“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