“She said the market was dead in Victoria and that it would remain so for a very long time. I asked how she knew. Her answer was fascinating and should scare the pants off the real estate crowd.”

“Yesterday two old friends, J & M, from Victoria, mid 50′s, both very bright and mid level bureaucrats at separate provincial government departments came to visit us in the Comox Valley. At one point the topic moved to real estate. I began to say that the market was dead here when J interjected that it is the same in Victoria and that it would remain so for a very long time. I was surprised by her response and asked how she knew this because I know that neither of them reads any of the real estate bear blogs. Their answer was fascinating and should scare the pants off the real estate crowd.

First, both live in Townhouses and J is the head of her strata council (46 units). She said that last year about 7 units sold. This year one of the most desireable units was listed and got no inquiries at all. It was pulled. In addition one of the vendors of a unit last year did want to buy back in but could only do so with a 0/40 mortgage, which is of course no longer available. She had no idea what he had done with the equity from the sale.

Second both pointed out that their incomes have remained largely static for years but that housing prices and strata fees (not to mention special assessments) have increased relentlessly to the point where they felt prices are ridiculous relative to income. J was of the opinion that the townhouse unit in which she lives has about $60K of material in it and yet these units were until recently selling for $300k plus. She felt that the spread between material cost and selling price was indefensible. J also pointed out that despite being mortgage free her strata fees and hydro per month were in excess of $500, the better part of a mortgage payment not that long ago.

Third J said that the price of real estate would be down basically forever because our generation had had few children, overall. As a result who was going to buy our houses when we depart for the great hereafter?

Fourth both believe that the potential sales price of their own units have decreased substantially in the past year and will probably continue to decrease but they intend to stay put. They do not see any point, for example, in selling and then renting despite knowing that prices are inflated vis a vis rent.

Fifth both pointed out that they work at very large institutions and that they, of course, interact with many of their fellow employees. One of the constant topics is real estate and these days the virtual impossibility of finding buyers for the units that their fellow employees have for sale. They report that the view of the majority of their fellow employees is similar to their own – real estate is dead.

Finally, and very ironically, at least for most of us at this site, both get most of their news from CBC and CTV. Their overall impression of reports on both channels was that the real estate market is collapsing.”

– Ford Prefect at VREAA 31 Mar 2013 8:46am

“Vancouver Island real estate is crashing.”

“Mid Vancouver Island real estate is crashing.
So many listings have been reduced 4-5 times and over $100,000 in price reductions, and still no greater fools buying.
Nanaimo to Courtney is kapoot!
Someone turn out the lights and end their misery.
This is not ending well!”
– unbelieveable at greater fool.ca 1 Mar 2013 10:13pm

“Central Vancouver Island is kaput is almost an understatement. Comox Valley: MLS Inventory, 874. February sales, 36. MOI, 24.4. This is a total wipe out.”
– Ford prefect at greaterfool.ca 1 Mar 2013 11:13pm

“I train automotive dealership employees how to use my employer’s software for a living.
Yesterday, one of my clients was a woman who used to be a realtor for 6 years on Vancouver Island……and last week I had another ex-realtor on Vancouver Island with 20 years of experience. Both left the RE industry recently, and just entered the car business.
That’s about 4 of them I have encountered in the last month alone.”
– Carioca Canuck at VCI 2 Mar 2013 10:35am

The Blast Radius moves closer to the epicentre.
(cue Jaws theme)
– vreaa

“Sellers will commonly say, ‘I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse. And buyers are saying ‘It looks like things are bad, I’m going to hold off until the market drops another 10 or 20%.”

