1837 replies to this topic

[G-Man]

I have never heard the definition of a housing boom being based on house price. That is absurd.

If you had a town with one house and it appreciated 500%, than that one house town would be going through a housing boom with no increase in houses.

Mike was referring to the pop increase since the last boom (20 years) not in the last year.

Also since you are big on stats recheck your 2006 CRD stat is so wrong it hurts me.

[househuntvictoria]

I have never heard the definition of a housing boom being based on house price. That is absurd.

If you had a town with one house and it appreciated 500%, than that one house town would be going through a housing boom with no increase in houses.

Mike was referring to the pop increase since the last boom (20 years) not in the last year.

Also since you are big on stats recheck your 2006 CRD stat is so wrong it hurts me.

Absurd or not, that is what is being used in some cases, rightly or wrongly is irrelevant. You could use "building boom" to be more clear.

"Mike was referring to the pop increase since the last boom (20 years) not in the last year." Can you not read? I said: "there is no data to support your assertion that our population has grown by roughly 100,000 during the current "boom", if that is what you are claiming" Boom in my use meant the period 2001-2006 for which I provided data. Even if you extrapolate this over 20 years our census area did not grow by 100,000. I gave you data for 15 years of that period as it was all I could find. I challenge you to find statistics that prove mine wrong.

I incorrectly used CRD in place of "Victoria census metropolitan area" which contains: Central Saanich, Saanich, Colwood, Esquimalt, Highlands, Oak Bay, Langford, Metchosin, North Saanich, Sidney, Sooke, Victoria and View Royal. You can see the chart, sourced by Stats Can and published by the TC here:

http://a123.g.akamai.../population.gif

You can see the TC's own story on this here:

http://www.canada.co...fee004ca&k=5569

I am not "so wrong it hurts." I didn't include the Gulf Islands which apparently fall within CRD boundaries too, but I doubt very much they make up the 67,000 shortfall for your accounting methods.

I love it when people dispute quotes of publicly available facts without attempting to provide any concrete data of their own.

[G-Man]

OK looking at just the CMA the statscan website has the data from 1991 to 2006 available. 1991 CMA pop of 287 000 - 2006 CMA pop of 330 000 or an increase of 40 000. I will see if I can kind the Victoria pop in the late 70's early 80's but I imagine it would be in the low 200 000 area which would be over 100 000 increase.

I love it when people dispute quotes of publicly available facts without attempting to provide any concrete data of their own.

Anyways this is all from statscan.

Not sure what 67 000 deficit you are talking about.

All I was saying was that you quoted 321 000 as the pop of the CRD in 2006 and it was off by over 25 000 people. You shared your error that you used the CMA stat that is fine.

[househuntvictoria]

OK looking at just the CMA the statscan website has the data from 1991 to 2006 available. 1991 CMA pop of 287 000 - 2006 CMA pop of 330 000 or an increase of 40 000. I will see if I can kind the Victoria pop in the late 70's early 80's but I imagine it would be in the low 200 000 area which would be over 100 000 increase.



Anyways this is all from statscan.

Not sure what 67 000 deficit you are talking about.

All I was saying was that you quoted 321 000 as the pop of the CRD in 2006 and it was off by over 25 000 people. You shared your error that you used the CMA stat that is fine.

What I did was take all the individual numbers for 2006 in the chart I linked to above and add them together, which equals 321,269. Then I subtracted the numbers from 2001, which I added together to equal 303,539 and came up with total growth of 17,730. Then I went back to the oldest set of data I could find (1991) and got this number for the same census area: 287,897. Then I subtracted that number from the 2006 number I added up and got 33,372. Where did you find another 25,000 people from?

The 67,000 I alluded to in terms of accounting was from Mike's claim of 100,000 during the "What's even more remarkable is not once during the last six years did we touch the best year from the previous boom, yet
a) our population has increased by roughly 100,000 residents" which when I read it means the past six or seven years of boom, not 20-30 years. I gave Mike the benefit of the doubt and tried to go as long as the data he quoted from, I fell 5 years shy.

Regardless, you can move the yardsticks back as far as you need to, I moved them 15. You can easily extrapolate out to 20 using my growth rate average of just below 1%/year and still be over 50,000 short of 100,000 pop. growth claimed by Mike.

[G-Man]

346 000 minus 321 000 is 25 000 or CRD pop minus CMA pop

Also I believe the cenus undercount numbers are in and it puts our pop higher still at or about 365 000

[Nparker]

Also I believe the cenus undercount numbers are in and it puts our pop higher still at or about 365 000

Yet we are still not large enough nor demographically diverse enough to warrant our own IKEA ...though I suppose that is an argument for another day and another thread.

[househuntvictoria]

346 000 minus 321 000 is 25 000 or CRD pop minus CMA pop

Also I believe the cenus undercount numbers are in and it puts our pop higher still at or about 365 000

On the StatsCan site, for the CMA, not CRD, they revised their numbers to be 330,088 or a difference of roughly 8800 from the originally reported ones.

