Condemnation

A couple of note worthy articles in today's TC.

Four Rental Buildings Condemned. The landlord refuses to perform any upkeep on the buildings, and voila! Let's tear down the buildings and do something different - build luxury condos!

Unbuilt Building Condemned. Well, not quite. The Wing condo project in Vic West continues to be an eyesore, yet the local community association doesn't appear to want to do anything about it. I don't get the statement from Diane Carr "... it's not the community's obligation to make up for a bad investment on the part of the investors. That's not our problem." Alright, then forget about offers from developers who want to do something with that mess, and enjoy your eyesore!

I think that Victoria is being overbuilt at this time, however, I would sooner have a building, that perhaps doesn't please everyone, than an eyesore empty concrete-laden lot. My $0.02.

What do you think?

A local developer has approached me with an idea of theirs and would like some feedback. I offered to post their idea, and ask your opinions of it. Here goes...

A new home has been built in the city - 2000 sq. ft., maple, granite, wired for home theatre, all the good stuff. Rent would be set at $2500 / month. After one year, the renter would have the option of using their rent paid during the year ($30000) as a down payment on the purchase of the home. The home has an asking price of $500k. If the renter provides an additional $30000 for the down payment, the developer will borrow the renter an additional $40000 (at a 9% interest rate) for down payment. Total down payment would then equal $100k. As this is 20% of the purchase price, the purchaser qualifies for a conventional mortgage.

What do you think?

July Housing Starts and June New Housing Price Index

CMHC has released July housing starts numbers for Vancouver Island and Victoria. For Victoria, July 2007 housing starts were more than double that of July 2006. Year-to-date, housing starts in Victoria are up 19% in 2007 over 2006.

B.C., as a whole, and nationally, housing starts are down.

Statistics Canada has released the New Housing Price Index for June. Victoria had the second lowest price increase from June 2006 to June 2007, at 0.5%. The lowest price increase belongs to Windsor, ON, at -2.3%.

Go figure. In Victoria, housing starts are up, and prices are stagnant. The rest of Canada is seeing price increases, yet housing starts have decreased. Supply and demand? Looks like it.

Focus on SFH Sales

As I did for condos and townhomes, I've made a few graphs for SFH sales and median prices for Greater Victoria, Victoria, Langford and Saanich.

The number of sales of single family homes in Greater Victoria is higher this year than 2005 and 2006. Median sale price is increasing, and has not been negative year-over-year since 2005.

The City of Victoria has had high sales numbers the past couple of months. The median sale price is down from earlier this year. June's median sale price was negative year-over-year.

Langford has had an average number of SFH sales thus far this year. The median sale price is increasing.

Saanich home sales have been on a tear the past two months. Median sale price is consistently increasing at around 10% year-over-year.

All regions' year-over-year median price increases (%) have risen from late 2006 and early 2007. It's difficult to determine a definitive pattern due to our small market. There have been very few year-over-year monthly decreases since 2005.

I plan to have graphs for other municipalities in the future. Hopefully this provides a little food-for-thought.

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!

The Effect in Canada

I wanted to quickly throw out this link to everyone. Finally, the MSM has published an explanation of how whats happening in the U.S. will affect Canada. It's from the Halifax Daily News.

Hat tip to Housing Doom. Thanks.

July Sales Numbers

The VREB's sales numbers for Victoria for July show that the local real estate market continues to be both resilient and oblivious to what is happening south of the border. The numbers of sales this July blew away previous July numbers. It was the highest number of sales for July in 15 years. Greater Victoria saw higher average and median prices for SFH. Condo prices dropped, townhome prices were a mixed bag.

Year over year, the median price of a SFH in Greater Victoria is up 17.4% Last July's median was $438500. This July, $515000.

The number of SFH sales in Saanich continues to amaze me. This July, 150 sales. July 2005 and July 2006 had 113 and 110 sales, respectively.

