5833 replies to this topic

[lanforod]

Additionally, your/Citified's takeaway that nothing needs to happen, this is a big nothing, doesn't jive with the answer about the role for government.

[Mike K.]

These two answers contradict themselves. Stratas often don't have a real choice in strata insurance deductibles. Insurers set it. So buildings that are now getting a deductible set to 250k minimum instead of 25k cannot 'consider manageable deductibles', as those are not manageable for individual owners, particularly when a lot of insurers won't do individual coverage that high. I'm still waiting to hear from BCAA if I can get that high of a deductible covered, and how much it will cost.

It cost me an extra $75 annual to increase my individual deductible coverage by just 10k (from 25k) last year, that scales to a absolutely crazy value in insurance. I'm not paying $1500 more annually in insurance just to increase my deductible to 250k. I'd sooner sell.
This is in a newer building in New West, maintained well, but with some claims history. Maintenance doesn't stop the idiot who hangs a bathroom mirror and punctures a pipe damaging multiple units below, nor does it deal with a fire from some tool left plugged in for a renovation. That said, if the deductible were 50k, I think there would have been 2-3 claims in the 10 year history, and if it were 100k no claims at all. So why is it going to 250k?

If the province sets a loss assessment or deductible cap, then there is either a gap in individual owner coverage and strata coverage, or insurers are forced to keep the deductible lower, resulting in even higher, un-affordable premiums. Just a cap isn't enough; which I suspect we'll see soon enough in Alberta/Ontario.


 

Don’t often also means some do.

If your building has a claims history there’s your answer. Your building is a liability.

Have your strata collect some quotes on various repair jobs. You’ll be surprised at how expensive even a tiny remedial undertaking is considering modern code requirements, the labour market and materials costs.

[VIResident]

Les Leyne: Insurance companies create their own disaster 

Times Colonist

MARCH 11, 2020 06:00 AM

".....they’ve jacked the threshold for making claims so high they’re immune from having to pay out on anything other than catastrophes."

"....price of coverage to $817,000 from $265,000, as happened at Shoal Point condos, with plenty of similar examples elsewhere."

"....The industry has traumatized thousands of residents — many of whom scrabbled for a hold in the housing market. "

".....incomprehensible how financial institutions performing an essential service in the most fundamental part of the economy can abandon basic regard for its customers. Particularly when it’s such a vast market — 1.5 million British Columbians in condos."

"....industry says the strata line of insurance has lost money for the last several years. A long list of reasons is given to explain that. And some of them involve deficient management of buildings by the people who live in them."

"...Some have abandoned the strata line of business entirely, which obviously lessens competition"

"...About 2,000 stratas a month renew their coverage, on average, so the outrage is going to build." 

The Insurance Bureau of Canada estimates the average strata insurance premium has jumped 35% this year. That number doesn’t match what the brokers are seeing. Their B.C. association cited a range of increases between 50% and 400%.

 

But if an average 35% hike is accepted, even the insurance bureau acknowledges that’s too high.

"...It’s baffling to see an established industry devoted to coping with disasters create one for itself."

https://www.timescol...ster-1.24094993

[VIResident]

BMO expects Bank of Canada to cut key interest rate to record low

 

"The Bank of Canada will have to slash its key interest rate by another three-quarters of a percentage point in its next rate decision in mid-April, Bank of Montreal says,...."

 

“....anticipate that the Bank of Canada will be cutting rates 100 basis points over the next two meetings,......”

 

".....anticipates a 75-basis-point cut in the bank’s next rate decision on April 15, and another 25 basis points in the following decision on June 3."

 

https://www.theglobe...-to-record-low/

Edited by VIResident, 11 March 2020 - 06:40 AM.

[Mike K.]

Oh my gosh, the fear mongering. Since the start of 2020 we’re coming up on 6,000 renewals. Where’s the mounting outrage?

We should be seeing a thousand plus stratas clamouring to be heard, instead Les Layne needs to pen his own outrage because it doesn’t look like enough people actually care to. Maybe some will make their way out of the wood work now but it’s not the disaster the media wants us to believe it is.

[Mike K.]

 

These two answers contradict themselves. Stratas often don't have a real choice in strata insurance deductibles. Insurers set it. So buildings that are now getting a deductible set to 250k minimum instead of 25k  cannot 'consider manageable deductibles', as those are not manageable for individual owners, particularly when a lot of insurers won't do individual coverage that high. I'm still waiting to hear from BCAA if I can get that high of a deductible covered, and how much it will cost.

 

It cost me an extra $75 annual to increase my individual deductible coverage by just 10k (from 25k) last year, that scales to a absolutely crazy value in insurance. I'm not paying $1500 more annually in insurance just to increase my deductible to 250k. I'd sooner sell.

