
"That's not me, but lots of realtors won't even show your property without full buyers commission"
I just don't get it. There is so much really good information on websites like RedFlagDeals, etc., on various financial and real estate topics but it still barely seems to make a difference in terms of how the average Joe behaves.
I think this exposure to people who do educate themselves can cause false confidence in the market and the actors in it. The people smart enough to go low-fee realtor are the ones buying within their means and making good money. The rest are perfectly happy to go with their buddy's uncle as the realtor, max out the mortgage, and put the remaining couple dollars into a loan for a boat.
Real estate agents and agencies operating on the traditional model have a very strong incentive to protect the model and put out press and branding that supports this.
You are closer to the market and conditions than I am Marko. I do find it surprising that alternate models and mere listings are not more popular and have declined.
LOCATION, LOCATION, LOCATION
But where is that location?
I looked at the median prices of the last 500 sales in the Core districts. Non waterview houses between 1,600 to 2,600 finished square feet situated on 5,200 to 9,200 square foot lots.
Let the game begin.
Vic West and View Royal - not enough data
$475,000 for Esquimalt
$500,000 for Saanich West
$555,000 for Saanich East
$573,500 for Victoria
$670,750 for Oak Bay.
Round one - goes to Oak Bay that's one (1) location.
Nothing really startling about these results, I would have thought most of us would have guessed the core districts would have been ranked basically in this order.
Now it starts to get a bit tricky. Generally the homes in Oak Bay and the lots are slightly larger than other districts. In order to see which neighborhood in Oak Bay has the highest prices I looked at the median price of non water view homes having between 1,800 to 2,800 finished square feet situated on 5,600 to 9,600 square foot lots over the last five years or 300 sales.
Uplands and Gonzales didn't have enough of these type of properties.
$637,500 for Henderson
$705,000 for North Oak Bay
$710,750 for Estevan
$765,000 for South Oak Bay
Again, not really any surprises South Oak Bay wins at LOCATION X2
But where in South Oak Bay????
In order to find what streets in Oak Bay. I quartered the hood.
North of Mcneil and West of Transit was $722,000.
South of McNeil and West of Transit was
$718,250
North of McNeil and East of Transit
was $757,500
And the clear winner of LOCATION, LOCATION, LOCATION is
South of McNeil and East of Transit at $805,000
If you live along any of the roads of Central, Linkleas, Newport, Island, Byng you're the Location X3. And you will spend between $300 to $500 a square foot to live here. That would be $630,000 for a fixer upper to almost a million for a recently renovated or newer home.
***Yes, there are more expensive homes but they are larger in both house and lot size than the sample I chose. The sample excluded water views and waterfront.
So when someone tells you that they bought LOCATION, LOCATION, LOCATION you can now ask them where on Linkleas they bought.
Nice JJ! Can you do the same for Victoria. IT has a larger range than OB. It includes Rock Bay, Vicwest, Downtown etc. I would think areas in James Bay and Fairfield would be included in the 3 L's. Maybe Fernwood too?
Are you suggesting there is more than one LOCATION, LOCATION, LOCATION?
Because if that were true then this would just be a meaningless phrase to sell real estate.
And we all know that the three nmost important things about buying real estate are:
I am...are you saying there is only one on the face of the earth?
Because if that were true then this would just be a meaningless phrase to sell real estate.
What? another helpful phrase like:
"buy low, sell high"
or
"the first rule of investing is "never lose money""
Dasmo if you're a non-believer in the Real Estate Trinity, then may VREB smite thee down.
Because without the faith, Victoria no longer becomes the best location in Canada and Canada the best place to live in the World.
Allow me to retort..
https://www.youtube.com/watch?v=crR6pBGMZ90#t=42.
I like to say "one of the best" I've been to a lot of places on this earth and Victoria is one of the nicest... one of the nicest.
In Victoria Fairfield is the nicest neighbourhood IMO. I think you will see that reflected it its prices for SFH...
Southwest Fairfield was nice before all the big houses got divided up into strata units. South Oak Bay still has the old character homes intact and owners who can afford to renovate these old character homes to modern standards with structural upgrades, insulation on all six sides of the box, new windows, new interiors, etc. I wonder how the average household/owners income is in these two areas compare???
Oak bay is higher... I don't dispute its a higher income area. It's just not the only desirable one....
So I guess VicWest is the Location Location Location for Condos?
Agree that it's not the only desirable hood, but my point is "desire" is a function of income when it comes to Location Location Location. So I think JJ is right that his identified area is perfect for higher income families; whereas a family earning a total of $50k per year might think Oaklands is perfect, albeit it rates just one 'Location'. Negative "Locations" also exist. I'd give minus one Location to the house behind the noisy loading dock of the store in Oak Bay Village. It's all relative and subjective.
OK I dug it up myself...
Average sale price Jan-June 2014 $801,461 up 6.68% from last year. 2% vacancy rate...
^ Fairfield...
whereas a family earning a total of $50k per year might think Oaklands is perfect
$50k a year family income won't get you into Oaklands.
Marko said...
$50k a year family income won't get you into Oaklands.
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Depends on the size of their down payment. With a bit of help from the bank of mom and pop, the younger generation can still get started these days.
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