Condo sales for Greater Victoria appear to have plateaued. Quantity of sales is consistent, prices are rising ever so slowly. This has to concern the developers who have hundreds of units available for sale.

The number of townhomes sold this July in Greater Victoria was the highest monthly amount for the years of which I have data (2005 - 2007). Year over year median prices are up 8.5%. Again, Saanich sold townhomes like they are going out of style. 47 this July. 23 and 17 the previous two Julys.

With the number of active real estate listings having decreased in July, prices should remain steady for the coming couple months. Inventory, according to VREB, is up only marginally from last year. Taking this into consideration, I'd say, don't expect to get any deals on SFH priced less than $500000.

I'd have to disagree with HHV, this was a month for the bulls. Listings down, sales up, prices up. I'm giving the Bulls a field goal. Score: Bulls 26, Bears 3.

In Canada, specifically Victoria, it's still tough being a bear.

Condo Prices at the Railyards

June 19th I mentioned how a price review was underway for phase 4 of the Railyards development, titled "The Gateway." The price review has been completed, and prices have gone up. Increases are between $0 and $30000. This increase is a pretty big surprise to me, because of the 62 units available, only 28 have sold thus far. I believe the building is nearing completion. I'm sure that building costs have increased, justifying the price increase, in their minds. But I can't see them becoming more competitive and selling more units in today's condo market through upping the prices. Someone responsible for the increases needs to give their head a shake!

The Julia condo development has been completed. There was a lot of back patting in Saturday's TC for this accomplishment. It's a good thing they are 50% sold already! Get ready for the fire sale! Did anyone get a chance to attend the grand opening?

I think it would be fun to be in the market for a new condo these days. I'd definitely be low-balling the new developments. I wonder what sort of deals could be found!

What is news... Part 2

Real estate has again made it on to the front page of the Times Colonist. Jack Knox has made an attempt to present the "other side" of the coin. He did bring up the affordability issue caused by today's prices, which can be appreciated. And, of course, the old cliches "Victoria is the place people want to be" and "It's paradise here" were thrown in. I can't totally disagree with those cliches, but they do discourage me. If the housing market does not change, Victoria may become a modern day setting of the apocalyptic movie "Children of Men", where the youngest person in the city is around 20 years old. Families can't afford to live here, and yet, having been caught yesterday afternoon in the horrendous Colwood crawl, I'd hate to live in the Western Communities or up Island if a daily commute into downtown Victoria were required. Better mass transit or a couple overpasses on that highway are long overdue! What a sad state of affairs.

Quick check on what level of income is required to purchase that house. Feel free to correct me if I'm wrong. With an asking price of $325000, how about a 20% down payment ($65000) to avoid CMHC. Then using an amortization period of 25 years, with a 5 year fixed term of 6.18% (from RBC), on a mortgage of 260000. This equates to a monthly payment of $1687.

If the mortgage payment is 32% of pre-tax income, monthly income required is $5272. Annual income required is $63264. It looks like it would be possible for a young family to purchase that home, but I can't see them being happy there for long.

What is News?

After spitting my morning coffee all over the front page of today's Times Colonist, I decided that my vacation was officially over. I could be silent no longer. It was time to get back on the blogging horse.

What is news? Wikipedia defines news as "...any new information or information on current events which is relayed by print, broadcast, Internet, or word of mouth to a third party or mass audience." Is the absurd asking sales price of a piece of personal property news? Is it worthy of the full front page of a newspaper with a circulation of 73000? Perhaps, if items for sale with stupid asking prices are indeed newsworthy, I should inform the Times Colonist that I have a broken wristwatch, which originally I purchased for $140, now for sale for $9700!? Now, that is newsworthy! NOT! Neither is the sale of the Oak Bay mansion on today's front page newsworthy. A beautiful home. Definitely. Worthy of the front page of the Homes section in Saturday's paper. Sure. But, please! Give it up!

HHV's blog on today's issue is priceless. Thanks HHV.

I am getting very tired of the coverage of the real estate market by the MSM in Canada. Is anyone else?