Saturday, March 31, 2007

March 31 Week Ending Stats

Great discussions this week. I'm sorry I wasn't a part of it. The wireless internet at my hotel in Campbell River this week was sketchy at the best of times. Fortunately, I think my schedule for the near future keeps me at home. As great as it is to get 123+ comments on a post, I'll try to post more frequently, thus keeping you from having so much scrolling. Also, I've appreciated the emails with suggestions on future topics.

Ahhh, Campbell River. The final frontier. Well, not quite. On first impression, it appeared to me that there were a lot of for sale signs on the Old Island Highway. Not knowing the area though, that may be the norm. Quick check on MLS, and for $200 / square foot, you get ocean front property. Not bad, but still a little too much. Really, how many salaries in Campbell River can afford a $600000 home? Any up island readers out there? What are you seeing in your cities?

There was a definate up-tick of listings for SFH on MLS this week. There are 41 more SFH listed this Saturday than last Saturday. There are 125 more SFH listed today than there was four weeks ago. As we all know, this week's VREB report will show a continued increase in active listings. Of course, not knowing the number of sales, I can't estimate very accurately the number of active listings for the month. A rough guess, I'd say we're in the ballpark of around 3150 active listings for March. This would be a 27% increase in listings over last year.

Inventory of homes in the $400k - $500k and the >$700k continues to rise, while the other price ranges are closer to flat. I don't quite understand why the $400k - $500k range is increasing faster than the other sub-$700k ranges. Perhaps it is because a lot of the newer homes being built in the 'burbs are in that price range. Perhaps it is because homes below $400k and above $500k are selling, but the $400k - $500k range has low value for your money. Below $400k are "starter" homes, while above $500k, you get a lot more for your money than the $400k - $500k range.

Percentage of homes in each price range was flat for the week.

This will be an interesting week with March stats coming out. My prediction for average prices - SFH and townhomes down from February, condos up slightly. As useless a stat as it is, the YOY for SFH for March should be fun. March 2006 SFH average was $557k. If this March is down, maybe to $520k, that a 7% YOY decrease. If we do see a down March, with negative YOY numbers, do you think the MSM will report that? I doubt it - they'll spin it some way, some how.

Saturday, March 24, 2007

March 24 Week Ending Stats

Single family home inventory continues to rise in Greater Victoria. There are 115 more SFH listed on MLS today than there were 1 month ago. High-end homes are really hitting the ball out of the park. There are nearly as many SFH with an asking price greater than $700k listed today as there were last October, which was when active listings in Victoria hit an all time high. People are either asking more for their homes, or they are trying to get rid of their expensive homes while they can. Expect this inventory level to rise even higher. I'd hate to be in a position where I had to unload a $700k+ home and there were 340 others to choose from - with that number increasing!

As a whole, there continues to be fewer sub-$400k homes to choose from. I believe that it's been discussed at HHV how these homes are moving, but high-enders are not. This may change, as you are starting to get a lot more home for $450k-$500k than you are for $350k-$400k.

It's interesting to see a pie chart again...

Finally, 2 bed condo and 3 bed SFH inventory has a ways to go before it reaches the levels of last fall. 3 bed townhome inventory is about as boring as watching your dog run away for 3 days on the prairies.

Thursday, March 15, 2007

Your Ideal Neighbourhood

A unique opportunity has presented itself. A representative from the developer who is designing the West Hills community in Langford is seeking the input of the readers of this blog. They are interested in knowing what your ideal community / neighbourhood would look like. They don't want West Hills to necessarily be like every other new development. They are thinking outside the box, and for this they are asking the public what they want. My hat's off to the developer for this. Regardless of whether you agree or disagree with this development, or any other new development, I think it is commendable for a developer to be willing to try something new.

This post's purpose is to stimulate a conversation on what an environmentally friendly, ecologically sound, affordable, family oriented neighbourhood should look like. Please post your thoughts on what a developer can do to do it right and what developers are doing wrong these days. Topics to think about and comment on include the following:

- How important is your car to you? With adequate public transportation, would you be willing to give it up?

- Would you like to see a car-free neighbourhood?

- If you couldn't live without your car, could you live without a garage? Would you be willing to park in a community parking lot and walk half a block to your home?

- Do you like lots of big, wide streets? What should the street grid look like?

- How would you make homes more affordable?

- Would you mind living with less square footage?

- How about a house with a 2nd floor that is not finished when you acquire ownership of it? Is sweat equity something you have time for and be willing to provide?

- How would you create a neighbourhood with people from all incomes?

- What existing neighbourhood / development is, in your opinion, close to ideal? What is the poorest neighbourhood design that you have seen?

