With Snowageddon bearing down on central Canada (and 30 US states) this is probably the one time of year anybody in Mississauga or St. Albert ever thinks about Victoria. But Victoria, of course, thinks about itself all the time.
In fact, this little city on BC’s big island is a microcosm of what’s wrong with the country. At least its real estate market. And that irritating Canadian habit of believing you’re actually different (which really mans “superior”) to everyone else.
As this morose blog, populated with mouldy basement-dwellers, jihadist doomers, bullion lickers and people with an alarming attraction to underwear, continuously points out, we’re not different at all when it comes to screwing up finances. We may be slower, but we do it as well as anyone. Remember, there was a time (about 2005) when people bidding for real estate in southern California and Florida did so because, ‘everybody wants to move here.’ A great climate, unique scenery and boisterous economy shot housing values higher, as the Sun Belt swelled with northern exiles.
Today you can buy a condo on either coast for 40 cents on the 2005 dollar. Meanwhile home ownership in the US has withered from 70% then to 66% today, just as we’re going in the opposite direction.
Anyway, here’s Claire:
“What about condos in a city such as Victoria? Condos around $500,000 are half the price of a house, and both our residential unit and rental units are within 1-4 kms of the city centre, built within the past 5-10 years, not high end (as in no granite counter-tops!) but comfortable in well-run buildings; one overlooks a golf course and the other overlooks the Gorge waterway above the Inner Harbour.
“We bought the residential unit in 2006 and the rental in the year you most warn about, 2009. Would not these types of units be appealing over the next 5-10 years for baby boomers who manage to sell in other parts of the country and want to re-locate to Victoria? And/or, the other scenario is if everyone takes the advice to sell now, and then rent, wouldn’t our units be desirable as rentals and worth hanging onto for the next decade or so?
Ah, poor Claire. Drank the Victoria Kool-Aid, bought two condos, and now as a million bucks tied up. Likely she’s getting a return of less than 2% on the rental unit, making it equivalent to life in the orange guy’s shorts. But at least with him, you’re liquid.
So what of her arguments (and those of people across the country who think rich Boomers, rich Asians or rich Iranians will flock to their hood)?
Well, unless you live in a world class city, such as London, Paris or New York, statistics pretty much indicate you can kiss goodbye this net migration theory. In Victoria, for example, 70% of all the people buying houses last year actually lived in Victoria. More than 85% of the buyers lived inside BC. And 97% were Canadian residents. Rich Asians? Nah. That’s how they stay rich.
Okay, so how about all those wrinkly, diseased Boomers flocking to enjoy the coastal monsoons? Apparently not. Just 14% of buyers in Victoria were retired. And what percentage of the Canadian population do retired people constitute? If you guessed 14%, you win a fabulous fun weekend in Cairo. Bring a stick.
By the way, how is it that Boomer refugees from Alberta or Ontario are going to move to the Floatie Capital of Canada and buy a $500,000 condo when they can’t sell their McMansions in the burbs for that much? What, exactly, will support Victoria condo prices other than the delusion of the locals?
As for the future of rental units, Claire, it ain’t great. There will be a downward pressure on rents equal to that on house prices in every major urban market in the country. Blame over-building, too much speculation, flippers, and tons of people who just can’t sell properties they own, and end up renting them for whatever they can get. As my last post showed, it’s already happening. If homeownership levels in Canada fall, as they have in the US, it doesn’t mean houses will go empty as condos are swamped. Methinks you’ve been inhaling those harbour vapours too long.
But, you’re not alone. There’s no city in the nation I have visited where ‘it’s different here’ is unheard. Houses will swell in Calgary and Edmonton for the oil, to Ottawa for the feds, in Halifax for the navy, in the GTA for immigration, in Skatch for commodities, in Vancouver for the Chinese and in Winnipeg for the dream climate.
Worse, Canadians think it’s different here just because we’re not Americans. It is the ultimate delusion.
So, Claire, if you can find a local greater fool than you, willing to give back your half-million in a market with a bad attitude, then sell.
The rest of us are too busy shoveling. We love it.