David Langlois

Experience & Expertise

 

Breaking the Real Estate Code - If that downtown condo you're looking at is "within easy walking distance of all amenities, shopping, cafes, restaurants and entertainment", then chances are there's no parking. Wink

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More and more we are seeing buyers being offered incentives to write offers with particular sales agents.  You've all seen the ads that go something like, "You find the House, I'll write the deal and we'll split the commission", or some artfully worded variation thereof.

 

Other than being a questionable practice in some jurisdictions, as a broker from another province pointed out to me today, I wonder where this practice is leading, and of what real benefit there is to the average consumer.

 

You might have noticed that I said buyers were being induced to write offer with, not work with, certain agents.  i don't get the impression that these agents do in fact "work" for their "clients".  I wonder whether they enter in limited service contracts in an attempt to mitigate their fiduciary duties - or whether they in fact feel they are providing any agency at all.  Will there be a race in the future to see who can do it for the least, and then for free?

 

As a buyer I would worry about this agents commitment to my side, as it were.  Do these guys look at properties to help buyers find the right home?  Do they ferret out deals? Are they attempting to negotiate effectively?  Or do they just "write the deal"?  It's all well and good that you get 2 or 3 or 5 thousand dollars of the agent's commission, but are you sure you didn't pay $15,000 too much for the home?  How would you know?

 

The analogy that popped into my head this morning is that of a dentist offering to kick back half the money my medical insurance plan will pay him for procedures if I go to his clinic.  That would seem a little shady to me.  Not that I'm saying this incentive practice is shady - it's just that something about it doesn't sit quite right.

 

Always happy to hear your thoughts.

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If you're looking at properties up to a certain price point, don't be shy at looking at ones 5 or 10 percent above your price limit, both to help you get a fix on the market and to ferret out possible deals you might be missing.  A property is not necessarily worth what it's listed for, it's worth what someone will pay for it.

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 I'm starting to think that perhaps the Times Colonist has taken a short position on real estate in Victoria.  How else do we explain how they have taken what should be a good news story and turned it into a bad news story.  

You might or might not have heard that Re/Max put out a report that summarizes the past decade of activity in major Canadian real estate markets.  The upshot is that Victoria had an annual compounded rate of return of 7.6%, outpacing the national average.  Pretty good news.  Here's The Headline :

HOUSE PRICE COOL-DOWN EXPECTED

What?  Here's the TC's story summary as I read it.  

Over the past decade the market has fared quite well, it's unsustainable over the long run (as opposed to a decade-how long is the long run anyways?) so prices will come down. Err, actually, prices won't come down they'll just not go up as fast, and may only go up a point or two more than inflation for a while.  Maybe.  Or maybe not.  But whatever we're saying we would like you to focus on the negatives that haven't yet happened but could.  So be afraid.  Very afraid.

My particular favourite line in the story is the "...possibly calling into question the post-war mantra that buying real estate is a surefire investment...".  Are we seriously still in a post-war period? Is the implication that a 65 year market trend is ending.  I guess little has happened in the housing market over that period other than a straight line rise and only now are we seeing market fluctuations.  Seriously folks, get yer head out of yer ass.  

If this is how reporting is to be done, here's some headlines we should expect:

"CANUCKS SET TO LOSE MORE GAMES THAN THEY WIN", analysts agree that their winning pace is unsustainable for the remainder of the regular season.

"NEXT RAINFALL TO CAUSE WIDESPREAD FLOODING" ,should it not stop before rivers overflow their banks, analysts agree.

"NEWSPAPERS HAVE LITTLE CREDIBILITY", as they struggle to come up with daily headlines to alarm readers into buying their rags say some analysts.

Actually the last one makes sense.
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Some big news in the media financial pages - housing prices in Canada have formed a bubble and prices are at risk of dropping 25% or more over the next several years, possibly pushing us into recession.  ORLY?  Yes, indeed, that the headline across the country 'Housing Prices to Fall..."
 
Hmmm.  Sez who? I wonder to myself.  Capital Economics is the answer.  More specifically a fellow named David Madani.  Who are they? They are professional think tank - brains for bucks if you like - mensa mercenaries - that produce all sorts of economic reports, data blah blah blah for governments, institutions and corporations and charge huge fees for their research.  Mr. Madani comes to them through the Export Development Corporation and a brief stint at the Bank of Canada.  He arrived at Capital Economics in September 2010 and apparantly has 10 years worth of forecasting experience.
 
