How do we get more affordable housing in this region?

The reason housing is so expensive in this region is that there is not enough supply.   This scarcity of supply works very well for the owners of property but not for the people that need a place to live.   If the supply of housing is increased enough the cost of housing will fall or at least not rise for some years.

We should be measuring how many households there are in the CRD and many many new ones are created each year.   Once we know the number we have and by how much we are increasing per year we have a baseline to work from.  

Once we know the current state of things we can set targets of the number of units needed to reduce the price of housing.  A good measure to track the success of this would be from the monthly selling prices of houses in the CRD.   If the price of houses is consistently falling we know housing is getting more affordable.  

One problem of house affordability is that it can not be effectively be fixed in a direct manner by local government - government can not build enough houses to make any serious impact.    The cost of each housing unit is too high for the government to be able to bear.   The low income housing units the government build end up being a defacto lottery win for people who get a place in one of them.  

Low income housing units as part of developments  is a nice idea, but once again there are only a few of them and it is a long waiting list to get into one.   The cost of these units in a development make projects less viable and can at times push projects from being developed to not developed.

What we need to improve housing affordability in the CRD is to remove as many obstacles as possible to more units of housing being built.    We need to allow a lot more flexibility in rentals, not just secondary suites everywhere but even more on a residential property.   Condos should not be allowed to restrict rentals.   Local government could require new condo developments to have covenants allowing rentals without restriction.

We also just need a lot more housing units to be constructed    The first step would be to speed up the process to rezone properties to a higher density.   Each municipality should work out a 20 year plan on where the space for more housing will come from.   Not just an Official Community Plan, but an actual plan that outlines what land is needed, and where, to accomplish the growth in housing.

I would have local government offer property tax holidays based on the sales price per bedroom on a sliding scale.  The idea would be to encourage more inexpensive units to be constructed via this incentive.   We could use several thousand three bedroom homes to be constructed that can be purchased for around $250,000 ASAP.

There also has to be active cooperation from municipalities like Oak Bay, North Saanich, Highlands and Metchosin to deal with the problem.   If these municipalities are not willing to help through increasing housing units in their jurisdiction they should be paying enough money to build the equivalent of a 3% increase in their housing stock per year.  

The biggest reason we are unlikely to see an end to a problem of housing affordability is because there are too many home owners out there that would see large parts of their wealth disappear if the cost of housing were to actually fall enough to make a real difference to anyone.

VictoriaVision Video - Housing Affordability in Victoria

Another one of our videos focusing on issues that matter in the local elections.

We had planned to film on the sidewalk in Quadra Village but the heavy rains drove us inside

Real Estate Board stats for September

So the numbers are in for September and it remains a weak market. only 458 sales.   This is better than

• Year total sales  single family home sales
• 2011     458           212
• 2010     377           203
• 2009     776           437
• 2008     485           286
• 2007     632           306
• 2006     593           261
• 2005    ~700
• 2004    ~650
• average  584           284

I only have graph that records total sales for September 2005 and 2004.

Sales for this September were about 23% below the average.  

The prices for single family homes remain in roughly the same area where they have been for several years, without the $50k drop in July and $75k rise in August, the price has been very steady.

Esquimalt had a median price of $380,000 for single family homes, though this was on only 7 sales.   It does mean that the majority of houses in Esquimalt sold for under $400,000, something that has not happened in four years.

The supply of units on the market in September remains at record levels.   With a bit more than 4900 units for sale, there is roughly a ten month supply on the market.   To put this in other terms, only 9.3% of the units on the market in September sold.  

This is a dramatically high level of housing stock on the market.    It is too high for the market to keep the prices where they are.  

The Real Estate Market

The latest stats are out from the Victoria Real Estate Board and they are not very good for sellers.

• 5100 units were on the market in July - record for this city
• Just under 1400 new listings in July
• 523 sold

So how does that compare?   A year ago it was not much better, only 527 units, which is only four more than this year.   The difference comes when one looks at the total value of sales.  Last year this was $257,050,956, 7.4% higher than the 2011 value of $239,263,822.

The on going soft market has come through in the average house prices in July.  The $581,117 for a single family home in July is the lowest average in two years.  The 8.3% fall in the average is the largest I can see in the detailed data I have.  My data only goes back 7 years.   The average is now the same as the average of four years ago.

