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Victoria's housing market, home prices and values


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#2081 rjag

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Posted 04 November 2017 - 05:15 PM

you’re splitting hairs.
You didn’t mention the 3 bed townhouse either and come up with why there’s such a discrepancy
You can research lots of similar lots in other cities like Kamloops and come up with the same result, land costs play a huge part of building costs as evidenced above

#2082 jonny

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Posted 04 November 2017 - 05:17 PM

None of those costs have doubled in the last two years. Developers like Le Fevre bought the railyards land in 2002. It’s not even a cost anymore. Sleggs only recently bumped up drywall prices by 40% on top of the bump from the new tariff. That I’m sure is because they want their cut. So yes all this costs are going up because they developers are charging $1000/sqft not the other way around. Those prices are not cost driven, they are market driven. I’m happy for Chris though he deserves all the extra profits....


You're not listening. Supply and demand dasmo. Prices have doubled because of supply and demand. Our municipalities suppress supply.
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#2083 dasmo

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Posted 04 November 2017 - 06:15 PM

Exactly. Supply and demand. Not increasing costs....

#2084 Mike K.

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Posted 04 November 2017 - 06:30 PM

Increasing costs plus supply and demand, which has been a factor in Victoria since the 1980’s.

Every new wave of Victorians thinks prices “just” increased and that it’s a new phenomenon.

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#2085 lanforod

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Posted 04 November 2017 - 06:49 PM

If demand is causing land prices to go up, and that is the reason prices have gone up so much, the. developers aren’t pocketing anything extra, dasmo.

#2086 Mike K.

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Posted 04 November 2017 - 07:37 PM

Dasmo is write in that land purchased a while back has allowed some projects to enjoy a larger profit margin, but the way the market works is if units are priced significantly lower than comparable competition buyers will purchase the units and be highly motivated to flip them upon completion to then purchase another (costlier) unit with a massive down payment.

But then there are also situations, like the Janion, where the developer loses quite a bit of money while purchasers have realized 100% profit scenarios with resales.

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#2087 FirstTimeHomeCrier

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Posted 04 November 2017 - 09:11 PM

And approximately how much tax have you paid from selling your investment properties?

 

I have never owned or sold any investment properties, so none. I'm not sure what your point is.



#2088 tjv

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Posted 05 November 2017 - 08:07 AM

Exactly. Supply and demand. Not increasing costs....

Supply and demand:

 

There is an increase in demand for land so prices go up

 

There is an 30-40% anti-dumping tariff on drywall so prices go up

 

There is a demand for labour, carpenters for one are in hot demand and everyone is working so if you want guys you have to pay more and more because if not they will go elsewhere.  Carpenters as a guess have gotten $5+/hr more in the last 2 years.  Add on EI, CPP, benefits and that's about $7/hr.  Try to find a labourer for less than $18/hr and even at 18 good luck in finding someone.  Also add on the fact workers know they are in demand so they won't get laid off so they aren't in a rush to produce so productivity goes down.  Do you have any idea how many manhours go into building a house or high rise?  As a ballpark lets say you have on average 6 guys on a house for 6 months x an extra $7/hr = an extra $44k in costs!

 

Add in the fires and demand for lumber in BC and the USA, lumber and plywood skyrockets by 40% which is another 20-25k in costs

 

And since lumber went up, everything made with wood goes up - doors, finishing trims, etc, etc.  I've seen electrical wire increase by 15% in the last year

 

The list goes on and on and I think anyone can quickly see that when you add this all up, it adds significant costs and no one is eating these costs, they can't.  In the boom 10 years ago prices were increasing between 1.5 and 2% EACH month!  I don't know the inflation numbers today, but I would imagine they are similar


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#2089 davidN

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Posted 05 November 2017 - 08:44 AM

I have never owned or sold any investment properties, so none. I'm not sure what your point is.

Perhaps the point is that there are no guarantees that your investment goes up and you make a profit. You seem to think everyone should share despite how much time, effort and money goes into something. Very nice idea but very unrealistic.

 

Why would I risk an investment  dime without a chance for a return. I for one am more than happy to pay a risk taker (developer) his profit. Without risk takers (developers) we would all be living where? And of course those risk takers (developers) actually keep prices inline. Can you imagine if only one person decided to develop . Can you imagine how many people would be paying ridiculous sums to buy the very few properties that he could build a year.

 

It is up to me to decide where I live and how much I am willing to pay to live there or what I buy for an investment and how much of a return I should expect. Reward should be based on your hard work and how much you are willing to risk. Not on some government bureaucracy that controls everything.


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#2090 dasmo

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Posted 05 November 2017 - 12:14 PM

A labourer at $18/hour is nothing when you bill them at $50. Lumber skyrocketing from the fires is an excuse to skyrocket the prices. Yes cost are going up. Trust me, I know. Non of the costs even touch doubling of prices in a few short years. Let’s just call the spade a spade please. It’s market driven price increases here. Same lumber goes to Kamloops....

#2091 Mike K.

