APS 2012 - Housing market in military driven communities

[Wookilar]

Another factor in some of the smaller mainly military communities were the fairly large number of people coming out of Edmonton ('07-09 especially) that had buckets of cash from their houses going through the roof since the late 90's.

I bought in St Albert in '97 for $113K, sold in '05 for $202K (and that was the end of a bidding war), and the guy that bought my place sold it 13 months later for $425K. It was a nice place, but nothing spectacular.

People coming to Gagetown bought some pretty nice places (and boats, and quads, and campers). Now that those people are getting posted again, they are wanting to recoup their inflated prices and far fewer people are biting  (hence the large number of houses in Oromocto west that still have not sold).

 

[Strike]

People coming to Gagetown bought some pretty nice places (and boats, and quads, and campers). Now that those people are getting posted again, they are wanting to recoup their inflated prices and far fewer people are biting  (hence the large number of houses in Oromocto west that still have not sold).

I think it's more that they want to make more money on their home by listing it at a higher price.  If they wanted to recoup their prices the houses would be listed for pretty much what they were when these people bought them in the first place (Plus whatever they may have put in to it wrt actual improvements, which painting is not), thus leading to a STABLE and FAIR market, as opposed to one that is artificially inflated by greed.

 

[armyvern]

I think it's more that they want to make more money on their home by listing it at a higher price.  If they wanted to recoup their prices the houses would be listed for pretty much what they were when these people bought them in the first place (Plus whatever they may have put in to it wrt actual improvements, which painting is not), thus leading to a STABLE and FAIR market, as opposed to one that is artificially inflated by greed.

In a utopian world maybe. One of my Cpls who was posted in to Gagetown was one of the types detailed below. Paid out cash for his Gagetown home coming out of Edmonton, bought the nice boat, trailer and a Harley too with the cash he had left over from Edmonton. Is used to spending his paycheque now on entertainment/gas ... not loans. Now needs to upgrade/replace those toys as they're getting on in years (6) --- his house is listed at 43K more than he paid for it (& it's in PMQ West [Oromocto West] with nothing having been done to it either). Just sayin'.

 

[CombatDoc]

Any idea which way the market in the Ottawa area is moving?  With the proposed move west to the Nortel site, I imagine that the east end e.g. Orleans will be less attractive while the west end e.g. Stittsville, Kanata will be more attractive.  Couple that, however, with layoffs in the federal PS and who knows what the market will do.  I'm figuring that prices will drop.

 

[armyvern]

Any idea which way the market in the Ottawa area is moving?  With the proposed move west to the Nortel site, I imagine that the east end e.g. Orleans will be less attractive while the west end e.g. Stittsville, Kanata will be more attractive.  Couple that, however, with layoffs in the federal PS and who knows what the market will do.  I'm figuring that prices will drop.

I'll go with "they'll maintain staus quo" then.    Someone else can bet on the "they'll rise".  8)

 

[dapaterson]

Any idea which way the market in the Ottawa area is moving?  With the proposed move west to the Nortel site, I imagine that the east end e.g. Orleans will be less attractive while the west end e.g. Stittsville, Kanata will be more attractive.  Couple that, however, with layoffs in the federal PS and who knows what the market will do.  I'm figuring that prices will drop.

I'm thinking along the same lines, but it's hard to say right now.  I did luck out last time the Feds did their downsizing; I bought in the trough after the last round of cuts.  In 2000 I bought a two bedroom condo in downtown Ottawa, with underground parking, for under $90K; sold in 2007 for about $180K (and put the money into a house).

I expect that the full effect of the Federal cuts plus the DND move to Nortel won't be felt for another 4-5 years; then the cycle will repeat itself.

 

[bridges]

In 2000 I bought a two bedroom condo in downtown Ottawa, with underground parking, for under $90K

:rofl:    That seems the stuff of fantasy now.  How the market has changed; nicely played.

I expect that the full effect of the Federal cuts plus the DND move to Nortel won't be felt for another 4-5 years; then the cycle will repeat itself.

Yep.  A co-worker recently bought a house near Nortel, even though our unit won't be there for a few more years (if ever...), and many listings in the area are now mentioning proximity to the new DND location.  Orleans, on the other hand... even if there is a dedicated express bus, the journey will still take longer than most might want to spend standing & holding onto a strap on a moving vehicle.

Ditto on the cyclical nature of these things.  As a rule, Ottawa tends to be relatively insulated from the vagaries of the market.  There are ups & downs, but not with the same amplitude as some other cities.  Your best bet, if unsure, may to get a place in the south where you can get to everywhere.  But this is covered in other threads.    :nod:

 

[McG]

... thus leading to a STABLE and FAIR market, as opposed to one that is artificially inflated by greed.