There are quite a few houses for sale for under $400,000 on the market at the moment.   15 in the core, 19 on the Westshore and 43 in Sooke.     Esquimalt had a median price of $415,000 in July for single family homes.   This means half the houses sold for less than $415.000.

Traditionally the fall months each have lower sales than the one preceding it.   The July sales numbers do not point to a very robust fall real estate market.

State of the Real Estate Market

I pulled up the latest MLS sales statistics from the Victoria Real Estate Board and I have to say I am surprised at what happened in the market in April.   There were only 584 properties change hands in April.

I have no idea why the number was so low.   The 2011 April total is the lowest for any April for as far back as I have month to month data - my month by month information only extends back to January 2004. I had not expected the sales to be that low.

Going back just over seven years, April has normally been one of the top three months of sales in each year.   If this pattern holds, 2011 could be a very bad sales year.  

Meanwhile, the number of active properties on the market has risen to just shy of the highest we have seen in this region.   At over 4600 active listings, we had about 15-20% more properties on the market than will sell in the next 12 months.  

So what are prices doing?   

For single family homes the regional average has held steady for several months now.  In fact the median price for a single family home in April 2011 was the same as April 2008.  

For condos, the average in March were lower than they should have been because of a number of very cheap sales counted that were elsewhere.   When the VREB releases their averages for single family homes it is only for Greater Victoria.   The average for condos includes MLS sales outside of the region.  Factoring out non regional sales means March would have been up from February and the increase in April would have showed the continuation of a fairly consistent rise for the last five months.

The condo market in total value of sales remained about the same in April from March.   It is among single family homes that the total sales value dropped.   In April close to 1/5th of the total sales values was from condos, this is a high proportion of the market.

For both single family homes and condos, the gap between the average price and median price increased.     Even though the change was small, the average price for single family home rose by just under 0.5% but the median price fell by the same percentage.   What this roughly means is that the lower end of the market is falling price and the upper end of the market is rising.   With condos both the average and median rose, but the average went up at twice the rate as the median.  

So what does this mean?

I am trying not to be a voice of doom and gloom, but the data seems to be indicating that 2011 could be similar to 2009 or worse.  

On the other hand, this should be a good time for someone wanting to buy a house.   From what I hear, properties that do not have significant interest in the first week are simply not moving.    I suspect that serious low ball offers will begin to be accepted after 45 days on the market.

For us the current market conditions indicates to me that our house is still up 15-20% from what we paid for it four years ago.   Not that we have any intention of selling anytime in the next 15-20 years.

Bear Mountain, some pictures from today

"Downtown" Bear Mountain

Daniel is now 16 and learning to drive so I am beginning to take tours around the region so that he can get practice driving.   There are numerous new subdivisions out in Langford and I figure over the next months I will get Daniel to drive me to all of them.  

Today we ended up at the top of the Bear Mountain development.

Finlayson Reach Condos

I have been ambivalent about Bear Mountain from the start.   My biggest beef is that it right at the foot of Mount Finlayson and spoils the view I used to get from there.   This is not somewhere I would live - I do not get golf, I like wilderness and I like hiking, I am not a fan of long acres of green grass.   That said, others like living here.  I know a few people that have moved up there and like it.  

This region has a shortage of housing and each unit built anywhere frees up more space.  Bear Mountain may be top end, but each local buyer frees up a house elsewhere in a neighbourhood like Gordon Head. A house in Gordon Head is then bought by someone from my neighbourhood and then a house here is available for the first time buyers.

There is still almost no retail up at Bear Mountain.  You have a long drive for a litre of milk and some bread.  There are some restaurants and as we discovered at Cullinaire the other day, the Copper Rock Grill seems to be very good.

Kuma Sushi

Is there enough business at Bear Mountain to keep the hotels functioning?  It is a long way to go from the core of the city that I would think only golfers would be drawn here, but I could be wrong

The location also makes sense because it is an area of very low impact on the environment.   It is on rock, it is not situated in a crucial part of a watershed, it has density, and the whole property is to the east of Hwy #1 and therefore has very limited wilderness values for wildlife or functioning ecosystems.  There are few places that make better sense than where Bear Mountain is located.