This is in a newer building in New West, maintained well, but with some claims history. Maintenance doesn't stop the idiot who hangs a bathroom mirror and punctures a pipe damaging multiple units below, nor does it deal with a fire from some tool left plugged in for a renovation. That said, if the deductible were 50k, I think there would have been 2-3 claims in the 10 year history, and if it were 100k no claims at all. So why is it going to 250k?

 

If the province sets a loss assessment or deductible cap, then there is either a gap in individual owner coverage and strata coverage, or insurers are forced to keep the deductible lower, resulting in even higher, un-affordable premiums. Just a cap isn't enough; which I suspect we'll see soon enough in Alberta/Ontario.

 

Here's further clarification from Luke Mills on your question, Lanforod.

Many strata’s, subject to their bylaws or strata council decisions, can charge back the strata insurance deductible, or the full cost of a repair if it is less than the deductible, via an assessment to the owner of the unit in which the damage originated. Given that some strata water damage deductibles have risen to $500,000 or higher, an amount that cannot be fully offset by the unit owners personal insurance, this can impose a devastating financial burden on individual unit owners. 

 

In Alberta, legislation was recently introduced limiting the amount condo corporations can assess a unit owner for an insurance deductible to a maximum of $50,000. A unit owner can purchase personal insurance coverage to fully off-set such an assessment.

 

[Mike K.]

BMO expects Bank of Canada to cut key interest rate to record low

 

"The Bank of Canada will have to slash its key interest rate by another three-quarters of a percentage point in its next rate decision in mid-April, Bank of Montreal says,...."

 

“....anticipate that the Bank of Canada will be cutting rates 100 basis points over the next two meetings,......”

 

".....anticipates a 75-basis-point cut in the bank’s next rate decision on April 15, and another 25 basis points in the following decision on June 3."

 

https://www.theglobe...-to-record-low/

 

We'll see what they decide to do when they decide to do it. Chartered banks like BMO can only estimate moves, and they quite often over or under-estimate what the BoC actually does.

 

But making wild claims like forecasting a record low rate gets them heaps of free media attention.

[johnk2]

My daughter is smiling. She is going for a mortgage in June and looks like she may be able to shave half a point off her current rate.

[Kapten Kapsell]

Regarding Shoal Point:  there's a new listing for sale in the building, MLS #422139; the unit is offered for sale at $610k, it offers 980 (finished) square feet of space, and the strata fee is $824/month ....

 

I know that most buildings won't be nearly as affected by the higher insurance rates, but I wonder what will happen to the few 'very problematic' ones like Shoal Point aside from price declines in the short term.  At some point, 80% of the owners could band together to disband the strata corporation and sell the land to a developer?

[LeoVictoria]

Yeah, the insurance thing is a real issue for condos.  Absolutely not a nothingburger and not as simple as buildings with poor maintenance getting slammed.  Valuable and high end buildings are getting hit too.   Apparently wood frame being hit more than concrete.

 

But also the cries for the government to step in are very misplaced.   Government can't force insurance agencies to provide better or cheaper insurance.  That's the free market at work.  It won't kill the condo market, it just means years of unreasonably low costs are a thing of the past, and risk of special assessments is much higher in case of claims.  

Edited by LeoVictoria, 11 March 2020 - 12:55 PM.

[Mike K.]

Bank of Canada lowers overnight rate target to ¼ percent

The Bank of Canada today lowered its target for the overnight rate by 50 basis points to ¼ percent. The Bank Rate is correspondingly ½ percent and the deposit rate is ¼ percent. This unscheduled rate decision brings the policy rate to its effective lower bound and is intended to provide support to the Canadian financial system and the economy during the COVID-19 pandemic.

The spread of COVID-19 is having serious consequences for Canadians and for the economy, as is the abrupt decline in world oil prices. The pandemic-driven contraction has prompted decisive fiscal policy action in Canada to support individuals and businesses and to minimize any permanent damage to the structure of the economy.

The Bank is playing an important complementary role in this effort. Its interest rate setting cushions the impact of the shocks by easing the cost of borrowing. Its efforts to maintain the functioning of the financial system are helping keep credit available to people and companies. The intent of our decision today is to support the financial system in its central role of providing credit in the economy, and to lay the foundation for the economy’s return to normalcy.

The Bank’s efforts have been primarily focused on ensuring the availability of credit by providing liquidity to help markets continue to function. To promote credit availability, the Bank has expanded its various term repo facilities. To preserve market function, the Bank is conducting Government of Canada bond buybacks and switches, purchases of Canada Mortgage Bonds and banker’s acceptances, and purchases of provincial money market instruments. All these additional measures have been detailed on the Bank’s website and will be extended or augmented as needed.

