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Inventory Challenges for Buyers

Buyers still face a market with much less inventory available than the historical average. There were 2,646 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of September 2018. Even though that is a 33.9 per cent improvement over last September (2017), last year’s market inventory was exceptionally low.

Federal and provincial regulations applied to the housing market have certainly slowed down how quickly inventory is moving but it has had negligible impact on the prices of home and condo in Victoria. The Multiple Listing Service® Home Price Index benchmark value for a single-family home in the Victoria Core in September 2018 was $883,700, a 6.2 per cent increase from 2017 when it was $832,000, and down slightly from August 2018 where it was $888,300.

How do you interpret this data if you are searching for a new home?

It can mean longer periods of searching for the right home if you’re looking for a single-family home at or below the Home Price Index benchmark value. Be prepared to make a competitive offer when you spot the house you desire. If you are searching for a 1.5-million-dollar home, the competition is far less fierce. These are general observations as each area is a real estate microcosm with its own market conditions.

"If you are considering buying or selling a home, you need to understand your local market, particularly in the context of your property type and price point," says Victoria Real Estate Board President Kyle Kerr. "Micro markets in our area behave very differently as they are influenced by different pressures.

I can help you establish the right mindset and stamina you will need in your search and advise you on the best strategies for success. I look forward to working with you!

Chart courtesy of Canadian Real Estate Association (CREA) http://creastats.crea.ca/vict

 

What Does Real Estate Market Look Like at Summer’s End?

"Prices in our market are quite flat right now, with a slow, long-term trend toward a more balanced market," says Victoria Real Estate Board President Kyle Kerr. "Thirty per cent fewer homes this year were listed for sale at $750,000 or less than in the year previous, which means there is still pressure on lower priced homes in the Core and other popular areas. We do see a levelling out of prices month-over-month which is one factor helping to slowly return us to a more balanced market."
There was a total of 2,519 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of August 2018, a decrease of 3.4 per cent compared to the month of July but 31.4 per cent more than the 1,917 active listings for sale at the end of August 2017.
"Our strong local economy and high employment rates may bolster demand into the fall as people return to work after their summer vacations. Fall numbers will be an interesting indicator of our year to come as we continue to track low home inventory in a changing marketplace.”
The Multiple Listing Service® Home Price Index benchmark value for a single-family home in the Victoria Core in August 2017 was $830,800, while the benchmark value for the same home in August 2018 increased by 6.9 per cent to $888,300, slightly lower than July's value of $888,700. The MLS® HPI benchmark value for a condominium in the Victoria Core area in August 2017 was $453,900, while the benchmark value for the same condominium in August 2018 increased by 10.8 per cent to $503,000, slightly lower than July's value of $507,700.

 

Municipal Fragmentation is a Significant Impediment to Per-Capita GDP Growth – An Analysis of Amalgamation



Article Republished from Times Colonist opinion piece published on August 4th, 2018

A discussion on municipal governance is critical to the future of our community, instead of opinion pieces that suffer from the malady of: “Don’t bother me with facts. My mind is already made up of things I heard years ago.”

An independent and systematic review of all economic and social factors is a prerequisite rather than dogmatic retreat to defend boundaries and municipal institutions established half a century ago.

We must get beyond the simplistic question: “Will it save money?” and badly dated micro-economic approaches that lack perspective over a reasonable time horizon.

Noted economist Peter Drucker identified two measures for assessing costs and benefits of how organizations perform: efficiency and effectiveness. The emphasis tends to be on the former.
Studies of mergers with large municipal workforces, parks, works, police and fire services with standardized union pay scales and benefits do confirm limited opportunity to provide immediate savings. However, if we evaluate effectiveness, it is clear there are benefits to integrated police forces or cost sharing of social and recreation services where user patterns cross borders.

This is reinforced if you also consider “fairness” and that Victoria or Saanich residents absorb the cost burden of the majority of charitable, social and artistic services and the impact of more than 100,000 non-resident vehicle trips to the airport, the ferries, the University of Victoria and downtown using their roads and bridges.

Columnist Lawrie McFarlane parrots the results of studies by Robert Bish, who unfortunately persists in using discredited public-choice methodology developed by Charles Tiebot in the mid-1950s. More recent results have shown that mergers can, in fact, save money.

After 15 years, the merged city of Halifax has significantly improved its municipal financial situation. A study by Timothy Cobban (2017) of more than 150 municipal/regional mergers in Ontario suggests they have been extremely successful from 1995 to 2010, making significant gains in reducing the cost of the “administrative” portion of municipal budgets.

In B.C., critics continually ignore the success of Chilliwack, Kamloops, Abbotsford and Kelowna.
Offering up Toronto is misleading because of the failure of Ontario’s legislation to facilitate inter-regional transportation, housing, regional growth planning and environmental protection as common interests of two million city folks with more than three million Metro residents in adjacent York, Brampton and Markham. The whimsy of their voters to elect “offbeat local politicians” is a reflection of leadership, not municipal structure. Similarly, West Shore politicians choose to go their own way.
Critics focus solely on cost savings for individual municipalities. In contrast, two decades of international studies led by the Organization for Economic Co-operation and Development have studied the economic and social implications of urbanization. Separate studies by urban-studies scholars Luca Bartolini, Rudiger Ahrend and Mats Anderson confirm how municipal fragmentation is a significant impediment to per-capita GDP growth.