I could only see on crane in evidence, so work seems to have slowed down a lot.   Lower down I could see some new developments on the lower slopes and then off of  Millstream road.

Cavalcade Terrace behind Costco

In our driving, Daniel took us the wrong way coming out of Costco and we ended up on Cavalcade Terrace.   Another small development of which there are so many of the Westshore that all look very much the same.   Not only is every house the same style, the style is the same over and over again.

There is this bland acceptableness about these sort of developments.  Ultimately it feels like the sort of suburban landscape that sucks out all the individuality and soul from the people.  I know this sounds harsh, but I grew up in the 'burbs of Vancouver (Tsawwassen to exact) and that is what it felt like to me.   But ultimately I have always been an iconoclast and just do not fit the societal expected norm.    This always drove my former mother-in-law nuts.

Latest MLS stats for Victoria

The Victoria Real Estate Board has posted the stats for February.   Here are my thoughts on the data.

Inventory is rising, it is ahead of the curve for 2010.  This February almost equaled the record for inventory set in February 2009.  Though the new MLS listings in February were not dramatically high.

The average price for condos has been flat, expect for the dip in 2008/09, for close to 4 years now.   Adjusted for inflation, the value of condos has been flat for something more like five years.

Single family homes have been bumping between and average of $575,000 and $625,000 since May of 2009.  Taking out the dip in late 2008 and early 2009, the average has been in this range since the fall of 2007.

Sales in February were at the second lowest level in last 11 Februaries.  The sales were about 20% below a median February.   February 2009 was down about 35% from the median.  In the last eight months we have seen 3427 sales, about 63% of the same eight months a year ago.   There is a long term weak sales market, not has bad as it was in 2008 to 2009, but certainly not a strong one.  

The large inventory together with flat prices does not say to me that this is good market to be selling your house in.

December Real Estate Sales

The Victoria Real Estate Board MLS stats are out for December.   The news is mixed.

The prices show a spike upwards for single family houses but a large drop for condos.   The median price for houses rose dramatically, which means the bottom end of the market is moving less than the top end of the market.  The relatively low number of sales in December means the data can be moved a lot be a few sales.

Overall the sales volumes for December were low for December.   In the last seven years one would normally expect 195 sales of single family homes in December, last December it was 162 or 83% of an average year.

11.1% of the single family homes sold in the region in December sold in Oak Bay, in November this was 4.3% of all single family home sales.   Of the total value of sales, Oak Bay was 16.5% in December and 5.2% in November.    This means that Oak Bay was a much bigger factor in Decembers numbers than it normally is.   Factoring out Oak Bay in December reduces the average price to $607,500, a drop of close to $40,000.   Doing the same in November has a much smaller impact with the average going from $636,600 to $632,800.  Factoring out the Oak Bay numbers means the region had an almost 5% drop in prices in December for single family homes.

Even with the low number of sales, twice as many properties came onto the market as sold.  The December 2010 inventory is just under 3300, about 750 more than December 2009.  This is the second highest inventory for a December in the last decade.  Total sales in 2010 were below 2009 and 2008 numbers.

All in all there is no evidence I can see of a crash in the market, but on the other hand there is nothing in the numbers that tell me I should be optimistic about prices in 2011

November Real Estate Stats

The Victoria Real Estate Board released their MLS stats for November a few days ago and I meant to comment on them for a few days, but other things intervened.

The stats for November do not show the market getting worse, but at the same there is little to show that it will be getting much better anytime soon.  People spent a lot of time looking at the average sale price and it is close to the peak of $650,000 for single family houses, but little attention is being paid to the median value.   The November value of $530,000 is close to 50% below the median in the first six months of the year.  The gap of $120,000 between the median and the average means that the sales of houses at the top end of the market are skewing the market numbers.

What this says to me is that the pattern I have been observing of the lower end of the market is that prices are falling.  Anecdotally, the prices in my neighbourhood are down to lower than the prices were at the start of 2007.   The gap between the average and median can not remain so large over any length of time.    Something on the order of 10% is a reasonable long term difference between the average price and the median price.   The current median indicates that the average is likely $50,000 to $60,000 too high.