I wouldn't be so haughty as to make that blanket statement.  It fails to consider that we often post members from low-value MDMs to hyper-inflated civilian driven markets (such as Edmonton in past years, or Vancouver, Toronto & Cold Lake) – these members need every dollar they can get from their home in an MDM in order to break-into the hyper-inflated market; it is requirement, not greed, leading them to get what they can.  I have no doubt greed is a factor, but it is not the factor as suggested by your statement.  Your greedy label is also unfair to members whose house prices are driven up by competing bids. 

You're saying that families in MDMs should be turning down market offered value on their homes.  Sure it may lead to a stable market in military communities, but it is certainly not fair as you are now calling on families leaving MDMs to eat the cost of inflation as they move to more expensive civilian markets while their peers moving in the opposite direction gain a windfall of moving into communities that are perpetually below large urban posting locations (Ottawa, Toronto, Edmonton, etc).  Inflation (or deflation) in MDMs needs to be a reflection of what is happening across the country yet moderated by the local economy – it is not stable, but it is fair.

Selling families ask for a certain price based on what the market is offering … and I highly suspect that you would not turn down tens of thousands of dollars for the sake of stability if that is what the local market ever offers for a house you are selling.  When you do, let us know and we can colour the rest of us greedy.

 

[Sprinting Thistle]

I have to agree with MCGs post above.  There are a number of factors, other than simple greed, at play.  In Petawawa, as an example, agents play a part of the price factor.  This year, in my neighbourhood, one agent had a majority of the listings.  This agent suggested selling prices to clients that were, in my opinion, above what the market would support in the neighbourhood.  Once the bulk of the HHTers arrived all of these houses ended up dropping their prices more than once in order to compete.

Another issue is the members original purchase price.  In some cases, members buying are stuck with what is left on the market and are forced to pay prices they would rather not.  This happened to me with a late, end of summer, posting.  When it comes time to sell they would like to get their money back but, as happened this year in Petawawa, the market flattens, or even drops, and the member can be out of pocket. 

So, there are a number of reasons that factor into price-setting of houses in MDMs. 

 

[McG]

Here are a few thoughts on what the CF could do to keep military driven markets from stagnating during APS:
[list type=decimal][*]Extend temporary dual residency benefits from 6 months to 12 for military driven markets only (because if one does not sell during APS, they are unlikely to sell until next APS) - with the risk of paying for two homes alleviated, more people will be ready to go look for a home.
[*]Base commanders should not approve IR requests that arise from an inability to sell primary residence at origin before September (when children are back in school and posted members are already in gaining unit location unaccompanied), and that approval should be dependant on showing the residence was actually put on the market over the summer.  This will encourage people not to give-up early
[*]If all posting messages are ever again delayed by a full month, then COS dates should shift later by two weeks in order to make-up some of the time lost in the selling/buying season.
[*]It used to be that the full IL&M benefits were supposed to have been conditional on showing members attempted to arrange a door-to-door move (when closing date was the critical path to negotiating a sale) - a handful of individuals deliberately negotiated dates that gave a maximum of paid days in a hotel so everyone suffered.  We need to go back to the old system, but hold accountable those people who abuse it.  This will make negotiating sales easier, and in each case it would save money in comparison to a year unaccompanied and IR.
[*]If there is not a military requirement otherwise, COs need to ensure that all members are allowed their HHT as timely as possible.  If a guy is in the field and cannot be replaced, then he will have to wait; if a guy is rear party in garrison his HHT should not be delayed just because other guys are still in the field.[/list]

I think something also needs to be done to ensure that new home construction is not funded to unsustainable levels in MDMs.  At the same time, the new home market must continue to exist at some level (because there will always be somebody with a housing requirement that cannot be met by the re-sale market, and because it provides a pressure release against over-inflation).  I don't know what the right answer to this is.

 

[McG]

The CDS came to Gagetown early in the month & apparently talked on this concern ... rather, he talked more broadly including the lack of sales happening in military driven markets and he talked on the very significant financial losses occurring in some diving civilian markets.  In responce to a question about the program where DND would buy all unsold houses after a certain period of time, he indicated that is something that may have to come back.  He came out and told the crowed that he didn't know the answer, but it is a problem that is getting attention.

Service members do not get to decide when they will be posted or not based on when the housing market is favourable.  As it is the government's decision, it is fair that the government fully assume the risk.  But, if the government is fully assuming the risk, then it would not be appropriate for the military homeowner to reap the windfall should a posting message come a time of local hyperinflation.  I suspect many people will insist they are entitled to both the profit and the risk protection ... but the solution cannot be free lottery tickets.