While seemingly abstract and irrelevant to readers, it is these macro growth measures that serve to provide the new revenue sources necessary to pay for the services we expect local government to provide.

OECD research reflects the reality of how urban regions actually function when we realize that where residents sleep and pay their taxes bears no relationship to the daily regional travel routines of where they play, work, shop or learn. Consider the mosaic of customer, employee and delivery transport to and from the commercial/retail corridor along Blanshard Street and Burnside Road.

We ignore the municipal location of hundreds of commercial, light-industrial and retail enterprises that surround Uptown and Mayfair shopping centres with nearly 20,000 employees and are a major business property tax base. When you include a similar cluster of business enterprises across in Vic West overlapping with Esquimalt, municipal boundaries make no sense.

Studies that identify the benefits of investment and job creation do so on a regional basis, ignore municipal structures and instead recognize how land-use planning, development-approval processes, tax policies and service amenities are the critical factors.

International authorities have generally repudiated the myopic scope of the Bish approach to measuring the performance of local governments.

Evidence of a boom in population, investment and employment confirm that the international community has discovered Victoria, and we are no longer an economy and lifestyle determined by dependency on government and retirement.

Many residents suggest a merger of all 13 municipalities into one is not a good fit, but recognize we do have at least three “natural clusters,” the city, West Shore and the Peninsula.

While municipal territoriality has historically stifled discussion of municipal reform, Victoria and Saanich councils are now willing to ask their residents to support a “citizens’ assembly” to lead a study of their common interests. This will provide a fair and independent consideration of all the facts and opportunities shared by two-thirds of our regional population. (Over time, Oak Bay and Esquimalt should be included in the dialogue.)

It is important that we ask the right questions and use the right information before we make assertions and choose sides for or against municipal reform.

James D. Anderson is a member of Amalgamation Yes. He lives in Saanich.

 

Densification in Victoria’s Downtown

1,500-units of condominiums and rental apartments currently under construction in downtown Victoria are expected to complete this year and next, according to Citified’s construction data.
Last year's approximately 330 completed units will more than double in 2018 and the number of units completed in 2019 will close in on 2018’s total of 740 units.
Mayor Lisa Helps has stated that as many as 10,000 new residents could call downtown Victoria home by 2030. If an average of 500 units a year receive occupancy status, she may well be right!

 

Start with a Condominium


Over the last few years, rising housing prices have outpaced the ability of many first-time buyers to save a sufficient down payment to service a mortgage for a single-detached house.
If you are getting tired of paying rent and you would like to own some real estate, there is an alternative. Purchase a condominium as your first home.

Doing so doesn’t mean you have to give up your dream for a white picket fence and big garden. It simply means you shift your current expectations to get into the real estate market and put your monthly payments towards building your own family’s equity instead of a landlord’s equity.
While considering your decision, may we point out a few benefits to condo ownership you might not have considered?


The Primary Consideration - Price
In Greater Victoria, condominiums are more affordable than owning a detached home. You’ll likely find your mortgage plus condo fees are equivalent to how much you pay for rent. If you end up paying more, be assured it’s less than what you’re going to be paying for a detached home mortgage plus maintenance fees. In a condo, those fees are budgeted for and included in your monthly amount. In a detached home, they are often not accounted for until the roof or the deck needs to be replaced.
Locations Are Usually Better
It’s hard to beat living within or on the edge of a bustling city with easy access to work, dining, activities, public transportation and other amenities.
Better Security
Condos are more secure than a detached home. Every building has a front entrance and, in some cases a formal or informal neighbourhood watch with residents keeping an eye on who is entering the building. Having neighbours close at hand if there is ever an emergency isn’t a bad thing.
Simpler Maintenance
Freedom from maintenance is one of the biggest attractions to condo ownership. After all, aren’t there better things to do than mow your lawn or repair outside structures? Your monthly condo fees take care of it.
What About Noisy neighbours?
Did you know Canada's National Building Code (NBC) was updated in 2015 to change how builders and architects design for acoustics to ensure you have quieter neighbours? That means new condos must use building materials that do a better job at dampening the noise coming through the walls, floors and ceilings. Less noise = happier neighbours!
Still prefer a detached home?
If owning a detached dwelling is still your ultimate goal, a condo purchase can be a good interim step. Start putting your hard-earned money towards paying down your own mortgage and building up your own equity rather than your landlord’s. The alternative is to keep trying to save enough down as you chase the market.
Fair warning, though. Once you’ve been living the condo lifestyle for a while, you might find it difficult to give up!

 

How Victoria’s Real Estate Market is Shaping Up This Summer


There are more active listings than this time last year, about 20 per cent more, yet the number of homes sold in June is 25 per cent fewer than June last year. The biggest reason rest with the changes in mortgage qualification rules. They have reduced buyer’s purchasing power.  We also have a lot more competition for any home listed at a lower price because there are a third less homes listed under $750,000 this year over last due to rising real estate prices.

