Market Up? Market Down?

As a buyer, do you want the market to go up, or go down? I can't come up with a good answer to this question. I'd think I'd want some stability more than anything because I'd need to have my purchase validated. Ideally, I'd buy today and see steady growth; that's not how markets usually work though.

Worst case scenario? I buy today and then the market consistently goes down. Like any market related activity, you buy low and sell high. But in most markets, you don't have to live in what you buy. So... where am I going with this? No idea at all. Kind of like trying to figure out where we're at in this crazy market now. Everyday I hope we're seeing top and confirm my gut that we should wait to buy until its economically feasible, or at least corrected for a while and then began to climb again.

VREB numbers for February are out:

Listings: Feb 2007 (2,919) Feb 2006 (2,320) % change (26+)
Sales: Feb 2007 (707) Feb 2006 (658) % change (7+)
Listings to sales ratio: Feb 2007 (4.13) Feb 2006 (3.53) % change (1.17-) or in other words: monthly inventory has increased by over one month's supply; correct me if I am wrong, but this is a significant increase in inventory.
January to February sales: Feb 2007 (707) Jan 2007 (442) % change (63+)

[looking at my numbers from a previous post on the least expensive homes and condos]
SFH under 425K LtoSratio: (2.8 ) Condos under 250K LtoSratio: (3.5)
This keeps in line with least expensive category still being more competitive compared to market as a whole.

SFH average price change: (0.13%) or negligible growth because of several $1M + sales
Condos average price change: (8%-) 8% decline doesn't seem like a solid market for condos, especially considering that is percent decline compared to previous 6 months' average.
Townhomes average price change: (3%+) modest growth.

"The average price of single family homes sold in Greater Victoria last month was $534,101; the average for the last six-months was $527,103. The median was lower at $472,000. The average price of all condominiums sold in February was $283,246; the average for the last six months was $305,635. The median was again lower at $263,750. The average price of townhomes sold last month was $387,281; the average for the last six months was $376,639. The median was $370,000.

MLS® sales last month included 372 single family homes, 211 condominiums, 63 townhomes and 17 manufactured homes."

You can see the graphs here.

As always, I'm no economist, and not very good at math, so please pick my posting apart... I could use the education.

Hunting leases

Been engaged in a ton of purchase hunting and blogging about that market being inflated and competitive.

Unfortunately, from looking around, I'm starting to believe that the rental market is hot on the RE market's heals.

Here's the sites we are using to find places:

1. UVIC off-campus housing so far, in my 12 years of renting in this town, this has been the best resource for good suites and good landlords.
2. UsedVictoria.com
3. Craig'slist.com
4. renting.ca online version of the TC's classifieds.

There are definitely more; many firms like Brown Brother's and Dutton's and Co, have online listings for the buildings they manage. We're looking for a suite in a house, so we're not using them so much as they tend to manage either apartment buildings or whole houses.

The rise in free online classifieds leads me to believe that paid newspaper classifieds may not be the best way to find a suite anymore.

I have even rented a place in Fairfield several years ago that wasn't advertised anywhere. I was wandering around, coffee in hand, looking at houses and sure enough, for rent signs were found; a quick call on the cell, a walk through 2 minutes later and within 20 minutes I had signed a 1-year lease. It was a great place, a great neighbourhood, a great landlord and a really easy hunt. I was lucky, the suite had just been cleaned and the sign just put up within hours. I was the 4th call, but because I didn't go home and wanted to walk through right away, the place was mine.

Things I look for in a Landlord:

• I want a landlord to check my references. If they don't, they don't care about their property and therefore they don't care about the issues I may have with it.
• I want a landlord to have a lease, at least 6 months, but preferably a year. A lease helps me and it helps them. Without a lease, I don't have any guarantees that they won't sell the place or evict me in the short term. A landlord has to give you at least two months notice, and the second month is a 'free' month for the tenant. That's an economic consequence that is potentially painful to swallow, I don't expect them to take it lightly.
• I want to see a place empty. This goes against the realtor's credo of showing a house with furniture in it because then buyers can get a better idea of size and layout. As a renter, I don't want to see beat-up furniture and messy dishes, I want to see that the place was cleaned by the landlord or a professional and that the potential one month of letting a place sit empty isn't overly crippling to a landlord; if they can't take that as part of being a landlord, then they may not get around to replacing a broken fridge or hot water heater too quickly either. ( I rarely get this wish granted though)

Fundamentals:

The vacancy rate in Victoria is 0.5% apparently... maybe its 1%. For the past two weeks I've been calling prospects. Calls go like this: "Hi, calling about your suite..." "sorry, its gone."