Maybe the CF could offer two systems - at the time of home purchase CF members could choose to accept their own risk & gamble on winning in the housing market, or they could choose to give to the government both the risk & entitlement to profit (beyond average national housing inflation for the period of ownership) - if a member chooses the risk protection, then the government will also buy the house should it not sell on posting (but if a service member chooses to gamble on the profit, then they also gamble on to occurrence of a sale itself).

And PMQs are not a solution.  The CF should not be in the residential real estate business if it can at all avoid it ...

I understand the CDS also commented on the CF having significantly reduced its PMQ footprint in years when housing markets were moving better, and that maybe (at least for some areas) this could have to be revisited.  What would you think if PMQs & CFHA were replaced with a military housing estate and a homeowners association that required all sales be to other military families or back to the crown?

 

[GAP]

Would that not be pretty capital intensive initially?

 

[Sprinting Thistle]

Having just left one of these military driven markets for a higher civilian driven market I would be interested to know what the US military experiences for comparison.

 

[Cdnleaf]

Found this using the search function - this is/was a great post and I concur with your initial observations. My own perception of the Petawawa market at this time, is that it's close to flatlining. The number of houses currently MLS listed and not moving seems really high this year, in addition to new builds entering the market every month. The real estate industry and by that I'm thinking the pure number of agents in this area, has to play a role in sustaining the prices artificially high; less their own mortages don't get paid. Watched as some of you have done, the values double, triple and so on during a 10 year period; makes me ask when is there going to be a (-) market correction. I'm releasing next year with the entitlement to move, and have been tracking the market. We are staying in the area and discussing staying with our current house (purchased 2005) or moving.

Anyone have a link, or are the numbers currently available showing yearly sales/prices. Have a great Turkey Weekend.  Dan.

 

[sidemount]

Intersting thread that Ill bring back up.

A few years later are we on the same downward trend?
Here in Petawawa there seems to be a ton of properties up for sale and NOTHING seems to be moving. Are HHTs just really late or are we losing a ton without gaining or are there too many places being built.

 

[ProPatria05]

I think it's 'all of the above'. Clearly, though, there has been WAY too much construction here in the past 4-5 years. Builders got greedy after years of troops coming home with $20,000 or so in their pockets, doing tours every couple of years to Afg and looking to buy homes. Real estate agents are now investing in subdivision developments, so clearly have a bias to push the new homes. Builders are happy because the new homes tend to sell when up against slightly older ones. The ones getting screwed are the re-sellers.

Oh, and the Town of Petawawa mayor and council also have blood on their hands, as they've been more than happy to collect the building permit fees and be able to claim they've got such a 'fast-growing' community.

Even the homes that are selling (including mine, thankfully) are selling at break-even, or a loss. I sold mine at a small loss after 4 years, despite trying to be true to the market. Not complaining, though, as many haven't sold yet. And people are panicking and dropping their prices like crazy. It was bound to happen, after years of vulture agents churning up the market and artificially jacking up home prices. I mean, really? $300,000+ for a home in PETAWAWA???

It's the perfect storm, and we're finally seeing what is the inevitable result of the unchecked greed that's been going on for the past number of years. Good luck to everyone who is still selling - hope you land on your feet.

 

[Bradboy]

We owned and lived in a small but modern townhouse in Petawawa and tried to sell in the summer of 2013 in order to upgrade to a larger home. After the house sitting on the market and open house after open house with no one showing up to them, we decided to rent the house out. Luckily we had the down payment for the house we ended up buying and live in now or I imagine we'd still be living there.

It's funny how things happen though. Our small townhouse not selling has been great for us. We've been renting it out since October 2013 and it's become an excellent source of extra income for our family. We've had no problems finding tenants and good quality ones at that. We considered putting it back up for sale again this summer as our current tenant is leaving. After watching another townhome on the same street sit on the market for almost 2 years we decided against it and are continuing to rent.

It's unbelievable how many new builds are going up in the area. It seems there's more houses than there are families! You'd think the town council would understand the impact this will have on the real estate market in the area. But as mentioned in an earlier post, town council is probably rolling in money with all the building permits being purchased and the extra property taxes being paid!

 

[sidemount]

The number of new builds is crazy, along with the new builds going up on the other side of Doran, its just not good business, they are going to be empty.

The town is right out of er!

 

[ProPatria05]

Not to mention the vast wasteland they've taken 3 years to create across from Moncion's, where the promised 'mall' is supposed to be built. There has literally been NOTHING done on that land since last year. My bet is that the local families that have the town of Petawawa by the balls (Moncions, Mohns, Clouthiers, etc, etc) are holding this up so it doesn't disrupt their incestuous monopoly on business.

 

[sidemount]

The good ol sandpit up there.

That place is brutal, I don't expect to ever see anything build in there, maybe bring some tonka trucks up there for all the kids to play. haha