“While the national housing market appears to be retreating in an orderly way, the data show pockets of sharper slowdown, particularly in the western Canadian cities of Vancouver and Victoria, which once led the hot housing market.
“Personally I don’t see any revitalization of the market in the near future,” said Victoria real estate agent Tony Joe, noting that investors have left the market.
Residential sales fell 8.3% in September from a year earlier in Victoria and were down 32.5% in Vancouver, according to the local real estate boards. Prices were down 2.6% in Victoria and 1.4% in Vancouver on the year, according to the Teranet report.
The price declines are far smaller than the plunge that hit U.S. homeowners during the crash. Still, buyers are hesitant, wondering if they should wait until next year to purchase.
“Sellers will commonly say, ‘I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse,” said Joe. “And of course buyers are saying ’It looks like things are bad, I’m going to hold off until the market drops another 10 or 20%.”’
Joe, a 21-year industry veteran, does not foresee such a drastic decline, simply because Canadian lenders have been prudent and interest rates are not going up soon. Sellers will pull houses off the market rather than accept a price drop.”
– from ‘Canada braces as housing slowdown takes hold’, National Post, 5 Nov 2012

Victoria – “The ‘next wave’ of first time buyers is when housing drops to where the 30k-40k salary can purchase. A 10% correction has gone unnoticed”

“My social group is mostly 100k/yr co-workers and 30k/yr friends. Of my 15 co-workers all but me have bought, many in the 2007 mania in Victoria. None will have to sell but all took mortgages for as much as they could get and will be paying out 40% of take home for the next 25-35 years.
The 30k/yr friends would love to own, but accept that it’s impossible in this market without moving west out of Victoria and a couple trips through the Colwood crawl usually puts that to rest (for the smart ones anyway).
I won’t be buying, I like winter travel and early retirement too much. So the ‘next wave’ of first time buyers in my world at least is when housing drops to where the 30k-40k salary can purchase, a 10% correction would (and has) gone unnoticed to anyone who doesn’t have an assessment to look at each year.”
– Lee at VCI 7 Sep 2012 1:23pm

A 10% correction from a bubble top is just noise, and doesn’t do very much to reconcile prices with fundamental values. It may, however, be enough to cause most buyers to take pause, and thus ensure future price descent.
– vreaa

Tales From The Periphery – Victoria and Kamloops

“In the southern interior around Kamloops and Clearwater on holidays, and can’t believe how many people want to cash out right now after buying in last 2-6 years. Nothing selling. Prices softening already and only sharply discounted properties moving. Family and friends I have been telling to hang on and let rent cover payments for at least five more years, which they can do fortunately…no point selling at a loss. But many ppl want or need the “cash” now. Five years of reno’s, renters…and ending up in the negative after transaction costs. Not even having a good time with my told-ya-so’s. So much glut and lack of interest in buying, but this time no more “yeah but it will turn around”…more a sense that “this time it is different” and not in the good sense. True stories from the front lines. CRAZY how much talk there is of RE – everyone is getting in or mostly out…thought it was just fucked up Vancouver’s only conversation point…but, nope, seems everyone else has bought into it across BC.”
– ArthurFonzarelli at VCI 6 Jul 2012 11:55am

“I have a friend that just bought a tear down in Oak Bay last month and is reno’ing it to the tune of 200k. He was bragging his ass off on Facebook like he’d finally achieved membership in some exclusive club. His wife works for the government and he dabbles in a bunch of different things, but they’re by no means wealthy.
He’s going to be f’d to high heaven in a couple of years…..and the club isn’t going to be very exclusive at that point.”
– Anonymous at VCI 6 Jul 2012 2:04pm

“Came back from Victoria last weekend visiting the parents in the Fairfield area (near Gonzales Bay). Could not get over how many homes were on the market. This has not been a neighbourhood that has had an overly high turnover of ownership (even the parents noticed as they don’t drive but walk everywhere). Many of them were also waterfront properties. Drove through the Uplands bit – LOTS of homes on the water side for sale – presumably in the millions+ category. Can’t imagine who will be snatching all these homes up.
Walked through the Bay Center(?) mall downtown in the middle of the afternoon – it wasn’t anywhere close to being busy. Actually, now that I think back, there really wasn’t one shop I went into where I had to wait in line to pay or would be considered busy. How do people make any money in Victoria? There’s nothing there but small businesses that close at 6pm. Yet the average home in Fairfield area is around $700-$900K. Truly mind boggling.”
– unimpressed at VCI 6 Jul 2012 at 3:01pm

“He half-heartedly lamented that he had bought at the peak. But he also said it’s all relative, if his house goes down so do all the others, so it makes no difference if prices go down.”