Meanwhile, other than a few months at the end of 2008 and start of 2009, the median value of condos has remained close to $300,000 for more than three years now.   But even here there has been some fluctuation in the last few months to lower values.

When it comes to sales volume, November was not good but not abysmal.   The fact that it was up from October is not the normal pattern, but sales were in single family homes month on month were up and were higher than in September or August.  Sales numbers in the last few months would have indicated November could have been horrible.

Units on the market has been falling and could indicate that finally there will be an inventory stock that is  below 3500 units in 2011, though unless the inventory falls below 3000 we are unlikely to see a rising market.

October 2010 Real Estate Stats are in

The Victoria Real Estate Board released the numbers for October 2010.  

My house last night, not for sale

Clearly October was better than than September and August, but that said October was still not a good month.   October 2010 was better than October 2008 which was the worst October in many, many years. It is not the norm to see October having more sales than September.

The average price of a single family home is up but this is once again strongly influenced by a number of expensive sales.  If we look at the median price we see very little movement in October from August and September and in fact is broadly comparable to the prices in 2009 and only about 4% up on prices from three years ago, significantly below the rate of inflation.

Much the same pattern seems to have happened with condos, the average price was up but the median price was down.    That speaks to a fall in the lower end of the market.  Effectively there has been no increase in value of condos in the last three years making all the units purchased for investment purposes were bad decisions.

Supply is still outstripping demand.  The number of units coming onto the market in October was more than twice the number sold.   The total inventory is down as listings have expired, but we are still at over 4000 units for sale in October, the 13th highest inventory out of the last 100 months.

What do the trends look like?   We have some significant similarity to the winter of 2008/09 which was a very bad one for sales, the big difference is that the last three months have seen average prices heavily influenced by the sales of some expensive properties.  It seems that the bottom end of the market is either falling in price or is not selling.  

The rise in sales from September to October does seem to indicate the market is not in as much trouble as it could be.

Looking at the September Real Estate Sales

What word is best to use for September?  Horrific comes to mind.

Total sales - 395 units - this is the worst September for sales in more than 20 years, possibly more than 30 years, I do not have detailed data going back that far into the past.

September is normally a average month in the year for sales, it is normally higher than sales than the fall and winter months.  It is in March that numbers rise.

The stock on the market is high, very, very high.   We finished 4300 units on the market at the end of September.   September saw the addition of 1200 units on the market, an above average amount for the month.   Three times as many units came onto the market as sold.

The fall and winter of 2008/09 were dire in local real estate, this fall and winter look to be worse.   The market will be bad enough that an average realtor is unlikely to be part of more than one sale between now and March 1st.

There has been a mix in what prices are doing when it comes to single family homes.   The 'better' quality neighbourhoods are seeing their prices hold better than the cheaper neighbourhoods.  It is in Saanich West and Esquimalt that the prices have fallen the furthest so far.  These locations are seeing falling price because of  the low number of new entrants into the market.  This will percolate up through the market as people can not sell in Esquimalt and move to Gordon Head.

We see lot more houses on the market for under $400,000.  In the core there are 12, the Westshore has a similar number.  There are 65 between $400,000 and $500,000 in the core and 90 on the Westshore.   This means we have 179 single family homes for sale for less than $500,000 in the core and Westshore.  This is more than the total of sales of single family homes in September in these areas.

The bottom end of the market is $339,000 at the moment for a 764 square foot house on Lyall Street in Esquimalt.   The lot is only 2030 square feet, but this is more than what you get with a condo and no condo fees.  

We are going to see a bigger fall in the lower end of the market over the winter with the nadir reached when the cost of a small two to three bedroom house is affordable for a young couple with a combined income of $80,000 or so a year.  This means having a reasonable selection of houses in the range of $300,000 to $330,000.

As the prices fall in Esquimalt and Tillicum Gorge, the number of people that will be able to move up into other neighbourhoods will fall and will pull those prices down.    The problem is that few people that have purchased since 2006 will have enough equity in their homes that they can buy something else in the region.   It was the dramatic rise in equity that allowed people to sell in Esquimalt and move to Gordon Head.