Any other suggestions on how to make a community greener, more livable, more environmentally friendly are welcome. What would you want to see that would make you say "That's where I want to live!"

The developer is appreciative of all comments, thoughts, and ideas, both positive and negative. Another thing that the developer would be interested in knowing, if you are willing, is to have an idea of what your demographic situation is. But only if you are willing. No pressure. Thanks for your help, and for the great conversation as of lately.

I'll be working out of town for the next week, so I'm taking a little break from the blog. Hopefully, conversation on today's post will carry on until I'm back. Next post will be Saturday, March 24.

Monday, March 12, 2007

How out-to-lunch are our prices?

First, kudos to House Hunt Victoria on his blog. I've really enjoyed reading it thus far, and there's been some great commentary on his topics. Nice work! My entry today may be of interest to him and others who are debating between renting and buying.

I've been doing some thinking and some number crunching. My young family will need a larger living dwelling in the next year or two. The question is, and will be, should we buy or continue to rent? We've been, and will continue, to save all our extra pennies in an attempt to maximize our down payment, should that be our decision. Part of the reasoning behind my starting this blog was to educate myself as much as possible about today's housing market, and thus make a wise decision.

Using Craigslist and, I pulled together a spreadsheet of rental asking prices for 3+ bedroom homes, and then calculated the average monthly asking price. I know that the number I came up with is not 100% accurate, as there will be duplicate ads between the web sites. Also, in going through the ads quickly, I'm sure I pulled in the occasional number from Parksville or Nanaimo or wherever other than Victoria. But I do think that the average I got should be pretty close.

Average rental asking price for 3, 4, or 5 bedroom home = $1693 / month.

What is the average rental price for a 2 bedroom suite? We pay over $1100 / month. Our friends are paying between $800 - $1050. However, they've all been in their current locations for 2+ years. I think it is fair to say that conservatively, the average rent for a nice 2 bedroom suite is around $1000 / month.

Consider this - a large home, 3+ bedrooms upstairs, 2 bedroom suite down. If both were rented at the average asking price, total monthly rent income = $1693 + $1000 = $2693.

Homes that meet the 3+ beds up, 2 bed suite down, criteria can be bought today for $500000 or less. This home is not in Oak Bay, probably not in Victoria proper, but it is in Langford or Colwood, maybe even Saanich (MLS does have a 3 bed up / 2 bed down home in Maplewood for $409900). Put 10% down as the down payment. Including CMHC fees, mortgage comes in at approximately $459000. At today's interest rate, say 5%, 25 year amortization, monthly mortgage payment is $2683.

Hey, if you live upstairs, rent the downstairs suite, your mortgage payment is then $1683. Less than the average rent for a 3+ bed home!

Ok, there's property taxes, maybe $300/month, utilities $200 / month, misc repairs, I don't know. Yes, it is more expensive to buy. But, if you take into consideration the fact that equity is being built, is it really any more expensive? The first month's payment knocks the principal down by $771. That's $771 in equity, so long as the value of the house does not decrease.

Try this. $2683 (mortgage payment) + $500 (taxes and utilities) = $3183.

$3183 (monthly cost of purchased home) - $771 (equity) - $1000 (2 bed suite) = $1412.

In buying a home, $1412 / month (initially) is down the drain. Renting the 3+ bed home, it's $1693 / month.

I know that this comparison is not perfect, and I do believe that house prices are too high for current rents (especially small homes, townhomes, and condos). What I'm asking is whether the cost of renting is really that much less than buying a comparable home with suite? Is it me or just our home prices that are totally out-to-lunch?

Saturday, March 10, 2007

March 10 Week Ending Stats

Listings of single family homes on MLS had a greater increase this week. There are 43 more listings today than last week, 74 more than two weeks ago. The largest increase in listings came in the $300000 - $500000 price range. Listings below $300000 are at the lowest level since I started tracking listings inventory (October '06). There are only 18 SFH listed below $300k. I think that this may be a sign that we are seeing price compression, similar to what they are seeing in Vancouver.

As a percentage, less than 2% of SFH listings are under $300000. 37% of SFH listings are between $300k and $500k. 61% of SFH listings are above $500000. That is an astounding number for a city as ours.

Listings of 2 bedroom condos, 3 bedroom townhomes, and 3 bedroom SFH continue to be quite flat, as they have for the past month.

Thursday, March 8, 2007

February Housing Starts

CMHC released February's housing starts numbers for Vancouver Island today. The document can be found here.