“On a business trip with a colleague from Victoria, who I knew purchased last year at the peak of the market. I mentioned how Vancouver prices were coming down, and that the Victoria market had already dropped. He agreed, and half heartedly lamented that he had bought at the peak. But in the next breath, he said it’s all relative, because if his house goes down so do all the others, so it makes no difference if prices go down.
Amazing – so highly educated but failed to realize that with his 10% down, he would be underwater if he went to move or buy up.
This “its all relative” mantra is really prevalent, even my own father believes this.”
– Told Yous at VCI 27 Jun 2012 4:52pm

Illogical post-hoc rationalizations will abound.
– vreaa

“Just witnessed another young Victoria couple get sucked into buying a pressboard box with no yard within a stones throw of the highway.”

“Just witnessed another young Victoria couple get sucked into buying a pressboard box with no yard within a stones throw of the highway. It was a bank sale on a project that looks barely a couple of years old and they weren’t even bright enough to lowball what was an obvious desperation sale. Of course it was the one set of parents pushing them into it so their smart little boy can be on the “property ladder”.
While one gets sucked in, another I know who has owned for 3 years needs daddy to pay for the groceries to keep the kids fed even with a two income family. This is not going to end well in the City of Gardens and the brainless.”
– coastal at greaterfool.ca 23 Jan 2012 at 10:53pm

“Sold a 1940′s small house in Victoria in 2011 and took a year off to travel. Now in sunny Florida, where I could buy 4 similar houses for what we got for the Victoria place.”

“Sold a 1940′s small house in Victoria in March last year and took a year off to travel. Currently I’m in sunny Florida on the gulf coast, I could buy 4 similar houses here for what we got for the Victoria place. Also cost of living here is so much less, and I spent the day on a beautiful white sand beach watching dolphins play. A lot of people in BC are delusional.”
– Beagle at greaterfool.ca 9 Jan 2012 8:17pm

“40 years old, married with two young kids. Leaving for Victoria and a mortgage free life. Now I can focus on building a retirement portfolio and not having the bulk of my wealth tied up in my house.”

“I am leaving as well. 40 years old, married with two young kids. Leaving for Victoria and a mortgage free life. Now I can focus on building a retirement portfolio and not having the bulk of my wealth tied up in my house. Thank you Vancouver Realestate its been great, but I am out! I feel like I won the lottery.”
– 2muchdebt at VREAA 14 Jan 2012 12:44pm

Victoria Flatlines – “There is definitely still a divide between sellers and buyers on price expectation and I’m not sure where that is going to go. I don’t see any real downward pressure on that, I see sellers wanting to hold out and buyers also holding out.”

“The Greater Victoria real estate market hit the brakes in 2011, recording the lowest total number of unit sales in 11 years.”
…
“Overall it was a very flat year,” said Pemberton Holmes real estate agent Nicole Burgess, noting one of the continuing trends in 2011 was the gap between buyers and sellers. “There is definitely still a divide between sellers and buyers on price expectation and I’m not sure where that is going to go,” she said. “I don’t see any real downward pressure on that, I see sellers wanting to hold out and buyers also holding out.”
– from ‘Home sales tumble to 11-year low’, Times Colonist, 4 Jan 2011

This time around, the sellers will blink first. – vreaa

“My house in Victoria has gone up in price 150% since 2001. That is not sustainable.”

“I think that there is a bubble in most real state markets in Canada as well as many other places in the world. My house in Victoria has gone up in price 150% since 2001. That is not sustainable. Last year I went to my home country, Colombia, and real state there has gone up by 500% in some areas in the same time. Today, no one can buy property with a family income on normalized interest rates. Yes, I know several young couples that have bought properties in the last year. However, all of them have bought with the minimum down and the maximum of amortization. Also they have new cars and new TV and go in vacations to Mexico!! well, I think that those guys will be broke if interest rates go up a little as many Canadians will be.”
– mekas, comment at Globe and Mail, 14 Oct 2011 1:41pm

Tale Of Two Nephews – ‘Ouch!’ and ‘Phew!’