Even moving the yardsticks out and increasing the census region to the CRD does not drastically alter the numbers nor the growth rate; they're still a long way off from the 100K pop. growth over the past 6-7 years or so claimed by Mike and that was my point.

I'm still waiting for someone to address the glut of new condo inventory and lack of sales this year.

[G-Man]

Mike claimed a 100 000 people from the 1980s to 2008 and so I don't think he is that far off.

[Mike K.]

Even moving the yardsticks out and increasing the census region to the CRD does not drastically alter the numbers nor the growth rate; they're still a long way off from the 100K pop. growth over the past 6-7 years or so claimed by Mike and that was my point.

As mentioned by G-man (twice now), you must have misread what I wrote.

Anyways, the '80's "boom" didn't just start in the mid-80's, it was fueled by demand from the early 1980's, much like demand from the late '90's fueled development in the early millennium.

The CRD population from 1976 to 2000 increased from 230,000 to 337,000. That's in the article link I posted above. Even if that includes the Gulf Islands, the populaiton increase there is minuscule compared to the rest of the CMA. A few thousand residents here or there don't make much of a difference. Heck, the Gulf Islands today have a mere 16,000 residents which represents less than 5% of the CRD's total pop.

I think your suggestion that housing starts have nothing to do with a housing "boom" takes the cake. It really does

Clearly this is not the largest boom in Victoria's history, and clearly the 17.5 months of condo development hasn't taken any records contrary to what the media and some sewing circles believe. We can bicker back and forth all day if we want to, but Victoria will continue doing what's it's been doing and clearly (I love that word!) has been doing for a very long time.

[househuntvictoria]

Mike claimed a 100 000 people from the 1980s to 2008 and so I don't think he is that far off.

Gman, this is the last I'll say on this debate:

Mike said:
"What's even more remarkable is not once during the last six years did we touch the best year from the previous boom, yet
a) our population has increased by roughly 100,000 residents"

To me, that is claiming in 6 years our pop. increased by 100,000. When Mike weighs in, I'll imagine he will clarify what he meant. I've already tried to give him the benefit of the doubt by digging for as detailed and as old a set of pop. numbers I could find from a reliable source and still, generously, found it to be over 50,000 short. Even using your revised numbers and area, we're still talking about a difference of approximately double the total number of people that moved to Victoria in the 15 year period I calculated above. That number is HUGE in terms of what it means to a discussion of housing starts.

I'd really like to hear your thoughts on listings to sales ratios of new condos in Victoria.

[Mike K.]

Sorry, I was referring to the pop growth from the 1980's, not the pop growth from 2001 through 2007. I can see where one may have misinterpreted what I meant.

[mat]

This article in The NYT is a bit of an eye opener as I never thought of renting vs buying under these terms - the rent ratio.

As househunter and Gman et al are more up on stats, what is the average CRD cost for a decent 2 bedroom rental apartment, vs buying a similar condo?

[G-Man]

I think that there are probably about 5 thousand units for sale with statscan listing about 145 000 total amount of units in the CMA so that works out to be about 3.5 % of all homes that are for sale. Now most of these units for sale are occupied but for argument sake lets say 2% are unoccupied so that means that even with a small in migration and slight investment from outsiders there will be no problem dealing with this amount of units.

No one would say that there is an automobile glut though I would bet that the total amount of new cars sitting in lots versus total cars in Victoria is about the same ratio may be higher.

That all said increasing the inventory of homes will allow prices to start being a little more realistic. I would say that a small drop or at least a flattening of prices would be a good thing.

[mat]

[quote name='
That all said increasing the inventory of homes will allow prices to start being a little more realistic. I would say that a small drop or at least a flattening of prices would be a good thing.[/QUOTE']

Inventory is up as sellers are being told they can get, or beat, asking prices in the current market - if sellers do not get the price they want most listings will be taken off the market. From what I see, at least in Gordon Head, houses are going quickly and in many cases bids are higher than asking. This, of course, may just be a microcosm of sales trend within the CRD.

Having said that, huge boom (dotcom, goldrushes etc.) usually equals big crash so I too would welcome a flattening of home value increases. My house has doubled in assessment in the 3 years since I bought it, and we get monthly personal unsolicited requests to sell - mostly from developers.

The only way we will see a housing market crash is if interest rates skyrocket to above %8, but then there will simply be fewer houses on the market, maintaining price levels. A localized plague might reduce prices a bit...

[househuntvictoria]

This article in The NYT is a bit of an eye opener as I never thought of renting vs buying under these terms - the rent ratio.

As househunter and Gman et al are more up on stats, what is the average CRD cost for a decent 2 bedroom rental apartment, vs buying a similar condo?

Mat, as done in that article, it's a bit difficult to "just" get those numbers for Victoria. I've tried many times to figure out what historic local rent to price mutliples are. But I haven't done the calculations as the author did.

