5833 replies to this topic

[LeoVictoria]

A local pre-sale just went through dozens of units in a matter of days.

And not one of them will be included in the VREB’s stats.

And that’s just one project representing one segment of the market. You can see just how much is missing from the VREB’s take on the market where a solid third or even a half of real-world market activity is totally unaccounted for it.

Not sure what you’re trying to argue. That the condo market is actually heating up and the presale market is somehow behaving opposite to the resale market?

Edited by LeoVictoria, 10 August 2018 - 06:19 PM.

[LeoVictoria]

Not sure what you’re trying to argue. That the condo market is actually heating up and the presale market is somehow behaving opposite to the resale market?

Which by the way is not possible over the medium/long term because presales and resales are (imperfect) substitutes for each other

https://en.m.wikiped...Substitute_good

[Mike K.]

I’m driving home the point that the data you rely on is incomplete by a considerable margin and only tells of a reality up to a certain point.

Your data won’t capture the sales of dozens of units from just one project over the last two weeks. It also won’t capture their prices, it won’t include them in your median calculations nor the averages. About 50-units just sold in one project and they are completely removed from your narrative.

[tjv]

One point of pre-sales is they are simply held in place by a small deposit.  I am sure we all remember the about of pre-sale buyers who were simply walking away in 2009 as closing time came and prices were falling.

 

Some of these pre-sale purchasers are also putting down the small deposit in hopes that once the project completes they are able to just flip it for a tidy profit.  Many did that and that's why CRA started to crack down on people who were declaring the profits on their tax returns

 

Not sure you can really count every pre-sale as an actual sale

Edited by tjv, 10 August 2018 - 07:54 PM.

[Mike K.]

In 2008/9 the global economy tanked.

Some folks are flipping, but to flip they must first complete the purchase.

[LeoVictoria]

I’m driving home the point that the data you rely on is incomplete by a considerable margin and only tells of a reality up to a certain point.

Your data won’t capture the sales of dozens of units from just one project over the last two weeks. It also won’t capture their prices, it won’t include them in your median calculations nor the averages. About 50-units just sold in one project and they are completely removed from your narrative.

 

Couple points on that.

1. Only applies to condos.  Not a significant number of new build single family to matter.

2. You are right, no one has this data.   So the question is, what is the impact?   If the data I use is incomplete, what effect does this have?   After all, it only really makes a difference if the addition of presales would change the "narrative" (interesting how you call facts a narrative).   I've already pointed out that presales and resales are substitutes for each other so the two markets follow each other.  So I am very confident even if the data were available it wouldn't change the overall picture which is that the market has cooled down.  If you would like to disprove that by giving an example of when the presale market took off while the resale market cooled, or vice versa, then by all means go ahead.

 

By the way, we can quantify how many property transfers are missing from the MLS database by comparing MLS transactions to those registered at the land title office.   

 

In a year about 81% of sales happened on MLS, with 19% outside of that.   The 19% is made up of pre-sales, private sales, inheritances, etc.  

Edited by LeoVictoria, 11 August 2018 - 07:03 AM.

[LeoVictoria]

This argument does raise a larger point:  You can make any argument you like without the burden of having to back it up with evidence.    

 

This is how the real estate industry has operated since forever.   Keep the data secret, then make assertions about the market from a position of authority.  It's a problem fundamental to the fact that the people interpreting the data were also the people selling the product. 

Edited by LeoVictoria, 11 August 2018 - 06:52 AM.

[Mike K.]

I have that data. I also have data for many other projects, but not every single pre-sale unit can be accounted for due to the sheer volume of transactions.

The pre-sale market leads the housing industry, it does not lag the industry. A pre-sale unit will sell for more, typically, than a comparable re-sale unit. And considering the risk to a developer, a pre-sale offering is not pursued unless the developer feels there is enough demand to not only justify the price, but also enough demand to ensure all units are sold in a timely order.

Pre-sales have played an instrumental role in our market over the last four years where a lack of inventory made pre-sales a favourable choice for those who didn’t want to play the offer game on re-sales or literally had no desirable inventory to choose from. Underestimating the importance of this segment of the market, which the VREB does, doesn’t give the industry or consumers a clear picture of what’s actually happening and just how much demand there is for local real-estate.