“Two anecdotes:
One nephew and spouse bought leasehold condo at SFU. Sold, but bought a SFH in Ridge Meadows at the peak (ouch!).
Other nephew PhD student (married, one child, in Victoria), had a condo. It was a prime leaker candidate(1980′s stucco all over). I put him onto a few RE blogs….gave subtle hints, aka ‘beware!!!!’. They sold at peak, it dropped shortly after. They are now in students’ housing on campus renting.”
– bubba at vancouvercondo.info October 7th, 2011 at 12:01 pm

Victoria – “One realtor openly stated the one home was overpriced but she was just following the direction of the seller.”

“I was out to a number of open houses on the weekend here in Victoria. With the exception of one, every home was vacant. And no there was no rush of buyers having a look. One realtor openly stated the one home was overpriced but she was just following the direction of the seller. In another the realtor said it was a buyers market with inventory at a 20 year high. He looked sad and forlorn.
There are For Sale signs popping up everywhere here; I don’t think prices are going to rise anytime soon.”
– Bobby at greaterfool.ca 5 Oct 2011 1:48am

“I’ve been to a number of open houses here in Victoria quite recently. The realtors are looking rather concerned. Each said we’re open to offers, in fact one said any offer.”

“I’ve been to a number of open houses here in Victoria quite recently. No, they are not busy and yes, the realtors are looking rather concerned. Each said we’re open to offers, in fact one said any offer.
The landscape here is littered with For Sale signs with many stating reduced or new price.
It is going to get ugly out there!”
– Bobby at greaterfool.ca 30 Sep 2011 2:02am

Victoria Questions – “I can’t afford to buy a house without a mortgage that would screw up my retirement. Who’s buying these houses and why?”; “How do people in Vancouver survive?”

“I look at myself living here in Victoria (renting; – sold the house) and pulling in a good pension with plenty of well paid extra part time work. And yet there’s no way I could afford to buy an average house (over half a million) and sleep worry free at night. So if I’m considered to be in the “middle class” and I can’t afford to buy another house without a mortgage that would screw up my retirement, then who’s buying these houses and why?”
– Not Wondering Anymore at greaterfool.ca 11 Aug 2011 12:00am

“Tell me, how do people survive? We are in Victoria – our family salary is above average – we have 4 kids that don’t do a whole bunch of activities. We don’t travel, don’t eat out. We just can’t seem to make ends meet.
So, how do people in Vancouver do it, I wonder, if so much of their income is going to RE?”
– Victoria at vancouvercondo.info 22 Aug 2011 7:42am

—
Vancouver Answers:
“Victoria,
Few ways it’s done:
Rent basement
Take on more boarders
Two or more jobs
Loans (gifts) from parents
Of course, the above all come with additional stress.”
[from Anonymous, at vancouvercondo.info 22 Aug 2011 8:21am]

Victoria – “But this is my goal. A house by 55.” – “Renting’s the only sane option. But I know from his conversation with me, that ain’t gonna happen.”

Garth Turner at greaterfool.ca 17 Jul 2011 relays this story from Jake in Victoria –
“I just turned 50. I married in 96 and then started thinking about purchasing a house. Should have bought something but had no cash, no down payment, and job wasn’t that good. But then things picked up. Starting saving, had 2 kids, moved to a small rental house.
But in 2001 prices started spiralling out of control, and even though my income and savings increased, I am still chasing the market up. I could rent a much better and bigger house than I could ever buy, so did just that. But I am running out of time.
So if I wait until 2013 or 2015 to buy in, and I could as I have now saved, I will be 54 by then and ready to retire. And every rent payment is going right out the door, I don’t even want to think how much I have spent on rent in the last 15 years, I could have bought 3 houses.
I work for Government, and my pension from BC Pension Corp starts at 55. I have 31,000 in an RESP, and 90,000 in RRSP money, of which 50,000 was destined for the HBP. 5,000 in a TFSA.
Am I screwed as far as owning a 4 BDR House in Victoria? Is it time to throw in the towel on my dream, rent til the kids are gone, and then buy a 76 Winnebago and live off the land?”
“I am not whining about my position in life, I thank God for what I have, I know I am in a better position than some that have shared their stories on the blog,” he said, “but this is my goal. A house by 55.”