So why all the press.  Well, putting out a report that has some good shock value is a good idea if you want press in Canada.  Real estate is a sexy topic, as long as its BIG NEWS or BAD NEWS or SHOCKING NEWS.  Not so sexy if its MARKET IS NORMAL news.  In the same way there is no such thing as regular winter storm in Canada anymore, there are only WHITEOUTS and BLIZZARD CONDITIONS and ICE STORMS and PARALYZING COLD SNAPS, there is no such thing as normal real estate news.  So you put out a BIG NEWS report, get it picked up by the 2 or 3 news outlets that supply all our major markets and Voila! National Coverage!
 
That's some smart marketing for Capital Economics.  It's not new of course - but they've been doing it well for a while now - releasing a report to the content starved, (read understaffed and happy to take free content), mainstream media.  Gee - do you think that Mr. Madani's phone might start to ring with actual paying clients whenever he gets quoted in the paper?  Do you think maybe that was the point?  And do you think maybe that they don't care whether they are accurate or right?  Or do you think perhaps that in their report there are lots of escape clauses and uses of the words might, may and at risk and perhaps?  Do you think those are in there so that 2 years from now when the market hasn't dropped 25% or more Mr. Madani can say "I was simply pointing out the risk in the housing market - not claiming it would actually happen".
 
Or perhaps Mr. Madani actually believes these things and isn't trying to drum up business in his new job of six months.  I know an easy way to find out - will Mr Madani be selling his home in the next six months?  Or won't he put his money where his mouth is?
 
And why did no-one ask him? 
 
And for that I say quite clearly this forecast is worth exactly what was paid for it - nothing!
 
 
 
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The January numbers are out and they are a little suprising.  339 net unconditional sales for 2011 versus 418 for 2010.  These numbers are beow 2010, better than 2009, and below 2008 and 2007. 
 
the 2009 January market was very slow, but was the first tentative step in what turned out to be the busiest year ever in the Victoria housing market.  If you remember this was just after our market had stalled for a few months in the fall as everyone wondered which way the market was going to go after the global meltdown. 
 
This past fall we saw a similar pause.  It started more in late summer and went through the fall but we seemed to be coming out of it in mid November and through a reasonably busy December.  Expectations were that January would see a normal level of activity, and I'd have to say we were off a bit.  That's where the suprise comes from.
 
So what does this mean for Victoria going forward?  I think our spring market will be a little subdued, though the latest round of mortgage changes will hurry some buyers into the market.  Though on a side note I'd say that those buyers should have hurried themsleves into the market in the fall as prices were softer than they are going to be now - why so many people decide the time to buy is when others are buying is beyond me. 
 
While subdued I beleive prices will hold, if not rise a little - the real issue is going to be inventory.  Yes there are certain types of inventory that we have an excess of, but generally thats the crap inventory.  There is tight inventory on the sorts of things most buyers are looking for, and a paucity of value purchases.  So if sellers are realistic and buyers are looking for more than just the steals then we'll see a reasonable level of activity, if not - well, we'll find out,
 
 
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November was a pretty good month in Victoria both in terms of sales volume and price stability.  As usual your interpretation of the data that came out of November may be skewed by who you're reading these days.  Those in the bear camp continue to doom and gloom, writing about how terrible the volumes are and how the huge correction will come soon and we'll see 20-30% drops in prices across the board.  These people are nuts!
 
Without throwing a sinkful of numbers at you I'll focus on two. 
 
Victoria Sales Volume;  we were 10% off the average for November's in Victoria for the past decade.  Worse than last year, better than 2 years ago.
 
Given all the hoopla about how horrible the Victoria market is - this should be viewed as quite a positive result.  Saavy buyers are seeing the opportunities and are coming back into the Victoria market. 
 
Victoria Home Prices:  Up.  Marginally, but up nonetheless.
 
Again, for all the bad news that is spouted out there, the reality is that our Victoria market is holding quite nicely thank-you - and in fact has throughout these "troubling economic times"
 
Conclusions?  Volume climbing over the past several months, prices holding and inventory levels beginning to drop - this points to a firming of market conditions and what I'll call a typical Victoria spring market coming next year.
 
There are still deals to be had, so if you're thinking about buying, do it now before we see firmer prices and greater numbers of buyers in our spring marketplace - and a reminder - Spring market in Victoria starts mid to late January!
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Over the years I've come across the same misconceptions, errors and myths concerning the various players in the real estate market.
 