On the higher end of the market, there are at least 50 per cent more $1.5 million plus houses listed. The new and potential taxes from the provincial government are putting pressure on some high value home owners to sell. The provincial taxes include the Foreign Buyer Property Transfer Tax, the increased School Tax and the potential Speculation Tax.

"You may find more flexibility if you are shopping for a multi-million-dollar estate in certain areas,” says the VREB (Victoria Real Estate Board) President Kyle Kerr. However, “you may be in for a competition if you're shopping for a lower priced home or condominium.”

The MLS® (Multiple Listing Service®) HPI (Home Price Index) benchmark value for a single-family home in the Victoria Core increased by 7 per cent over last year from $820,800 to $878,100. The MLS® HPI benchmark value for a condominium in the Victoria Core area increased by 15.7 per cent over last year from $426,900 to $493,900.

If you're thinking of buying or selling, give me a call. I can advise you on your local market and help you devise the best strategies to win.

 

Victoria Real Estate Market Review of April

"Last year, the months of May and June were the busiest," said Victoria Real Estate Board President Kyle Kerr. "So, we may see this pattern again but on a slightly smaller scale than last year, since our sales for the year thus far are down about 18 per cent when compared to 2017."

A total of 2,002 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of April 2018. A total of 774 properties sold in the Victoria Real Estate Board region through April which is a 12.5 per cent increase from the month previous.

There isn't a lot of homes on the market to meet demand, and good homes in desirable locations still see multiple bids. There is a strong pressure on lower-priced properties. The reduced buying power of consumers due to the new mortgage rules is creating more competition for lower-priced properties. That's what is pushing prices up.

The Multiple Listing Service® Home Price Index benchmark value for a single-family home in the Victoria Core in April 2018 was $866,700, an increase of 8.3 per cent increase over last April at $800,100. The MLS® HPI benchmark value for a condominium in the Victoria Core area in April was $495,100, an increase of 18.4 per cent over last April at $418,200.

 

Creating More Rental Spaces in Victoria


The NDP introduced amendments to legislation which will provide municipal governments stronger zoning tools to protect and improve the supply of rental properties. It will allow them to ensure existing rental properties cannot be redeveloped for other uses. Undeveloped land zoned for rental will be used for rental homes.

That's welcome news for Victoria Mayor Lisa Helps. She points out there are 10,000 rental buildings from the 1960s in Victoria that require some form of updating, including seismic work. She and the Victoria council are interested in seeing this work progress as a measure to alleviate a vacancy rate well below one percent.

“We're definitely looking at incentives for developers,'' she said.

Victoria council has been working to increase rental stock in the city. In March, they passed a bylaw to allow condos, duplexes, townhouses, secondary suites, and garden suites to offer short-term rentals of up to 2 bedrooms in their principle residences. Even renters can engage in short-term rentals, as long as they have their landlord’s permission.

Offering rental space in your home is an excellent mortgage helper. Talk to me about purchasing a property with short-term rental potential and I’ll make sure you’re fully informed about what you need to know before you buy your home.

 

BC Government Legislating Measures Designed to Control Home Prices and Increase Rental Vacancy


Recent legislation introduced by the BC Government will require builders to collect and report their buyer's information on the purchase and sale of condos before they are built. The NDP are putting this practice into place because they are concerned speculators are making purchases, riding out the equity increases while the property is being built, then selling them at a profit without ever living in them or reporting any of the capital gains.

“This is a key step to stopping people from using presale condos as a quick, lucrative investment,'' says Carol James. ``It's also to stop them from driving prices up for British Columbians trying to get into the housing market.''

This legislation would force the reporting of the condo flips and allow the government to collect the tax.

The NDP also introduced amending legislation to give municipal governments stronger zoning tools to protect and improve the supply of rental properties. It will allow them to ensure existing rental properties cannot be redeveloped for other uses. Undeveloped land zoned for rental will be used for rental homes.

Other steps the provincial government recently took include the introduction of a speculation tax on vacant homes to encourage rentals, increased foreign buyers tax on property sales and the creation of a housing hub program to link non-profit and faith groups with property to developers to build affordable housing.

 

More Homes Selling as Spring Arrives

The number of homes sold in March is up from February in over half of all local housing markets, led by Ottawa and Montreal. Monthly sales gains were offset by declines in B.C.'s Lower Mainland, the Okanagan Region, Chilliwack, Calgary and Edmonton. 

While a national snapshot is interesting as a backdrop for our local market, and you can read more through the link. Here in Victoria, the number of homes sold over last month rose 26.2 per cent as 688 properties sold in the Victoria Real Estate Board region.

It's certainly fewer than last year - 25.9 per cent down from the 929 homes sold last March. That's likely due to the federal government's new mortgage qualification rules combined with rising interest rates.

While there are outside pressures on the market and demand has lessened somewhat, supply is still tight, and spring is an excellent time to sell your home.