GT added this sensible analysis: “Following up, I found his two kids are 11 and 13, his wife doesn’t work, the family income is seventy grand, he’s desperate to retire at 55 and his pension will be $2,800 a month gross. So here is the situation – devoid of emotion.
The average SFH in that city is $630,000. His down payment will max out at $80,000 (with the HBP and cashing in his TFSA plus the rest of his RSPs). That’s 12% down, which means (with closing costs) a mortgage of $562,600. Of course, he can’t risk going variable since rates have nowhere to go but up, so a 4% fiver amortized over 30 years would cost $2,734 a month, and then escalate. With property tax and insurance, that climbs to $3,134.
His pension income, after tax (at 20.6%), would be $2,416 a month. So, carrying the house would take 129% of his income. No food. No gas. No cable TV or new clothes. No car. And only $31,000 in RESPs to help his two kids through a collective eight years of university.
See what I mean? Home ownership’s a dream denied by his own financial reality.
The only hope might be to move to rural New Brunswick, buy a place for $139,000, shoulder a mortgage in retirement, and have zero savings. Or, Jake could rent for 50% of his after-tax pension income, still have money to live, plus $95,000 invested.
If financial security and quality of life are the goal, renting’s the only sane option. But I know from his conversation with me, that ain’t gonna happen.”

Victoria – “How long you been building I asked? 12 years he replied. You’re about to get the rest of your lesson, I said.”

Dan in Victoria at greaterfool.ca 10 Jul 2011 at 10:47 pm –
“Things are definitely starting to turn [in Victoria], there is no doubt about it.
Went to a few open houses today, talked to a few sellers, oh yeah lots of interest, things are good….blah blah blah.
I think you are over priced I said to one fellow.
Got the down the nose look, well if you can’t afford it…
Had a good chuckle.
How long you been building I asked?
12 years he replied.
You’re about to get the rest of your lesson I said.”

Many in the market have no experience of significant price downdrafts and genuinely assume prices will continue to rise indefinitely. These guys clearly don’t do much reading. – vreaa

Victoria – “They put their place on the market soon after their twins arrived and it sits languishing after 2 price drops. They are more than $50,000 underwater if they sell at their new asking price.”

This anecdote relayed by Garth Turner at greaterfool.ca 22 Jun 2011–
“I am a transit operator for BC Transit in Victoria. I can’t wait to see the real estate numbers for June. I drive set routes and so I see all the for sale signs popping up. I drive by hundreds of homes for sale and have seen 2 sell! I think F’s moves to stem the tide of lemmings (newbies) throwing themselves into the real estate market here has had an effect. Unfortunately, my friends thought I was crazy when I said we were in the final phase of a RE bubble. Many drank the Kool-Aid. One poor couple over bought and then decided to have a child. Well their child turned out to be twins! They put their place on the market soon after their blessed arrival and it sits languishing after 2 price drops. They think they are $50,000 under water if they sell at their new asking price. Sad thing is they haven’t factored in the cost of selling the place or moving costs.”

Unnamed Eastern City – A Fine Way To Buy A House

This article on what sensible home buying should be like from ‘House Hunt Victoria’, 12 May 2011 reproduced here with kind permission of ‘HHV’.
No line ups in the rain?… No competing offers from a half a dozen other parties in the driveway?… No cellphone bids from foreign lands?… No 400K over-ask bid?… No shouting?… ‘Conditions’? [what are those? -ed.]…
The respect for the human aspect of the transaction stands out. ‘HHV’ and Froogle Scott share similarities in the way they appreciate homes as  personal artefacts.
[Note: We continue to believe that housing in Canada is an overheated speculative market, more so in Vancouver than anywhere else.]

—-

Buying: the search and the offer

“We’ve been at it for four long years. This search was very easy. We used a poor facsimile of VREB’s Matrix or PCS system and the MLS® website to find the houses we wanted to view. Our REALTOR® scheduled appointments. We gave her a list of 30 houses we wanted to see, 15 each day for two days. After the first day, we asked her to add 5 houses she thought we should see based on our reaction to what we’d already seen.