Single Family Home Price to Fall to $435,000 by February 2012

The Victoria Real Estate Board stats are in for August and it is BAD! 425 total sales is about 50-60% of the 'norm' of the last six years for August.  This comes in the wake of the Canadian Centre for Policy Alternatives paper on the housing bubble in Canada.


Total Sales for August

• 2010 - 425 - 7th highest out of 8 so far
• 2009 - 764 - 5th highest (Sept 12 sales higher)
• 2008 - 517 - 7th highest
• 2007 - 846 - 8th highest (Spet marginally higher)
• 2006 - 694 - 5th highest
• 2005 - abt 750 - 6th highest 
• 2004 - abt 685 - 6th highest

Total Single Family Home Sales for August (I do not have detailed monthly data from before January 2006)

• 2010 - 197
• 2009 - 366 - 8.9% of year's sales
• 2008 - 244 - 7.3%
• 2007 - 399 - 8.9%
• 2006 - 328 - 8.2%

Based on these numbers, total sales for 2010 for single family homes will be low, I am estimating 2800 to 3000 total single family home sales for the year.  This would be the lowest number of sales since the early 1980s.



So what has been happening with the price?  Average single family home sale price has dropped from $615,004 to $586,676, that is a 4.6% drop in one month. This means a house selling now will have seen more or less no increase in value in the last three years. The June to July drop was 5.3%.   That is close to 10% in two months.   


2008 as a very bad year for local real estate, in terms of single family house sales it was the worst one since two years in the late '90s.   Peak to trough in 2008 saw a 16.5% drop in prices.   


How far could prices fall?  2008 saw a rapid increase in the number of properties on the market in the first eight months of the year, 2010 saw an even faster increase.    This fall and winter looks to be the worst market for sales in close to a generation, at the same time the number of units on the market is not far off record levels.   September 2010 will 4000+ units seeking out 150 buyers, 25 units for each actual buyer in the month.   In comparison, at the peak of the market in 2006, there were 2-3 units for each buyer.  This is a ten fold increase in available properties.   The ration in September of 2009 was about 9 to 1.

Seeing that the prices have dropped so quickly in two months and the selection available is at a record level, the buyers in the market will be picky, very picky.   So where could it go?   If we take the 1990s as a benchmark and apply the rate of inflation to single family homes, a realistic average price is about $325,000.   Is there a chance we could reach this price?   Within a year or two this could very well be the case.   This sort of scale is the drop they saw in Toronto in the early to mid 1990s.   The early 80s in Vancouver were even worse, if that is where we are at, we could see a drop to $250,000


As of right now, anyone that bought a house after February 2007 is looking at no increase in value or a loss in value.   Factoring 2% inflation and a 5% cost to sell a house, anyone that bought a house after February 2006 is looking at no net gain in real terms.   The only people that are actually ahead of the game are those that bought more than five years ago.


One impact of this is that there a lot of people that are going to be falling into negative equity and this will lead to a rise in repossession.   Reposed houses take the market down because they are priced lower and they tend to empty.   A bigger impact will come from people not being able to sell and move up the property ladder.   


There were people that bought houses and saw $100k increases in value in a couple of years.   This allowed them more equity for their next house and allowed people to move to better neighbourhoods and bigger houses.  If this stops, Gordon Head is in a lot of trouble.


Finally, there are a lot of people out there that are no longer going to be convinced that buying a house is a good idea at all and that they are better off renting and saving money.   Certainly I was strongly influenced by my experience as youth in the 1979 - 1982 boom and bust in the Lower Mainland.   This dissuaded me from buying a house close to Gonzales Bay for under $50k in 1985.


So my final projection is that we will see total market drop in average prince for single family homes of about 33% by the spring of 2012 of $435,000.

House prices in Victoria

The latest Victoria Real Estate Board stats are out on house sales in the Greater Victoria area and it looks bad for the sellers in this market.

July saw 527 total sales, this is the worst July since the 1990s, it is dramatically down from the 800 to 900 sales that we have seen.   We have seen a decline each month since the peak of the market this year in March and this is not the normal pattern.   Normally the peak of the market is June - July in terms of sales.

