How do we compare to Victoria?

As prices have gotten silly in Vancouver they are often compared to what you can get in other cities around the world, many of them in the post-correction US.

But you don’t have to go far for an alternative to Vancouver, you can even stay in the province.

Our nearest comparable would be the smaller city of Victoria.

To that end Interest Only has put together this chart showing the variation in home prices between Vancouver and Victoria based on Teranet data.  After dipping in 2005 the deviation has become rather pronounced recently.  Here’s what they say about it:

What this tells us is that Average home prices in Vancouver relative to Victoria are stretched.  Victoria prices are rolling over and as a result, Vancouver looks like a new 23 year high versus Victoria prices. The ratio is outside of two standard deviations relative to the 23 year average (The shaded area).

 

vanvic

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Anonymous
Guest
Anonymous

It’s the immigration factor, stupid.

patriotz
Member

@1 is on to something, sort of. In the last decade Victoria CMA has had the slowest population growth (% wise) of any metro in Western Canada. I think that’s the main reason why it peaked in 2010 and has been declining since.

But major immigration centres such as Vancouver and Toronto have not been immune to busts in the past, and they won’t be immune going forward.

Anonymous
Guest
Anonymous

Average price is a poor gauge because of high end market distortions.

Agree though about relative movements and population growth. People are often confused about what sets prices in the medium term. For Victoria it’s not falling population that’s causing prices to be weak, it’s supply overhang from falling population growth.

So too it would be with Vancouver. When population growth drops, prices will drop too. As housing completions rise and starts fall I expect population growth to come under renewed pressure.

George
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George
anon808
Guest
anon808

I need a recommendation for a good home inspector. I remember a name being mentioned on here a few years ago.

George
Guest
George

Sears wants to build 7 condo towers at Metrotown. Metrotown is going to have a lot of condos.

http://www.vancouversun.com/business/real-estate/Sears+applies+build+seven+towers+Metrotown+site/8492428/story.html

frank
Guest
frank

We cant really compare Victoria to Vancouver. If we think employment opportunities are limited in Vancouver, they are very sparse in Victoria unless you work for the Government or own a small business that caters to retirees. There are very few major employers in Victoria.

Interest Only
Member
Interest Only

Immigration? The ratio turns parabolic after 2009 unless the citizens of Vancouver are splitting into two and half the population of Victoria are walking into the ocean never to be seen again, then there is more to it than immigration.

And the chart doesn’t show average prices, it is the ratio of the indices.

Interest Only
Member
Interest Only

Also, there is the impact of comparable goods… If a retiree wants a nice place to settle down in, Victoria still provides most of the amenities that Vancouver has with better weather. The larger the spread between these two countries, the more people will self select themselves away from Vancouver.

Billy Bob
Guest
Billy Bob

Moved my family to Victoria a few years back and I have no regrets. Miss the big city and what it offers but don’t miss the attitude, the pretentious Vancouver nillionaires, homeless people everywhere, and particularly the obsession with real estate.

Billy Bob
Guest
Billy Bob

Should have added – obsession with real estate.. as a gauge of where you fit into society

southseacompany
Member
southseacompany

Province says:”Canada’s impending housing collapse not in sight”

http://www.theprovince.com/business/Canada+impending+housing+collapse+sight/8538174/story.html

Goldmember
Guest
Goldmember

Vanc Island & Okanagan used to attract lots of secondary & vacation home buyers. Once the US imploded, they began substituting for the Sunbelt. Retiree cities like Victoria, St Catherines/Niagara, & Kelowna have now entered long-term decline as boomer retirees enter their net-selling years. To add to their woes, dwelling formation (college age) is now in decline.

Many Franks
Member
Active Member

Barbara Yaffe: British Columbians flee rising housing costs:

Those in the know say the market lately is moderating, with slower sales, but prices are barely budging.

The cost of housing could be one reason why many are leaving — more Canadians have been leaving than moving to B.C. since 2011.

On a net basis, reports BC Stats, the province lost 2,234 residents in the last three months of 2012 alone.

Seafair Dweller
Guest
Seafair Dweller

This brochure came to our office yesterday:

“Ni Hao. Say hello to achievable Vancouver home ownership.”

The project is 188 Keefer, being promoted as the next “60 W Cordova”. Notice that there is no “E” or “W” on the Keefer address. The project is located one corner away from Main and Hastings.