Day one was very fast. We’d planned to be at it for around 7-8 hours. We were done in four. Let’s just say we get to “no” very quickly. Mrs HHV came up with some handy acronyms for our listings sheets:

* NWIH = No way in hell
* NATP = Not at this price
* WAO = Worth an offer

At the end of day one we had two WAOs on our list. We repeated the process again the next day, in almost as little time. We found the home we bought around mid-day. We looked at half a dozen more afterwards. By the end of our two-days of looking we had 5 WAOs on our list and one house we thought we really wanted.

We spent the rest of that day doing what we always do when we have a big decision to make. We compared the status quo to the anticipated outcome of the action taken. Action won out. We decided to schedule a second showing and, if it showed as well the second time, make an offer. It showed better the second time.

Here’s an interesting side note: both times we viewed the home, the owners were present. Normally agents advise against this. The mobility of the owners was an issue, so they chose to stay home. We were very glad they were present. They made themselves scarce and weren’t an issue for us. But they were a big part of the gut feel we got while inspecting their home. They were the original owners and their pride showed.

When we went to make the offer our agent showed us what had sold in the neighbourhood over the previous six months. Like many neighbourhoods in Canada, prices were on the downswing. The asking price was below the assessed value, only marginally so. The home had only been on the market a few days. Our agent suggested a price. We suggested another.

The negotiation would have been very simple if the listing agent hadn’t been trying to take the day off. We had a few conditions on the offer: appraisal, inspection, financing and a change to the possession date. Our offered price was 2.6% below the asking price. We felt it was strong. Did it need to be? Given what we knew about the owners I’d say yes, it did. Given what we knew about the market conditions, I’d forgive you for telling me we paid too much.

So why did we choose to present a strong offer? Simple: the product and the people.

The house is immaculate and gives us the perfect opportunity to make it our own at our own pace. It needs nothing to make it livable today, but its old enough to make updating it worthwhile over the next 5 to 10 years. The layout is flexible. We’re a small footprint family right now, but we may not always be. The house meets both those needs.

The lot size was above average for the neighbourhood. But the home built on it was about 90% the size of many of the other houses in the neighbourhood. The price reflected the home size, but not the lot size when we reviewed comparables. We value land. We like houses, but don’t value a big house the way many people who choose to buy big homes on small lots seem to.

This house had one thing I always look for in a home: copper. If you’ve been in a new build in the last 5-7 years you’ll often see an abundance of what’s known in the plumbing world as PEX. We don’t like it and don’t trust the long term viability of it. I’d say 60% of the homes we viewed were plumbed with PEX versus copper. That was enough for us to rule them out, “good bones” and all that. All the major upkeep work had already been done: roof, siding, furnace, hot water heater etc.

This home was well-loved. Enough so that I wanted to know how it was well-loved. That was worth something to us: not leaving a distaste in the process of selling the home for the current owners. We wanted inside knowledge and were willing to pay for it.

Our agent suggested an offer price $5,000 lower than what we suggested.

The owner of the home had already decided his final price. It was $5,000 higher than our offer. When that came back we countered a matched price, but asked for some things around the property we knew the current owner didn’t want to move (another reason why we were thankful they’d been around for the viewings and we’d had a chance to ask them a few questions). We certainly didn’t get $5,000 worth of items, but we did them a service (they don’t have to try to sell the lawnmower, yard tools, gas BBQ, spare fridge etc) and we saved a bit of time/money not having to go out and try to buy all this stuff anyway.

When I attended the home inspection 5 days after having the accepted offer in place, the inspector confirmed our gut feel had been right. No home inspection will ever be “perfect,” but the total “fixes” necessary to this house are priced out under $500. Even better, the owners of the home showed me everything I had wanted to know about the house: how the sprinkler system works, how to maintain the water system, how to shut down the gas and water supplies, how to run the A/C/heatpump unit etc. We exchanged numbers and they’ll be a good knowledge source in the future should anything surprise us.

Much of the time we discuss properties here at HHV, we focus on the financial side of things. We have to in Victoria because the prices dictate us to be excessively prudent to prevent ourselves from getting overwhelmed by the emotional side of buying a home and ending up in a potentially financially ruinous situation. Buying a home is emotional though, you can see that in some of my description above. It’s been a positive experience for us thus far. We’re not in the house yet and we know there will likely be a few initial “moments” when we are, but we’re thankful that the price we paid allowed us to embrace the emotional side of the home buying experience — there’s value in that too.”