Long story short: no viewings scheduled at all this week. It's ok, we have a back-up plan, and don't have to move before May-June so plenty of time. No animals, no kids, non-smokers, both have professional jobs, we're quiet, don't party: confident we'll be ok.

Rent amounts: $800-900/month, we think is fair for a decent suite with light and a bit of space. We'd prefer 2-beds but we'll be ok with a bigger one bed suite. Laundry in unit preferable, but shared ok. Won't even look at a place that doesn't have access to laundry. Neighbourhoods for renting: Oak Bay, Gordon Head, Fairfield, Downtown, and Cadboro Bay. ( I think there are less slum lords in these neighbourhoods.) We may end up paying closer to $1000-1100/month the way it looks now.

Use a Realtor or not?

As a buyer, it makes perfect sense to use a realtor... it basically costs you nothing and their expertise could save you big time. Realtors often have access to info that the MLS system doesn't make readily available, especially online. Agencies internal listing services are usually much better and more up to date than MLS.

As a seller, I think given the massive number of new low-fee or no-fee services that have popped up in Victoria over the past 5 years, you could be forgiven for being more skeptical and inclined to sell-by-owner. Especially in a seller's market. I can't imagine FSBO-type sites doing well in buyer's markets.

Apart from the connections that the Realtor network provides, what are the other major benefits that a realtor can give you that you couldn't research or pay fee-for-service yourself?

I've been trying to source out all the private, non-Realtor websites for house hunting in Victoria.

1. BC for sale by owner 6 active listings in Victoria (they claim 18)
2. For sale by owner Canada no Victoria listings
3. ForSaleByOwner.ca no Victoria listings
4. PropertySold.ca 2 listings
5. ByTheOwner.com 71 Victoria listings
6. PropertyGuys.com 14 Victoria listings
7. HomeSellCanada 2 listings
8. BC Homes for sale 11 Victoria listings
9. FSBO BC

Please fill in any blanks I am missing.

Hunt Update: drove by a bunch of new condo developments this weekend. Reflections in Langford is definitely untouched in weeks... if building is happening, they do a great job of removing evidence for the weekend.

Tuesday will be a rental hunting day. We'll start with links to the online sources of rental listings. Give me hints if you know of good ones, please.

Whose buying anyway?

I'm dumbfounded to explain where people work, how much they make, and how they can possible afford to buy in this market.

Here's my information source. (2005 census numbers)

Here's my thoughts:

• 351K total population in the CRD seems really low.
• 167K to 182K between 2005-2010 is significant job growth: until you look at the % = 1.4%/year
• CRD has second lowest job growth of all regions in BC; yet second highest housing inflation rate? [this is my assumption, based on average SFH price, Lower Mainland highest, CRD 2nd... I could have pulled this info out of thin air too, and am feeling too lazy to research so point me to the truth if I'm wrong please]
• Construction boom in CRD in terms of jobs is big (7.5%) in 2007-2009 then predicted 6% drop in 2009/10. That's a big year of year decline and coincides well with current developments in CRD predicted completions. Does this mean no new growth is forecast for housing in 2010 and the near years post?
• Highest number of job growth is in the low-pay accommodation- and food-services and retail industries.
• Predicted decline in jobs for high-pay government and education jobs.
• Increase in health care jobs: can these be considered high pay anymore? As I understand it, fewer well paid RNs hired, more $20/hour LPNs and Nurse's aides... I'd say it safe to assume that the two cancel each other out and we'll experience job growth without overall growth in pay. Again, just assumptions by a non-economist, so likely completely baseless, please educate me.

Going out this afternoon to explore new developments of condos and mixed SFH in Langford. Going to check out Latoria Walk, Royal Roads and Goldstream developments. I'm curious if speculators are buying these units or not. I'm inclined to think that the speculation isn't worth the risk anymore, that developers aren't willing to give the profits away so easily and the pre-build pricing is more in line with fully-completed unit price. Does anyone else think that $350-450/sqft is disgusting?