The author uses monthly rent times twelve to calculate his ratios. Typically I've used a multiple of monthly rent vs purchase price to essentially do the same thing. If you look at the long-term normalized trend in Victoria of roughly 5%-6% growth year-over-year starting back in the late 60s when the data become widely available, and then study the CMHC normalized rents (the data doesn't go back anywhere near as long though), you get a figure between 175 to 185 times rent.

Here's an example using easy numbers to calculate rather than "actual" numbers (for the record, CMHC says a two-bed apartment in this town rents for just under a grand I seem to recall):

A "modest" 2-bed one bath condo can be purchased at a price of $250,000. Equivalent market rent is $1100/month. The rent to purchase price multiple is 227. I see that as being between 42 and 52 over the normalized historic trend. (The author uses 20 as his "breaking point" for an over-priced market. I'm not sure how to extrapolate my numbers against his. Roger, if you're reading this, I bet you can figure it out, please chime in).

In a correcting market, depending on timelines, you will see rents rise and prices fall to return to that historic norm of between 175 and 185 times rent. In some cases, in some locations, it will dip below. Obviously, the longer it takes for this to happen means rents rise more than prices fall and vice versa.

I have seen calculations, that other people I trust with numbers more than me, to be higher, in some cases closer to 280 times rent, especially when evaluating single family homes.

It's not a black and white, easy to calculate thing here. There are all sorts of other costs that come into play (tax, condo assessments, maintenance etc).

I remember very clearly back in 2001-02 when the radio was full of ads about how it was cheaper to own a condo than rent an apartment in this town, and it was. Which I suspect will be the case in a number of years (your guess is as good as mine here) when rents increase and prices drop. If you graphed prices compared to price to rent multiples you will see that the two lines will fluctuate and cross each other at different times throughout statistical history.

Hope that helped. If it didn't, there has been some very good work on blogs I link to on my site; you should be able to do a search on each site's posts to find what you are looking for.

For the record, I've always maintained that it is better longterm to own than rent financially. So if you are in the market for a property, can afford it, will be happy to live there for a long time (7-10 years minimum), can qualify for a traditional 25 year term mortgage, then today is a great day to buy.

If you're planning on buying a condo and flipping it into a SFH in the next few years, I wish you the best of luck, my guess is you will need it and then some.

[househuntvictoria]

That all said increasing the inventory of homes will allow prices to start being a little more realistic. I would say that a small drop or at least a flattening of prices would be a good thing.

The numbers I've found support your assertions. It seems to me that between 3-4% of total housing units change hand in Victoria year to year.

But I do think that if we have 2% of total units sitting unsold, and only a 1.16% regional growth rate, then we are overbuilt by almost 40%. That number is big. And perhaps explains why The Radius is nothing more than a big hole in the ground with an out of date website, Bambu is a fenced off waste of space, The Hudson is two towers instead of three, soon to be "paused" and most new places that have completed or are completing are barely 60% sold.

This is a cause for concern for the longterm health of the local economy and state of housing. In my opinion, too many people have over extended themselves with debt here to withstand even a 5-10% softening of the market and a 1-2% increase in interest rates.

I recall a conversation I had with a nervous banker who had to tell a client their mortgage was going to cost them almost $1000 more per month than when they signed on to their super low interest rate 5 years prior. Back in 2002-2003, many people were getting fixed rates for 5 years at just over 3%, now they're getting closer to 5.5%, and 6 months ago it was closer to 6%. That is a huge difference monthly, on a $400-$500K mortgage amount.

One factor of low borrowing costs has been the increase in HELOC sales. A lot of people have been using their equity to finance renos, new appliances, electronics, cars, vacations, new businesses etc. So much of our economy is wapped up in property-backed debt, that I fear what even a slight correction will do to us.

[mat]

What is a Heloc sale?

[G-Man]

Anyone that sees the equity in their house as a bank account to spend as they want will get what is coming to them. The whole financial bonus to owning versus renting is that you get to build equity.

But I do think that if we have 2% of total units sitting unsold, and only a 1.16% regional growth rate, then we are overbuilt by almost 40%. That number is big. And perhaps explains why The Radius is nothing more than a big hole in the ground with an out of date website, Bambu is a fenced off waste of space, The Hudson is two towers instead of three, soon to be "paused" and most new places that have completed or are completing are barely 60% sold.

You are not taking into account people that own here but don't live here, whether they are investors from somewhere else or someone simply wanting a pied a terre either way I think this would bring your number back in line.

[Caramia]

From that NYT article...

After several years of reporting on the housing market, I’m convinced that the most common real estate mistake is viewing a house first as a financial investment and only second as a home. That’s one big reason we ended up in this bubble-induced mess.

I so agree, and I wonder what society would be like if you could take ownership just by living in a place long enough and caring for it well enough... if property rights didn't extend to speculation. If we all took for granted our right to self determination in our homes.

It would be very different eh?

[G-Man]

^ Yup there would be a lot less rental housing.

Though I do agree with you on the point about your house/apartment being home not a financial investment.