Okay, Assuming you agree that Victoria BC is a subdivision of paradise, we are all talking about the same area.
This week we have seen announcements by Bay View developments reducing prices of approx 36 suites by 50%, reports of The Hudson development having sold their entire project (at a huge discount) to save it from collapse, earlier this month we heard about the big problems at Bear Mountain developments.
A lot of media attention around the increase of inventory and slower sales.
The hiring freeze and layoffs at the provincial government, the fear for higher interest rates, the hst, to be honest it is all to much and too fast for any economy to have any confidence and support to sustain itself.
The troubles with other developments like Aquatro, Reflections, The Falls, just to name a few. The postponing of 3 large developments at Colwood corners, and Wale rd. The list seems to be growing every time we turn around.
Please see our blog posting with a short May Market update using this link or check out our blog at www.victoriasm.com. also our website at www.pfanntastic.com
Together with a very lack lustre buyer interest in just about all types of properties, except for homes that are very well priced and in the core ares mostly with suites up to about $ 650,000. It is fair to say that we are on the edge of some serious real estate events in our region. Any time we come across this type of potential adjustment period they typically last for 1 to 3 years to sort themselves out.
Furthermore we are sensing that more and more of the municipalities are clamping down on bylaw enforcement as it relates to suites, boarders and property use.
The Saanich draft suite bylaw implementation process is giving us a very interesting insight into what Saanich and residents are thinking.
From it we can see that many residents are okay with suites, provided that part of the property is owner occupied, there is enough supervision and off street parking to name the key concerns. also scoring high on the concerns are properties like you and us have with 2 suites........
In Saanich there is also substantial talk about having "an either or approach" regarding having a suite or having 2 legal boarders but never both....
Now I know that this is Saanich, but we know that many of the other municipalities are keeping a very close eye on the trail run, the public feedback and all the comments from both residents, tenants and Saanich on the topic on their website, as well as during the various meetings.
It is not too remote to predict what might happen from this all. A set of new bylaws in many of the communities that will actually be pro-actively enforced (with community support obviously), which would increase the risk for "illegal and or unregistered suites" being shut down without any other reason that it is not considered legal to operate 2 additional suites.
Even the very liberal Langford community is re-thinking a bunch of their bylaw enforcement procedures, as they off course have a lot of small lot developments, that are not supposed to have houses with suites, but a number of them do have them.
The fall out would be huge, for example; lower vacancy rates, lower property values, some foreclosures, possibly higher rents, displacement of people many of which hard to relocate and likely a number of other issues that I have not considered yet.
Recently we sold a side by side Duplex in Esquimalt, we were able to negotiate a better deal because Esquimalt shut down the 2 additional suites as each side had an additional suite in the basement. This comes in addition to our earlier comments and conversations about ESq. shutting down suites in 1/2 duplexes and town-homes. Oak Bay has always been proactive and they check the MLS system for houses with suites and shut them down.
All these small and bigger indications have started to develop over the last very short period of time, and they do not really have a current impact on the sluggish market place (YET).
But I am suggesting that things are changing very much and very rapidly.
I am not sure what to suggest or advise people to do at this time, as there are a number of directions that all may make some sort of sense in their own way.. Dependent on your own plans for the future over the next few years here are some options to consider.
- Do Nothing, and continue what you are doing hoping for the best.
- Continue to rent but reduce number of suites to the legally allowed #, for the next 1 to 3 years at the highest possible rate, go for security versus top dollar (less turn over)
- Convert property to Vacation rental (furnish, and equip for that use, and market it on line there are a number of websites and services that do this type of thing very well) more money, more work, more vacancies.
- Convert property to some form of speciality market segment (seniors, disability, executive, seasonal etc.)
- get real creative and try to sell as a rent to own deal with details to be established (this may entice a few buyers to pay more than market)
- try to sell at the highest attainable price as is.
- try to strata title some or all property, if possible, then sell each unit when market returns.
- renovate and update property to legal use as per the bylaws
- and lastly possibly turn property into Owner occupied (family to own a %) and possibly have 2 boarders or 1 suite.
- Get ready to buy up one or a bunch of great property and wait for the rebound
- A combination of all of the above.
We are having conversations with a variety of people in and outside of the real estate business and most interesting are the conversations within some of the local blogs and bulletin boards. I can tell you that some of them are predicting a total collapse and think that would be a cool thing and well overdue. Off course the industry and all those around it (CMHC, BCREA, CREA, VREB, all the banks etc.) are trying to make it all sound not as harsh or dramatic and to give it a positive spin.
The reality will likely be somewhere in the middle, however at this time we expecting and are more likely to face a sustained decline in property values and number of sales, for either a short and steep decline or long and more gradual decline , the opinions are divided on the this.
I hope that this information, although not pleasant, is beneficial in reviewing your plans and direction for your property holdings.