[tjv]

In 2008/9 the global economy tanked.

Some folks are flipping, but to flip they must first complete the purchase.

yes it did, but I think our local economy did fairly well overall, its not like we were super hard hit, but prices did drop around 100k on average if I recall correctly.

 

yes they must complete and then a few weeks later they sell again.  Guess what, that's counted as 2 sales which overly inflates the numbers if that happens on a bunch of condos each month

 

Perhaps Marko can weigh in on this.  I watched a video he did on Aug 1 where he says prices are now flat overall.  If you have cheap inventory it will sell fast, but the pricier stuff you better make sure if stands out.  From my observations I think he is correct

[Mike K.]

Absolutely correct. We’ve been inundated with $1 million+ inventory that only a tiny portion of locals can afford to buy, while affordable, well maintained properties disappear within days.

There’s nothing of substance on the market below $600,000, and that’s a problem.

[LeoVictoria]

I have that data. I also have data for many other projects, but not every single pre-sale unit can be accounted for due to the sheer volume of transactions.

The pre-sale market leads the housing industry, it does not lag the industry. A pre-sale unit will sell for more, typically, than a comparable re-sale unit. And considering the risk to a developer, a pre-sale offering is not pursued unless the developer feels there is enough demand to not only justify the price, but also enough demand to ensure all units are sold in a timely order.

Pre-sales have played an instrumental role in our market over the last four years where a lack of inventory made pre-sales a favourable choice for those who didn’t want to play the offer game on re-sales or literally had no desirable inventory to choose from. Underestimating the importance of this segment of the market, which the VREB does, doesn’t give the industry or consumers a clear picture of what’s actually happening and just how much demand there is for local real-estate.

 

You have the data?  Great.   So it won't be a problem to show how the pre-sale market has heated up from last year to this year then.

 

I'm also surprised at the assertion that pre-sales sell for more than resales.   In general, given that you are taking a risk on a unit that is not complete, they sell for less if you adjust for quality (of course nearly all the resales are "used" so you have to adjust for that).  

In certain times of the market when there is no inventory of resales it could happen that pre-sales are more expensive, but that isn't the norm.  

Edited by LeoVictoria, 13 August 2018 - 05:27 PM.

[DavidL]

This argument does raise a larger point:  You can make any argument you like without the burden of having to back it up with evidence.    

 

This is how the real estate industry has operated since forever.   Keep the data secret, then make assertions about the market from a position of authority.  It's a problem fundamental to the fact that the people interpreting the data were also the people selling the product. 

 

Lol, yes, it's how we've managed to control the market and raise and lower prices as we see fit.  Or not so much.  The "industry" has been pretty open with it's data in a general sense for quite some time.  Specific squabbles concerning real time sold data and outdated "gatekeeper" mentalities do persist, but access to aggregate market data has been pretty wide open for at least a couple of decades now.  I always provide clients with all the data that I'm working from to get to my conclusions, while explaining methodology, and ideally we get there together.  The thing is, markets aren't just straight numbers, particularly real estate markets, as much as you may wish them to be.  Interpreting markets is both science and art, and skill in that art comes typically from experience-something the general public simply doesn't have.

[LeoVictoria]

Lol, yes, it's how we've managed to control the market and raise and lower prices as we see fit.  Or not so much.  The "industry" has been pretty open with it's data in a general sense for quite some time.  Specific squabbles concerning real time sold data and outdated "gatekeeper" mentalities do persist, but access to aggregate market data has been pretty wide open for at least a couple of decades now.  I always provide clients with all the data that I'm working from to get to my conclusions, while explaining methodology, and ideally we get there together.  The thing is, markets aren't just straight numbers, particularly real estate markets, as much as you may wish them to be.  Interpreting markets is both science and art, and skill in that art comes typically from experience-something the general public simply doesn't have.

 

Sure, and I have no problem with your approach of walking through the data with people explaining methodology.  Then they are free to agree or disagree with your interpretations of the data.   The problem arrises when people _dont_ show the data behind their interpretation and simply make claims based on insider information that cannot be verified.

