I walked through a house yesterday in Victoria which came available for $2.4 million. “This is a signature property,” Bruce the all-knowing realtor (and one of the few who will still talk to me) said, as we wound our way across three stories, five bedrooms and multiple staircases. “The people who own this place just finished putting $500,000 into it.”
Easy to tell. On a perfect block in a secluded, leafy neighbourhood, behind stone walls, surrounded by towering, stately trees and mature gardens. Inside, gleaming floors, chiseled fireplaces, stone-and-granite bathrooms, formal principal rooms plus a massive designer kitchen with an Aga stove big enough to crawl in.
It was a mansion, pure and simple. Gorgeous, precious, irreplaceable in its 80-year-old grandeur. And unloved. A year on the market, no offers, now selling for half a million less than the original ask – below appraised, below assessment, below replacement.
There are only 85,000 people in the capital city of BC, with about 330,000 in total in the urban area. And yet almost 200 houses languish for sale between $1 million and $2 million. Every day new listings and price reductions pour in. In less than a year, high-end homes have lost up to 20% of their value, most of that in the last 100 days. It’s been a long time, Bruce says, since he’s seen this many properties come available.
“There are places for sale now I have never seen on the market, as people realize their real estate exposure has got to come down.” In the space of a few hours, he shows me the evidence – ten, million-plus homes, from impeccable relics to gleaming magazine-quality West Coast contemporary cubes replete with windows feasting on mountains and waves. Some are empty. Some staged and coldly unlived in. A few are occupied. All have been on the market between two months and more than a year.
The market turned here, seriously turned, about March. Last month 293 SFHs changed hands in the region, down 18.75% from June, and there’s now a 10-month supply of homes. The average price is $580,563, which is still $100,000 more than in Toronto, with 20 times the population. But while the real estate board says things are balanced, nobody believes it.
Not the manager of the city’s big-talk radio station, for example. Before we hit the air he described the anxiety that’s everywhere now, as the local economy stutters and people doubt the holy grail of Victoria wealth – their houses. Looks like the Boomers have stopped coming from Etobicoke and Edmonton, he says. After all, how can anyone afford to move here now and retire?
Worse, the kids are leaving. His words were reinforced this week by a report that record numbers of recent university grads are abandoning the Lower Mainland, driven out by a cost of living badly out of sync with opportunity.
Bruce says it’s a mystery to him where the bottom might be. “I saw it fall apart when mortgage rates soared to 18% he says,” recalling a time three decades in the past, “and it collapsed again four years ago when the stock market crashed. Then people just went crazy with the cheap rates. I guess it’s time to pay up.”
We walk out of a just-built glass-walled masterpiece shouldered against the bluest sea. It’s $1.9 million, and comes with an anxious listing realtor in the living room who can’t stop himself from pushing too hard. “There was a time when I showed clients houses with dishes in the sink and rooms without lights,” Bruce says, “because agents and owners knew they didn’t have to do anything to get an offer.
“Now every house is perfect. The lights are on and the dog’s packed up. It’s interesting what a little fear will do.”
Victoria has more of this in its future. People in houses they thought were tickets to financial security are learning fast about illiquidity. New offerings pour on weekly, triggering a wave of reductions, extending days-on-market and turning old listings stale. The only weapon anxious sellers have is price, clad in disappointment and, I sense, shock.
Tomorrow I’m in Calgary. This will be like time-traveling to Vancouver, or Victoria, circa 2010. I hear it’s different there.