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Posted 05 November 2017 - 12:52 PM

I keep challenging all of the folks complaining about the cost of housing – who already own housing – to price their home for a value that they feel is fair based on what they originally paid, based on upgrades, etc. Not a single one wants to admit what they would price their home at when selling. But they sure complain, oh do they ever complain.

 

My sense is the folks who are most vocal about the pricing upswing and who already own a home or two, wanted to purchase more, but the price appreciated too quickly for their comfort/affordability level. So they complain.

 

The house I'm looking at right now is on the market for 40% above the price the current owner paid 1.5 years ago. 40%! And there's no reason for that other than the owner wants to capitalize handsomely on the sale, and when pressed says he'll only come down to 30% but not touch the ~$40k in necessary upgrades that the home will require upon purchase. I have no intentions of paying his asking price and clearly neither does the market, but there you have it, a perfect example of an average person (not a greedy developer) driving up the value of a home that's already built, that requires significant upgrades, and which was recently purchased at nearly half the price the owner wants for it now.


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#2092 aastra

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Posted 05 November 2017 - 01:17 PM

 

Dasmo is write...

 

Dasmo posts good stuff, but equating him with the very act of writing is going a bit overboard.

 

Funny coincidence: I went to school with a guy named Dasmo Iswright.


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#2093 aastra

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Posted 05 November 2017 - 01:21 PM

 

In those two years they likely paid hundreds of thousands in carrying coats.

 

I was nodding in agreement at your other points but you lost me with this one.


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#2094 dasmo

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Posted 05 November 2017 - 01:28 PM

Hehe. Carrying coats can get heavy but usually not costly. Carrying costs. As in owning the property costs you money. Financing, taxes, etc.

#2095 Mike K.

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Posted 05 November 2017 - 01:39 PM

Write again, aastra!


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#2096 tjv

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Posted 05 November 2017 - 01:40 PM

A labourer at $18/hour is nothing when you bill them at $50. Lumber skyrocketing from the fires is an excuse to skyrocket the prices. Yes cost are going up. Trust me, I know. Non of the costs even touch doubling of prices in a few short years. Let’s just call the spade a spade please. It’s market driven price increases here. Same lumber goes to Kamloops....

Have you taken the time to go line by line thru the construction costs of a typical house to fully understand why prices have skyrocketed?  I gave you some very good examples in my previous post of how costs are skyrocketing beyond anyone's control.

 

I would also like to know which developments have doubled in price in a few years on a sf basis.  Comparable location, building, finishes, etc



#2097 Sparky

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Posted 05 November 2017 - 01:45 PM

Write again, aastra!

 

Write? You want aastra to reword the post?


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#2098 dasmo

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Posted 05 November 2017 - 01:55 PM

Come on tjv. All I am saying is this is no time for sympathy for developers. You don’t need forensic accounting to figure it out. Would we be going through what might be a record pace building boom right now if it wasn’t for record profits? I’m not preaching social housing here. Just trying to keep it real.
That said, let’s see a large development open their books to show us how razor thin those margins are. Anyone? Anyone? Bueller? Bueller? That’s what I thought....

#2099 Mike K.

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Posted 05 November 2017 - 01:58 PM

But there are far, far more home sales every month by home owners selling already built homes than there are new-build condominium or home sales. Far more.

 

Why is your focus on developers and not on home owners pricing their homes at the rates they are?


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#2100 MarkoJ

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Posted 05 November 2017 - 02:09 PM

Come on tjv. All I am saying is this is no time for sympathy for developers. You don’t need forensic accounting to figure it out. Would we be going through what might be a record pace building boom right now if it wasn’t for record profits? I’m not preaching social housing here. Just trying to keep it real.
That said, let’s see a large development open their books to show us how razor thin those margins are. Anyone? Anyone? Bueller? Bueller? That’s what I thought....

 

I doubt developers are making the margins on the construction process; more so, on the upswing on the market. My father and I built a home in Fairfield last year and sold it earlier this year and I would say we probably made 70% on the land value upswing and 30% on the actual construction process/improvements.  For example, if we had sat on the existing house without tearing it down and sold it the day we sold the new build we would have made 70% of the profit. 

 

For large developments land is a smaller component buy they benefit by locking in on a construction contract at a lower price and then as the market upswings their construction cost remains relatively fixed while the value of the final product skyrockets.  Assuming they didn't leave 10s of millions on the table by pre-selling everything....i.e. Encore, Legato, etc.

 

It is easy too look smart when the market upswings. Go buy a piece of land at CURRENT prices, build at CURRENT construction costs, and sell in a market a year or two from now, depending on the size/complexity of your project, with the new mortgage rules coming in. Good luck.

 

I think the developer has to sell at the highest possible prices because the next land acquisition is likely going through the roof. If the developer gives buyers a break I doubt the subsequent land owner will give the developer a break on the land acquisition purchase price, or the city will make the rezoning process any easier because he or she is such a nice developer.


Edited by MarkoJ, 05 November 2017 - 02:14 PM.

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