 

As to controlling the market, I don't think this tendency for beneficial interpretation has controlled the market.  In the end, the basic fundamentals of supply and demand are far stronger than any kind of influence a misleading interpretation of the market may have on buyer sentiment.   However there have been some studies on the effect of information asymmetry on the returns of buyers and sellers, and it seems clear that a more informed person has the potential to make better decisions.   Hence the need for unbiased presentation of market data to consumers.  

[Mike K.]

I still get a crack out of reading the first 10 or 20 pages of this very thread, now on its 123rd page six years on, and the second iteration of a previous thread in which some foretold of a great housing bubble bursting at any moment.
 
The more things change, the more they stay the same. And the renters who listened to the experts then remain excellent tenants with wonderful references today, while those who had enough foresight to understand that housing is a need, equity is a good thing and you can spend your entire life trying to time the market have made out pretty well.

 

Anyways, everybody's an expert, lol:
 

Continued affordability correction predicts ~8% decline by next year so $480-$505k for me.

I just can't see it going down. Victoria is a highly desirable place to live, and is undergoing some major improvements. My guess is flat or up a couple of percent. Say 540-550.

 

[MarkoJ]

One point of pre-sales is they are simply held in place by a small deposit.  I am sure we all remember the about of pre-sale buyers who were simply walking away in 2009 as closing time came and prices were falling.

 

Over the years I've definitively noticed an upswing in deposit percentages. Most places are starting out at 20% and then dropping it closer to completion if they have unsold units. For 20% to be whipped out there would have to be a fairly drastic market shift.

 

A lot of the walking away in 2009 was a combination of market downturn plus projects that ran into various quality and other concerns such as Reflections in Langford and the Falls in Victoria. 

[LeoVictoria]

 

I still get a crack out of reading the first 10 or 20 pages of this very thread, now on its 123rd page six years on, and the second iteration of a previous thread in which some foretold of a great housing bubble bursting at any moment.
 
The more things change, the more they stay the same. And the renters who listened to the experts then remain excellent tenants with wonderful references today, while those who had enough foresight to understand that housing is a need, equity is a good thing and you can spend your entire life trying to time the market have made out pretty well.

 

Anyways, everybody's an expert, lol:

 

Yeah just re-read the first few pages.   Seems pretty reasonable to me.   Market was slowly declining back in 2012 which represented the consensus of the estimates.

Also then as now, it's a good idea to use your own brain when making a large purchase.   It's also important to act when the time comes to act.   Some people surely got buried in the analysis and forgot that critical second part.   

[MarkoJ]

If you can afford to buy now, how does guessing what will happen in 1 year help you make a decision? Sure, you'll come back and say "if prices drop by $35k, I'll have saved a lot of money", but thats exactly like saying "if I buy a lottery ticket I might have $10 million Thursday AM". No one here has any idea what the market will be like in 1 year; a lot of people on HHV have been claiming for almost 6 years they can tell the market will drop. It hasn't helped any of them. Its market timing, and in my opinion its a poor way to make financial decisions.

 

Some sensible comments from 2012.

[LJ]

On CKNW they are running ads for real estate seminars in Vancouver for people wanting to buy in Victoria and area.

Their tag line is "own waterfront in Victoria for the price of a tear down in Vancouver"

[Casual Kev]

On CKNW they are running ads for real estate seminars in Vancouver for people wanting to buy in Victoria and area.

Their tag line is "own waterfront in Victoria for the price of a tear down in Vancouver"

I'd say they're a little late, but the mainland is still batsh*t insane... I mean, in the cul-the-sac I lived in South Richmond there was an old bungalow a good 30-45 minutes drive away from downtown Vancouver going for $1.5 million! Most SFHs are at least $2 million. Meanwhile there are still tons of houses renting for under $3K/month because of the huge disconnect between prices and actual demand... and schools there are bleeding children because new families are moving to cheaper grounds, including Victoria area. 

 

It's actually maddening to think about it; sorry for the off-topic rant but McMansions have been popping up everywhere in Richmond for years yet school enrollment has gone from 23,500 to 20,000 since 2000. Bigger homes for fewer people amid a housing crisis and all the denizens there do is shrug.

Edited by Casual Kev, 26 August 2018 - 08:53 PM.

[tjv]

too late?  Nope, prices are extremely cheap in Victoria compared to Vancouver

 

https://www.rew.ca/p...ue-vancouver-bc