The number of units on the market is at 4500, this is a basically a year supply for the market.  The number of units coming onto the market has remained consistent over the last six years, the change is the number of sales each month.   The current supply is comparable to what we saw in the summer of 2008 when the market went cold.   The difference between 2008 and 2010 is that the market is colder now than in 2008.  May, June and July 2010 have all been worse than the comparable months in 2008.

The average house price of $615,000 is down and closing in on a low for the last year.   It also means that there has been little or no increase in the value of houses since the 2007 market peak.   What the stats are also showing is that the gap between the average price and the median price is still close to 10% and indicates that what sales are happening are at the top end of the market.

When one looks at specific neighbourhoods, there are some up that are up and others that are down.   Saanich west and Langford have seen dramatic falls in the last six months in prices as examples.

Condos are at a $325,000 average which means effectively no price increase since November 2006, close to four years of no capital gains.  135 condo sales is wildly low for July.  This is what we should be seeing in the late fall, not at the peak of the market.

So what is going to happen in the next few months?   I see the prices coming down a lot over the next six months, I see the average house price dropping to about $550,000 by the end of November of this year.   After that I see the house prices remaining stable or dropping slightly for the next several years.

The factors for a soft market:

• 40 year mortgages are no longer available and rules for getting a mortgage has become harder
• Prices elsewhere in Canada are falling, or have fallen, faster than here.   People can not more here and there is a financial incentive to sell here and move to a cheaper community.
• The market is too expensive for a 30 year old professional couple to be able to buy a starter home.
• The median age of Victoria is rising and these people want to sell their houses for their retirement.   

There are at least some developers seeing there is a market niche for starter homes, Kettle Creek Station in Langford is one such development.  The houses are very basic and available for $370,000 to $415,000, with sizes of 900 to 1650 sq feet in size.

We have several periods of where prices were stable in Victoria, I am convinced we are in that sort of a period again and should not expect to see house prices rise close to the rate of inflation till after 2016 to 2018.  At that point we may see increases, we may also see enough of a demographic change vis a vis population growth that demand many not increase.

Oak Bay Secondary Suites Report - "Lets think about it some more"

Corey Burger has posted the final report on Secondary Suites by the Oak Bay committee on the issue.   The upshot of it is the following:

The Committee is of the view that Council should continue to review the issue of legalizing secondary suites. While only a slight majority of surveyed residents favour such a move, it appears that others may support suites if proper protections and restrictions are in place to deal with expected negative impacts.

The Committee feels that a more comprehensive and informed public discussion led by Council could allow a consensus to emerge. Oak Bay currently has many hundreds of secondary suites scattered throughout the community. Ways must be found to deal with these existing suites and the potential for new suites in renovated or newly constructed homes.

Talk about waffle.

The reality is that Oak Bay is dealing the existing situation in such a way as to defacto grant secondary suites by refusing to enforce the bylaw that does not allow them.   Oak Bay has access to the information that will show them where all the secondary suites are through the BC Assessment records on the houses.   They have access but they refuse to act.

The problem with this is that they cause law abiding people to act outside of the law.  It is bad to have a law on the books and not enforce.   Widespread breaking of a bylaw is corrosive to civil society.   It also causes stress to people who rent out such a suite and have trouble dealing with breaking a bylaw.   It causes resentment in the minds of people that do no break the bylaw.

The biggest problem is that is allows for sub standard housing and no recourse to protection for the renter.   If you are renting in illegal suite that is not up to code, you can be evicted immediately with no protection of any sort.

Oak Bay has to make the suites legal through a registry and then require all of them to be up to code.  It then needs to seek out all the suites that do not register and impose a large enough fine to scare the crap out of anyone that is renting out an illegal suite, plus require the landlord of that illegal suite to provide six months free accommodation to the tenant in a legal dwelling.

I have never heard a good reason for having a ban on secondary suites.   All local governments should allow secondary suites unless there is a very compelling reason not to - I can not think of any compelling reason.

This committee report simply highlights how Oak Bay continues to be the CRD's brownest community and the local government least willing to address climate change, affordable housing, and livable communities.   Oak Bay also carries none of the regional weight on industrial lands and offers virtually no commercial space. They do not even have a single gas station.   They simply have never pulled their weight and based on this report are still unwilling to act in a responsible manner and acknowledge that there is a world beyond the tweed curtain.

