August 4 Week Ending Stats

Due to what appeared as irregularities in the number of listings on the new MLS.ca website, I haven't been posting weekly numbers. However, I have been recording the numbers, as funky as they seem.

My graph for 2 bedroom condos, 3 bedroom townhomes, and 3 bedroom SFH is now over one year old. The number of listings for condos and SFH is lower today than it was one year ago. Townhome listings are up from last year. Inventory in all three segments has dropped over the past month.

The number of SFH listings on MLS.ca has dropped over the past month in every price segment except in the $600k to $700k range. The number of homes available for under $500k continues to steadily decrease. Woe to the first time home buyers.

The percentage of SFH listed for over $700k continues to rise. Is there an end in sight? Today, 71% of SFH listed on MLS for Greater Victoria have an asking price of $500k and higher. Woe to the first time home buyers.

The obvious correlation between the rising median price of SFH and SFH listings is simply that there is nothing available for under $500k!

FTB, give your collective heads a shake! That $390000 POS 2 bedroom shack is not worth it!

Today's Cartoon

Hat tip to the Times Colonist for today's cartoon. Is this the TSN turning point?

On another note, phase 4 of the Railyards development has a price review underway. I'd say, 90% chance prices are going down, 10% chance prices are going up.

Which development is next?

The Banks Want Your Money... And Your House!

The City of Langford has an affordable housing program where developers are required to put 10 percent of the houses they build into an affordable housing pool. These homes are sold to families residing in Langford, who do not own real estate, have less that $50000 in assets, and have a family income of less than $60000 / year. The homes are sold at a set value, currently $160000.

It turns out that the big banks will not approve mortgages for these homes, as they do not control the home in the event of a foreclosure. In such a case, the home is returned to the affordable housing pool, and resold at the original selling price. However, there are other lenders willing to take on those mortgages.

I'd assume that those same banks would approve a mortgage of that size to the same family if it was for a home not in the affordable housing pool. Like a beast waiting to devour, the bank would take possession of that foreclosed house. I must be a little naive, because it doesn't quite make sense to me. I guess that in a rising real estate market, the banks believe that they would profit from controlling a foreclosed home. As is happening in the U.S., in a falling market, lending standards are getting tighter, and perhaps that same family would not get mortgage approval regardless of whether the home is an affordable housing pool home or not.

The related news article can be found here.

Info on the affordable housing program can be found here.

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.

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 Renting.ca, 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?

The American, er, Victorian, Dream

Today's Times Colonist had an article on the dream of home owernership in Victoria, titled "Dream of owning a home slipping out of reach".

Ok, this is not something new. I think that a lot of people, myself included, who did not get into the market 5 years ago, have been feeling this for some time. The subject in the article is quite typical of many people. Her situation is compounded by being a single mother. She would have to travel back in time to 1991 in order to buy a house for the mortgage that she qualifies for (assuming she has a 25% downpayment). Last I checked, time travel had not yet been perfected.

I've lamented to my father, who still lives on the prairies, numerous times over the real estate prices in Victoria. His response is that I should suck it up because I live in the California of Canada. I guess that this is true. If someone moaned and complained about real estate prices in Malibu, California, would we feel sorry for them? I doubt it. I wouldn't. Move somewhere else!

I think that the "move somewhere else" philosophy may soon start applying to Victoria, Vancouver, etc. If current real estate prices are here to stay, and increases in wages do not follow, then us renters will have to re-evaluate our life priorities. Which is more important to us - home ownership or living in Victoria? As in the Demographia survey, there certainly are less expensive, more affordable, places to live! Regina, Winnipeg, Quebec City! In those cities, a single mother, or father, or any single income family can afford a home.

And there are places closer to Victoria than Regina where affordability is better - Campbell River, Ladysmith, even Duncan. A new 1600 sq. ft. townhome in Duncan can be bought for just over $220k. A steal of a price compared to Victoria.

It looks like if the current prices in Victoria or here to stay, we'll be renting for some time, or moving elsewhere! How about you?

Victoria's Affordability

Having read portions of the housing affordability report from Demographia, I'd question the median house price number that they used for Victoria. But, this may be splitting hairs. I'm not sure how they obtained the median house price for 2006, but I took the average of the median for every month, and found that to be $445000 for Greater Victoria. Based on the same median income (that number does sound right), it produced an affordability number of 7.96. This number would put us at #12 on the least affordable. This isn't totally accurate, as Vancouver would still be higher than Victoria. With the US market the way it has been this past year, their numbers are still probably the same or close. So, we are even less affordable! Like we didn't know that!

I plotted the chart for the monthly medians for 2006. What can be drawn? Maybe that the median for Victoria went all over the map, but not really anywhere. The median for the CRD appears to have gone up and is coming down.