First time homebuyers dissapointed
From the Vancouver Sun:
“..the rate at which people are buying their own property is growing faster than the population.However, particularly in B.C.’s high-priced markets, the buyers aren’t getting exactly the property they want where they want to live.
Century 21 Canada president Don Lawby, in an interview, said buying habits are changing because “that’s just the reality of the marketplace today, for first-time buyers especially.”
The article goes on to mention some of the interesting ways that buying habits are changing in ‘the marketplace today’:
Kevin Lutz, B.C. mortgage manager for the Royal Bank, said 75 to 80 per cent of his bank’s first-time borrowers in B.C. are taking mortgages with 40-year amortizations, and a higher proportion are coming with less than a 25-per-cent down payment.
In Vancouver, Julie Jaggernath, director of education at the Credit Counseling Society, said her office is “a little bit busier than we were last year,” with clients including those who have gotten in over their heads buying property or upsizing their homes.
“We’re also seeing people spending about 70 per cent of their income on housing and housing-related costs,” Jaggernath said. “That’s a lot.”
40 year terms are the new standard? less than 25% down? 70% of income on housing?
Wow.
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December 13th, 2007 at 4:16 pm
December 13th, 2007 at 4:22 pm
All rich people own property, therefore if you own property you can be wealthy too!
.. There must have been some magic in that old straw-hat they smoked..
December 13th, 2007 at 4:37 pm
Particularly if they’re signing up for 40 year mortgages for the joy of living where they don’t want to.
What a bunch of maroons.
December 13th, 2007 at 4:47 pm
Or maybe Thumbsup is right. “Vancouver best city on earth, better a slave in nice place being than king in a nice but not quite as nice place like Halifax or Montreal.” (paraphrasing)
I think his argument goes something like that.
December 13th, 2007 at 5:51 pm
December 13th, 2007 at 5:56 pm
Down she goes $300.00 rent reduction on empty brand new condo. Love it!
December 13th, 2007 at 6:19 pm
I think that “Luxury loft style townhouse” is our canary in the lovely Vancouver coal mine. Well that and Thumbs.
I hope “Amby” never finds out how much joy he/she’s brought to the rest of us.
I just can’t figure it out. Personally I really do love Vancouver, but you don’t have to buy to enjoy the lifestyle. YOu can rent at half the price and let some other chump worry about interest rates and in-suite repairs.
I think people are going to figure out pretty soon that they made a mistake.
December 13th, 2007 at 6:31 pm
I agree and most if not all of the bulls on here are here cause they are having trouble sleeping..me I sleep really good and think of the$2000 net in my pocket each month that I would be paying if I owned this place with 25% down. In the meantime my wife and I manage to have a lot of fun. Time is short least if I get run over by a bus I’ll have enjoyed every day!
December 13th, 2007 at 6:46 pm
I have explained that earlier price to rent or buy can be fixed by floors,view,amenities,utilities,unfurnished or full furnished etc.
Sophia,
it’s!ok
because starata man did not find a detail on phone so just forgive him to confuse us.
Drachen,
those folks are doing something even today which you should have done that long ago.Our own home is a wonderful place on this earth.
Again who ever can afford monthly payment for term,Drachen.
It’s!Ok.
seen that article about Age 25,30 this time it’s not me but statistic Canada drachen.
It’s!OK
December 13th, 2007 at 7:50 pm
December 13th, 2007 at 8:49 pm
December 14th, 2007 at 12:09 am
I you don’t golf, ski, mountain bike, play beach volley ball, or rollerblade the seawall why move here?
It certainly isn’t for the high-paid head office jobs or the diverse cultural scene.
Maybe everyone just loves the rain and traffic…
December 14th, 2007 at 3:14 am
The difference in monthly payments between 40 year and longer amortizations (including interest-only, which is infinite) is very small - no more than 1/10 of the monthly payment at 6%. It doesn’t raise the bar much.
With a 40 year term and 6% interest, it takes 12 years just to pay off the first 1/10 of the mortgage balance. And God help the buyer if interest rates go up when it’s time to renew after 5 years or whatever. This means that first-time buyers will not have the resources to trade up for a very long time. Any market where 40 year (or longer) term becomes the norm is headed for long term decline.
Like Japan, you know?
December 14th, 2007 at 9:17 am
Assuming they can buy a $400k property (cheap townhouse somewhere?), it will cost $1725/mo in mortgage, and $350/mo in property tax/maintennace.
Assuming same thing can rent for $1400/mo.
That means every year, if they save the money saved by renting ($2075-1400), they will save $8100/year. Over 40 years compounded at a reasonable 7%, that means at the end of the 40 years, they will have 1.6M$. That house better be worth more than 1.6M in 40 years.
If they invest in an index market fund which is 12% avg over its history (i.e. DOW), then that house better be worth over $6.2M after 40 years. The house has to go up 7% each and every year for 40 years in order to reach that level (break-even).
December 14th, 2007 at 2:10 pm
That is exactly the thing. Going from one extreme (25 year) to the other (interest only) only lowers the payments by 20%. And that is a one time shot that gets eaten up in a year and change juding by recent appreciation.
When you buy a place with 25% down, you are paying 80% interest to start.
December 14th, 2007 at 2:12 pm
January 4th, 2008 at 8:12 pm
January 5th, 2008 at 8:41 pm