Victoria Real Estate Board May sales figures

The VREB has released their monthly statistics on home sales in the CRD.  The numbers look weak, at 671 units sold in May, this is the lowest level for a May some years now.

The normal sales pattern in Greater Victoria is for the number of sales to climb each month till July and then to level off before dropping in the mid to late fall with a trough in December/January.   This year we have seen a decline in the number of sales from March to May.   This is a pattern we have not seen before.

At the same time as the month to month decline has happened, we have seen a dramatic rise in the number of units on the market.  In May we reached 4500 units on the market, just short of the peak of 4700 in September 2008.   The more remarkable thing is how quickly we rose from just over 2500 in December to 4500 now.   This is the fastest rise in units on the market we have seen in this city.

Based on the number of sales in May and a historical average of one in eight sales being in May, we are looking at 5300 to 5500 total sales this year.  This would make 2010 one of the worst sales years in a long time.  I do not see what could cause sales in June and July to rise dramatically from the May numbers.   Based on this estimate, we have a ten month supply of housing stock on the market.

The average price of single family home is up, but in looking through the data I see that in a number of areas this average was heavily influenced by more expensive properties selling.

Among condos, the market looks bad.  The average price in May was lower than the six month average.  In fact the average price for a condo now is roughly the same place where it was three years ago.

I have been busy trying to finish renoing our upstairs bedroom because my niece is living with us for a couple of months and we need another bedroom in the house.  I have been laying a fir floor made from the boards of the old gym from when Spectrum high school was on Carey Road.   I finally figured out what I was doing by the time I finished laying the floor.   Now I am putting on a polyurethane coating and I am still not done.   This was all supposed to be done by May 10th......

Because of this work I have not been near the computer for most of the last week and not written much of anything - barely ready email.

I cam across this interesting site on Vibrant Victoria - Strata Watch.   You can look up how well your management company is doing.

I know I have not posted much on the real estate market locally,   This is not because I have not had anything to say, but because I have not had time to digest and analyse all the data.  Just some quick notes:

The number of housing units on the market has climbed very quickly after a dramatic fall over the winter.   December saw the total number of units on the market fall to about 2500, the lowest level we have seen the last four years.   The rebound back up to just under 4300 units in April and represents the highest number of units available in any April in Victoria history.    I suspect will reach 5200 units on the market by the end of the summer.

The just under 800 sales in April is not a strong number and is the worst April in this market since 2004.

Prices for houses remain flat and still remain above the bottom of the market in late 2008 and early 2009.  Normally March through July is a rising market with respect for house prices, and given the push due to various changes, I would have expected to see a rise in prices.   Does this mean we are going to see a bad fall for sales?

House prices in Victoria

With the new rules for borrowing money and the relatively high cost of houses in this city, I suspect there will be some dampening of the market.   The only thing I see working against this is misconception that new houses will be more expensive with the HST which could keep sales stronger than expected till July 1st.

Transitionally the best sales months are May through to August.   I expect that to happen again.

Where will interest rates go?   One measure says they need to rise to control growth, another measure says we need a lower dollar.  I make no predictions what this means.

All in all, taking these factors into consideration, I see the volume of sales decline dramatically in the fall.  Will the prices fall as well?  That is unclear.  House prices are sticky and resist downward price pressure for some time.

November to February should be a very good time to get into the market, many vendors will likely be desperate for a sale.

The biggest impact will be the new restrictions on heavily leveraged mortgages.   It will reduce the pool of people that will be able to get into this market and that will eventually force the price to fall.

Secondary Suites

The local governments in this region are falling down in protection of the public by not ensuring all the secondary suites are up to code. At the moment almost all the local governments turn a blind eye to secondary suites and allow them to exist.

The current regime rewards people that do not try to make their suites legal. You build it without a permit and no inspections, this costs less than going through the local government hoops. The official rules will not allow secondary suites, but many people flaunt this and do not try to make them legal. The upshot is that the majority of secondary suites in the region are not suitable housing for the public.

The local governments need to take three actions. First they need to generally make secondary suites legal. Second they need to make sure that all suites are registered and up to the current building code. Third, they need to actively and regularly ensure that there are no illegal secondary suites.