Weekly sales numbers are up at VT; is this an inventory slowdown? Does this means prices will increase sharply? Or just a weekly blip?

Friday News Hunt

Fridays are particularly good news days to check in with the local goings on in the world of housing.

Please use the comments to add to sources if there are any glaring omissions.

More commentary on the Building a Housing Legacy Budget here, here and here.

VHB's abrupt self-declared end gains some noteworthy coverage. And his list of resources is a worthwhile weekly read.

Local news:

• h/t Village at Victoria's Truth Hudson's Bay development gets unanimous approval. Highlights: 537 units in 3 phases of 178, 129 and 85. 65% will be studios or one-beds. Aimed at "first-time buyers, urbanites who wish small units, and single people looking for comfort without luxury"
• What are average joe's saying about the budget and housing?
• A "real" look at the condo versus house debate

Vancouver Sun behind a firewall; if anyone has access, feel free to post highlights in comments... please don't bend any copyright laws.

Gotta say about the Hudson... who are they kidding? I'm guessing that the prices will be significantly higher than the current 30-40% premium we pay for new units on the market now. Yesterday in the TC a report suggested that an income of $135K is necessary to cover a mortgage on $520K (current victoria average); correct me if I'm wrong but the current average condo price is $350K... downtown is higher priced, Hudson will be selling in 2009-10 most likely, I don't know how any single person will be able to afford $1800-2300/month mortgage payments.

Thursday play with numbers

This is by no means truly scientific. Think of it more as a snap shot into a first-time home buyer's look at an outrageously priced market. Or, you can feel free to think of it as a political poll in the middle of a majority government's term: hardly proof of anything at all. Now that the disclaimer is out of the way:

I analysed the listings we've been watching since January 31. I don't know what I'm doing so pick my analysis apart, or ask questions for info you think is missing and pertinent.

Total houses: 48 [criteria is suited, or suite potential, under $425K in SW, SE, Vic, Langford, ESQ]
Number sold: 17
Sold above asking price: 10
Sold below asking price: 7
Average days on the market: 11

Total condos: 67 [criteria is 2 beds, at least 1 bath, under $250K in SW, SE, Vic, Langford, ESQ]
Number sold: 19
Sold above asking price: 7
Sold below asking price: 12
Average days on the market: 23

[I should clarify that I counted sold at asking price as above... I figure if someone is agreeable to paying full asking price then they haven't made a deal worth calling anything other than duped]

What I am taking away from this analysis: condo market doesn't seem to be as hot as the pros are saying, certainly not in the least-expensive category anyway.

Houses: how can anyone afford to buy one? I read in the TC today that in order to get in at the average price of 520K a family has to have an average income of $135K. Who's making this kind of money these days in this town? I'm guessing not many. I'm hoping that this is the last of the people who bought $100K condos doubling their money and stretching into the housing market.

I'm still at a loss to either explain or understand what is going on. I'm guessing we can call this bear-caught-in-the-bull-syndrome.

Your thoughts?

Thursday Hunting

Looked at two condos this morning. One was literally a closet. I am amazed that people are listing one-bed plus dens as two bedrooms. And then pricing them like they are luxury condos.

We talked about not getting trapped in the market if we buy. So our thoughts on the purchase is to approach the suites as a purchaser would. We can fix up the walls, change the floors, update the kitchens and baths. But we can't change the amount of light that comes into the rooms or change the layout.

So light and layout are imperative to any decisions we make.

I still think condos suck. Too much to compromise to ever really enjoy. There are some positives, but a lot of negatives too.

Over on Victoria's Truth there's been a bit of a discussion about the number of new units coming onto the market. I'm wondering the implications on the type of units we've been looking at. I'd classify what we've seen as the last of the affordable units around. The units are generally bigger, sometimes 20% or more, than the new developments. New units are usually priced at least 30-40% more as well. Granted, there aren't too many new units under construction in neighbourhoods that I would classify as affordable. What does this mean for the cheaper units available today? Does this make the affordable--OK, I can't use that term anymore, its not accurate, let's agree to call them least-expensive--units a more competitive market? Can we assume that they are going to experience a relative stable pricing effect because of this?

This market is terribly difficult to sort out. I'll tabulate some of the price to sales ratios that I can later today and post again.