Today, the Bank is launching two new programs.

First, the Commercial Paper Purchase Program (CPPP) will help to alleviate strains in short-term funding markets and thereby preserve a key source of funding for businesses. Details of the program will be available on the Bank’s web site.

Second, to address strains in the Government of Canada debt market and to enhance the effectiveness of all other actions taken so far, the Bank will begin acquiring Government of Canada securities in the secondary market. Purchases will begin with a minimum of $5 billion per week, across the yield curve. The program will be adjusted as conditions warrant, but will continue until the economic recovery is well underway. The Bank’s balance sheet will expand as a result of these purchases.

The Bank is closely monitoring economic and financial conditions, in coordination with other G7 central banks and fiscal authorities, and will update its outlook in mid-April. As the situation evolves, Governing Council stands ready to take further action as required to support the Canadian economy and financial system and to keep inflation on target.

Information note
The next scheduled date for announcing the overnight rate target is April 15, 2020. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.

[Citified.ca]

Victoria's houses and condos set new price records in March despite COVID-19's market jolt

https://victoria.cit...-s-market-jolt/

[Matt R.]

Anything at Parkside place is just flying off the shelves. What a time to be alive.

Matt.

[LeoVictoria]

Chance of prices remaining stable with this disruption is very slim

[Mike K.]

So on the acreage front over the last few days we've seen:

 

East Sooke, listed for $564, sold for $568, 9 days on market

Metchosin, listed for $1.22, sold for $1.19, 15 days on market

Metchosin, listed for $999, sold for $999, 4 days on market

Metchosin, listed for $1.449, sold for $1.384, 26 days on market

Metchosin, listed for $999, sold for $999, 8 days on market

Langford, listed for $809, sold for $800, 15 days on market

Sooke, listed for $729, sold for $725, 20 days on market

Sooke, listed for $620, sold for $600, 18 days on market

Sooke, listed for $730, sold for $732, 13 days on market

Saanich, listed for $900, sold for $925, 12 days on market

North Saanich, listed for $2.1, sold for $1.995, 13 days on market

 

From the looks of it the biggest drops are on higher priced properties, but not always. With acreages you also have many unknowns that are uncovered during the inspection phase, like having to put work into the septic system ($30k, requiring well upgrades, $15k, and so on). Prices can drop $50-$100k at the drop of a hat if big work is needed.

[Citified.ca]

COVID-19 paused Victoria's real-estate market, but the month still ended on positive terms as buyers showed signs of accepting the limitations posed by social distancing and working around them.

 

The average price for the month still landed above 2019's annual average, a feat considering some projections expected sharp valuation declines. 

 

Hardly the market crash some feared, Victoria's April 2020 real-estate activity beat expectations

https://victoria.cit...t-expectations/

[Nparker]

...The average price for the month still landed above 2019's annual average, a feat considering some projections expected sharp valuation declines...

Interesting. 

[Mike K.]

As Marko notes, the condo market saw a greater focus on the lower end of price points, and the SFD market did quite well in light of everything that’s going on.

Marko also expects, given what happened over the second half of April, for sales in May to push north of 500.

Nobody’s walking into a $500k condo and paying $400k, like some theorized would happen due to COVID. But what those willing to pay $400k are doing is paying for $400k for a $400k condo.

It’s the same with SFD’s. Are there deals? Sure. But you’ve also got 10 guys chasing the same deals. Does that mean you can buy a $900k house for $700k? Not a chance.

[Redd42]

Does that mean you can buy a $900k house for $700k? Not a chance.

 

Not right now. Think if there will be change it will be a few months down the road.

[RFS]

Then there are larger immigration trends, which are arguably the biggest thing affecting housing prices in Metro Vancouver (and Toronto), as suggested recently in The Vancouver Sun by both former NDP premier Mike Harcourt and Anne McMullin, the head of B.C.’s Urban Development Institute, which represents builders. Even though the federal Liberals have hiked immigration targets (from 250,000 per year in 2015 to 350,000), citizenship ceremonies have been cancelled during COVID-19 confinement and the processing of would-be permanent residents is being held back. This pandemic is sure to affect the choices of would-be immigrants, who have accounted for 85 per cent of population growth in Metro Vancouver. And it will also affect people who might buy urban Canadian properties with money earned offshore, which is the gasoline that has been accelerating Vancouver’s already-unaffordable housing costs.

https://vancouversun...-housing-prices

^ looks like we are finally allowed to admit immigration has made housing unaffordable