The reality is that we need secondary suites to house the population of this city, but the way they are now is not helping. The current situation is clearly and completely due to the local governments dropping the ball on the issue. When the by-laws were created to make secondary suites in most residential neighbourhoods illegal the city population was dramatically smaller than now, the demand for inexpensive housing was not as crucial as today. These restrictions are no longer relevant or useful.

One only needs to look at the real estate listings and see how many of the houses being sold are advertised with secondary suites, almost none of them legal. There is an issue of professional ethics from realtors for allowing advertising which mention of illegal secondary suites, but this is for another time and place. The information is out there about the secondary suites, how many and where and if they are legal or not. Local governments can very easily find the suites through the real estate ads and the information held by BC Assessment, but no one can be bothered to look.

Looking at the MLS listings, it is clear that there are no neighbourhoods in Greater Victoria that do not have secondary suites. They exist in Fairfield, South Oak Bay, Uplands and Broadmead, the sort of tony neighbourhoods that are supposed to be locations that do not have secondary suites.

I think there is a case for local government liability with respect to secondary suites. The information to find the suites is there and many of them are wildly substandard, but the local governments tacitly agrees with them existing. Are they then saying it is OK to have them and that they are suitable housing?

Given the price of housing in this region, the average person needs to be able to rent out part of the house to make the payments. The way the local governments operate with respect to secondary suites is making many people break the law that normally would not. It is always bad when government laws cause people break them. It starts a process public corruption and harms the social fabric of our city.

We have to change the status quo with respect to secondary suites and it is local governments have to take responsibility immediately.

Assessments are out

Assessments are out here in Victoria and they are up again. If you have any concern about the value placed on your home, I suggest you appeal your assessment. You have until January 31st to file an appeal and it costs you nothing. You can also drop it before it comes to the review panel - about 90% of appeals are dropped before they reach the review panel.

I spent a number of years on the Greater Victoria Property Assessment Review Panel for residential properties. I am happy to help anyone understand the appeal process and if there is a case for an appeal. Just drop me a line at bernard (at) shama.ca, I am happy to help.

Home Inspector Ordered to Pay

A BC home inspector was ordered to pay close to $200 000 to couple in Vancouver for a faulty home inspection. I am happy to see this happen as there seems to be no accountability for home inspectors. Mike Holmes has a new TV show called "Holmes Inspection" about faulty home inspections in the Toronto area.

In our case the man we used, recommended to us, was a nice enough guy and seemed moderately through, but in retrospect I am amazed what he missed:

• The basement was not permitted
• The basement was not a legal living space
• The attic was not permitted
• The stairs up and down were not built to code
• The kitchen door was not to code
• He did not do any manner of thermal inspection to see what state the insulation was in
• He missed the problems with the sewer connection
• He missed the lack of venting for the downstairs bathroom
• He missed the incorrect drain pipes and improper connection between the downstairs bathroom and kitchen plumbing
• He missed a main support joist having been cut in two and no shoring up on either side

We bought a house that was advertised as being 3400 square feet in space but only has 1450 square feet of legal living space. Part of me thinks we should have sued the home inspector and selling realtor for not telling us that most of the house was not only not legal, but according to the City of Victoria did not exist.
An older local realtor once let me in on the reasons he uses home inspectors. The only purpose he saw for them was to use the report as a negotiating tool. He was very cynical about them and said that all home inspectors take their direction from realtors because that is where the business comes from.

I would like to see some changes to to liability on home purchases:

• Home inspectors should be held accountible for the reports they issue - certainly the home inspector should be able to point all the work that was done without a permit and make a note of it. The home inspector should be responsible for detailing everything in a house that is not up to the building code.
• Realtors should be held responsible for the state and condition of a property - if you are listing a house, you are responsible for finding and advertising all major defects. The selling realtor should be the one responsible for doing the home inspection and then making it available to everyone.

Realtors make a lot of money from selling houses, they need to held more accountable for what they sell. Liabilty has to lie with them for not revealing things. I feel very strongly about this because a house is the single biggest purchase most people will ever make. I am very glad to have seen this lawsuit succeed against Imre Toth the home inspector, I just wish they had also gone after the selling realtor.