Greater Victoria has had 389 housing starts thus far this year (Jan - Feb). This is up 6% from the same period last year (367). Not much difference there. However, it is still an increase, and with sales numbers generally lower than last year, this again shows how inventories will continue to increase. Combined, Langford and Colwood have 65% of the February starts for Greater Victoria. I'm a little surprised that Sooke has only 7 starts in February. I thought they were building faster than that out there. Then again, those 7 starts are probably SFH, while a lot of the starts in Langford and Colwood are probably condo / townhomes.

They're going gang-busters in Courtenay this year! 215% increase in starts between 2006 and 2007! Is their population growing that fast???

Wednesday, March 7, 2007

Canada's Strong Housing Market

The Globe and Mail's real estate article today is a comparison in housing market strength between Canada and the U.S. - "Canada's Housing Sector Defies US Trend."

Now that the monthly stats have come out, it does appear that the housing market is not yet declining or degrading in most Canadian cities - Victoria, Vancouver, Edmonton, Toronto, etc. Trends are pushing the market into more of a buyer's market, but the collapse has not yet happened.

We all know about the situation in the US. Things are pretty bad, and I feel sorry for the poor schmuk who got all pumped up after watching "Property Ladder" on TLC, went out and made a huge sub-prime mortgage, hired some cheap labour, and now is stuck with his or her McMansion. Well, maybe by now the mortgage lender is stuck with it, or perhaps the mortgage lender has imploded already. If I had been in a position one year ago to attempt a house flip, I may have. Shoot, if the people on that show could make >$100k per flip, why couldn't I? Thankfully, I wasn't in that position in the US at that time. On the other hand, here in Victoria, money could have been made.

One thing, the comments from Mr. Dugan of CMHC. His comments aren't that far off. But why, whenever a rep of CMHC gives comments, does it sound like they are cheerleaders for Real Estate? Isn't CMHC, a government agency, supposed to be unbiased and neutral? So often, their comments are no more valuable than those of, say, a Realtor. It's like they have something to gain from propping up the real estate market.

Finally, the housing numbers at the bottom of the G&M article are not a fair comparison. They compare Canada's resale home sales and prices against the US's new home numbers.

Saturday, March 3, 2007

March 3 Week Ending Stats

Another week has flown by. On a side note, I've really enjoyed the commentary that everyone has contributed lately. I wish I could be adding to it, but as we all know, this over-rated thing called work sure can be a hog for time.

Before getting to this week's numbers, I want to quickly post the graph for SFH median prices for Victoria and the Greater Victoria Region (CRD). Last year was more-or-less a sideways move. So far this year, it's been a surprising up-tick from last year at this time. The medians for February were near or above all-time highs. Ouch.

Listings for three bed SFH increased this past week to levels comparable to early December. Two bed condos and three bed townhomes listings were flat for the week.

Inventory of SFH with an asking price of less than $300000 is at the lowest level since early October, when I started tracking this statistic. Inventory of SFH with an asking price higher than $700000 is at levels last seen mid-November. High priced homes continue to be a larger percentage of homes available on the market.

What is the rental situation in Victoria today? When my wife and I were looking last fall, it was difficult to get into a good place. Lots of renters, not much available. Today, briefly looking at Craigslist, it appears that there are a lot of apartments / suites available. Is it easier to find a place in spring than fall?

Thursday, March 1, 2007

February Sales Numbers

February residential sales numbers were released today at VREB. Sales for the month were on par for February, while listings increased by an amount greater than I expected. Listings are nearly 26% higher than last year. There were more listings in February this year than May last year. It looks like if you are looking to buy a home this year, you will have a lot to choose from.

SFH had strong sales and price increases in Victoria, Saanich East, and Langford. SFH had price decreases, from the rolling 6 month average, in Oak Bay, Saanich West, and Sooke.

The average condo price was less than the previous months. No $5000000 condo on the water was sold last month to boost the average price. The average condo price today is less than it was last summer.

Townhome prices were up slightly. Victoria had a -3 sales count of what looked to be some pretty pricey townhomes. Did a development go under and the pre-construction purchasers get refunded? Anyone know what happened?

I was a little surprised by the home sales numbers this month. I hadn't expected that number of sales or that great an increase in inventory. The problem with getting data from is that homes with saleable listing prices go quick and never make it to MLS. The homes on MLS day after day after day having asking prices too high, or have something wrong with the house.

I think it was actually a good sales month for Victoria. The numbers looked "average", making me think that the market may be sustainable for longer than I previously thought. The market doesn't look over-heated. Prices are not skyrocketing. Of course, I do think that the market is overpriced, and we know that inventory is increasing. Supply and demand says that prices should decrease. Time will tell. The Bulls have kicked another field goal. The score is now Bulls 6, Bears 0.