For buyers these are the two most common myths that I've encountered
 
1.  Dealing direct with the listing agent will get me the best deal.
 
Well it gets someone the best deal, but it sure ain't you!  I'll leave it up to you to guess who this is best for.  The fact is the listing agent is contractually obligated to get the most money in the shortest amount of time for the SELLER.  You should be able to figure out the rest.
 
2.  I don't need help with buying until I find the property I want.
 
I suppose if you're confident that you are actually seeing all that is available in the marketplace, this may have some merit, but I doubt it.  For example in Victoria my buyers see not only all the MLS listings but also FSBOs, private sales, exclusives and the sleeve listings I'm able to ferret out.  A buyer by themselves will probably miss the "right" home a few times before ever finding it.
 

Don't fall for these myths.  A good agent on your side will bith be able to gt you a better deal than you could on your own, and is more likely to be able to help you find the right home.  If you're looking in Victoria, BC, give me a call.

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I've been looking at two types of properties over the last couple of weeks.  One is the single family home with a suite or suite potential $525,000 and under, in the core areas. The other is 2 bedroom 2 bathroom condos downtown under $400,000.   I think these are pretty active categories so I thought I'd share my impressions.

In the single family home category I am finding some value, but not overwhelmingly so.  At the same time I am seeing prices give a little, particularly in the less desirable areas, or those on or near busy roads.  There is some opportunity in this market segment if you're willing to look at a lot of properties and weed through the bad ones.  There are still a ton of people out there dreaming about what there homes are worth.  Listen folks, if you're house has been on the market for 150 days I'll give you three guesses as to why it hasn't sold, and the first two don't count.

Downtown is a bit of a different story.  For all the talk we have about overbuilding condo stock, there is precious little in this price range.  There is certainly no excess inventory here!  There is quite a disparity in pricing between the older buildings and the newer buildings, but I tend to see more value in the newer buildings as they tend to have better locations and don't require the upgrades that most of the older stock on offer require.  

The older stuff is generally larger than the newer, but with condos it is often how the space is used rather than just how much space there is that has to be considered.  There's nothing worse than going to see a 1000 sq ft condo and finding 200sq ft of dreaded "dead space".  Buildings I like are the Juliet, the Wave, 860 View and a few others.  I also like the Songhees area and tend to include it in downtown searches as it often goes unnoticed yet is so close to everything.

If you're looking at either of these property categories, give me a call, I feel like I've walked through every property in both categories!

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With much fanfarethe lead business story last night and on the front page of the business section today was how the Victoria real estate market is in the deep freeze.  Watching the news piece and reading the story, I might be forgiven for thinking that nothing but bad things are going on in our real estate market.  Precipitous percentage drops in sales over last year, disastrously high inventory levels compared to last year, prices only going up slightly.

Wait a minute, what?  Prices going up?  But the news leaves me with the impression that you can't give your house away?  Hmmm.  Perhaps a slightly closer look.

For the umpteenth time, 2009 was a ridiculously big year in our market in terms of sales volume.  Other than 2007 it was 20-30% bigger than any of the last 10 years.  Using 2009 as a baseline metric with which to compare anything is simply stupid.  Yes, TV news guy, stupid.  Yes, Times Colonist news reporter, stupid.

The average sales volume in Victoria for the past 10 Octobers is just over 550 units.  Take out the bumper 2007 and 2009 years and we get down to just over 515 units.  This October is off the last 10 years by just under 20%, or less than 14% if you take out the huge years.  For a market that's supposed to be in a mortal torpor, that's not bad.  More importantly, prices continue to rise!  

Inventory levels is a particularly irritating red herring, as in actual fact in many categories we have less than a six month level of inventory, which indicates a balanced market rather than a buyer's market.  

For the Victoria home buyer - get out there and take advantage of the "bad news" - there are great deals to be had but the market looks to be turning the corner.  Or wait until the busier, more expensive, less choice and less time spring market.  Most lemmings do.

For the Victoria home seller - evaluate your need to sell and price accordingly - it is still very competitive - as it should be - and you need to be among the best in class to successfully sell your home.  Or wait.  For whatever reason, more people want on the bus when it starts to get crowded.    

As always, get an expert on your side and please, learn to dig a little deeper!

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755 Humboldt Street Victoria BC V8W 1B1 Canada

David Langlois

I make myself available at all times. My web site is here to help you 24 hours a day. You can search listings at your own convenience, browse reports, and read up on real estate info on your own terms. When you are ready to see a listing in person, or just have a simple question, please dont hesitate to contact me!

 

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