“I know someone who had gone five months with only one low ball offer on a million dollar place in a nice area of Victoria. They switched to an Asian realtor based out of Van and had an Asian buyer with cash sign a deal within a week or two.”

coastal at vancouvercondo.info November 25th, 2010 at 1:19 pm– “I know someone who had gone five months with only one low ball offer on a million dollar place in a nice area of Victoria. They switched to an Asian realtor based out of Van and had an Asian buyer with cash sign a deal within a week or two. Wife and kids are moving in, dad staying in China to work. Not saying it’s the norm by any means but it does happen but only in high end neighborhoods.”

“I would not be exaggerating if I said that in East Abbotsford there are at least 60-90 new SFH’s being started as I type. This in an area that has 270 listings already.”

Developers do not seem to have any ‘insider’ advantage in their ability to predict market strength. Most bubble market tops are accompanied by ravenous new building. -vreaa

pianoexcellence at RE Talks 18 Mar 2010 2:03 pm – “I went for a nice drive today cause the weather was so nice. Almost every single new lot I drove past had holes dug and framers starting up. I’ve been driving through those neighborhoods for years and I have never seen this kind of building.  I would not be exaggerating if I said that there are (in East Abbotsford) at least 60-90 new SFH’s being started as I type. (this is in an area that has 270 listings already…up from 160 a couple months ago). Am I the only one seeing it? Is it just my bearish slant? Is this happening in other areas?”

islandlandlord at 2:08 pm – “Nope, you’re not the only one. In Victoria its the same thing..there are SFH’s going up every corner you turn. The market is going to flood again.”

“Although he could afford any house, he now lives in a rented condo overlooking the ocean north of Victoria. His strategy is simple: Wait a year or two and buy a lot more house for a lot less money in a post-bubble world.”

This from Garth Turner, on his own blog, greaterfool.ca, 14 Feb 2010 –

“Sunday afternoon [14 Feb 2010] I sat on a leather couch in the Empress Hotel speaking with a millionaire exile from the US. The guy now lives in a rented condo overlooking the ocean north of Victoria because – although he could afford any house – “I’ve seen this movie before.” He laughed as he said, “I would never have imagined before I came here that Canadians could be stupid enough to make exactly the same mistakes Americans did five years ago. I tell ya, this is like watching an old, familiar train wreck.” His strategy is simple: Wait a year or two and buy a lot more house for a lot less money in a post-bubble world.”

Victoria – “And you think we have not created a casino mentality?”

This anecdote is third hand. It comes from a speculator in Victoria, and has already been headlined at greaterfool.ca, and commented on, there, by Garth Turner. It deals, however, with a sentiment that is so seminal to the Vancouver bubble that we have felt moved to archive it here. -vreaa

“I bought a new condo, 2000 sq ft, facing the ocean on ocean frontage in 2007 for $1,200,000 A rental agency has advised me not to take short term tenants since possible damages to the condo may deflate the value. I partly financed by taking a conventional mortgage on my present home property for $875,000 prime minus .69%. Current rate is 1.56%. My home property is appraised at $1,700,000 (2007).(Prime ocean front). I rejected an offer of $1,600,000 in 2008. The market is firming up again in the Victoria area. We intend to move to the condo when the house is sold. My question: I would love to deduct the mortgage interest on the condo! How can this be done?”

[Garth Turner comments – “Just to put this in Dick-and-Jim terms for the feds: Guy with inflated property borrows 50% of its value to buy a spec property with 72% financing. He is able to get a mortgage at 1.56%, which is the current rate of inflation, which also means the money is free. Guy is a tool. His action serves only to pump up real estate values further, thanks to absurd interest rates, orchestrated by the Bank of Canada. He now wants to deduct the interest on his free mortgage money from his taxable income, which means other taxpayers (who don’t have $2.7 million in real estate) would pay half his costs for him. And you think we have not created a casino mentality?”]