The website says “we anticipate this project will be oversubscribed.” I wonder if they are trying to be ironic.

http://www.188keefer.com/

Woz
Guest
Woz

Can someone clarify for me. How do you interpret the statement in today’s article that “the ratio is outside of two standard deviations relative to the 23 year average”.

I was always under the impression that standard deviation didn’t apply to non-stationary series such as stocks and housing markets.

Is standard deviation as it’s applied to housing markets statistically significant? Is it saying there’s a 95% chance the ratio corrects closer to the mean?

Joe Mainlander
Guest
Joe Mainlander

Re: Keefer. I got that brochure in my mail too. Saw the words Ni Hao and threw in the garbage. Obviously not marketed at Canadians.

VMD@work
Guest
VMD@work

New Challenges for Borrowers and Brokers Alike
(via CMT)
“For almost a year, we’ve been adapting to two major sets of mortgage changes, the insured mortgage rules imposed by Finance Minister Jim Flaherty and OSFI’s B-20 residential underwriting guidelines. The latter has been causing lenders to churn out new policies seemingly every week.

These continual changes have made it increasingly difficult to qualify AAA clients. Applications that were approved a few months ago are now being declined or approved with more conditions. ”
– Some lenders now factor in a monthly payment for secured credit lines with zero balance.
-On revolving unsecured credit, monthly payments are being set at 3% of the outstanding balance.
-Many lenders now calculate heating costs using a specific formula based on property size.
-Conventional variable-rate mortgages and fixed terms less than 5 years are now qualified using the Benchmark Rate

Seafair Dweller
Guest
Seafair Dweller

Hi Joe Mainlander #17.

What you say is possible (as all new condos are marketed to investors to a certain extent), but I suspect that the target resident for these units is the “hipster seeking authenticity”. The “Ni Hao” (spelled out in English) is a reference to the fact that the development is in the heart of Chinatown.

I’m not sure I would want to get that close to an “authentic” neighbourhood (AKA DTES) to find affordable housing.

Thanks for your comment.

Brian
Guest
Brian

Seafare dweller, it’s clearly marketed to Chinese. Just look at the address-188, need I say more?

RE Canary
Guest
RE Canary

Everything is marketed to the Chinese
Who else has the cash?
I buy two, my sister buy two!

southseacompany
Member
southseacompany

Had a chat with someone who works for a developer about a Metrotown project that sold out last year. Out of interest, they said 20% were sold to offshore asians, rest to local asians, except for a few units to others.

victoria
Member
victoria
When we moved here Victoria a little over ten years ago it seemed moving to Victoria from Calgary, U.S. and even Europe was all the rage. It was a fad. The Americans I knew complained about health care, taxes and high cost of everything. The weather was not that great. Becoming a resident is not that easy. A few Europeans came and bought vacation homes but not many. People have left. I remember during the Olympics people honestly thought people would move here from Europe in droves. Just give up their lives and pack up the kids and come. Everyone in the world apparently wanted to live in Victoria. It was the promise land. Sigh – well it never happened. I have never seen to many million plus homes on the market. They are just sitting and sitting. Just my… Read more »
Local Apatrid
Guest
Local Apatrid

“On a net basis, reports BC Stats, the province lost 2,234 residents in the last three months of 2012 alone.”

Exodus will only accelerate going forward as Vancouver became Asian city. Also local economy is becoming irrelevant for survival due to offshore money and local parallel “self-sustainable-grey-economy” run by local Asians (cash only, please).

George Soros
Guest
George Soros

“- Some lenders now factor in a monthly payment for secured credit lines with zero balance.
-On revolving unsecured credit, monthly payments are being set at 3% of the outstanding balance.
-Many lenders now calculate heating costs using a specific formula based on property size.
-Conventional variable-rate mortgages and fixed terms less than 5 years are now qualified using the Benchmark Rate”

Wow! How novel. Lender’s actually taking the time to figure out what the risk each borrower represents. Now that they can’t just slap it into CMHC and download the risk to the taxpayer they are forced to make a business case for it.

50% of the mortgages in the last 10 years would never be approved under today’s standards. To think we don’t have sunprime mortgages is ridiclous.

Schadenfreude
Guest
Schadenfreude
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