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What first-time buyers really need

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55 Comments

Mortgage Brokers have come to the defense of first-time buyers and are asking Ottawa to bring back the good ol’ days of 30 year mortgages and extra ‘help’.

The Globe and Mail asked first time buyers what would help them, and oddly enough the overwhelming response wasn’t ’30 year mortgages!’.

It was:

Affordable houses.

It appears that the price of a home has an impact on first time buyers:

“The biggest challenge I face is affordability,” said Dustin Strong, a 34-year-old Vancouver renter looking for a home in the $500,000 range. “I have spent several years saving up enough for a reasonable down payment, but have now determined that in the current market, it just makes more sense to rent.”

Ok, so the price of the home and the fear of losing your down payment and more as prices decline:

Market uncertainty and bubble-talk are also holding buyers back, said James Ellis, a 26-year-old looking for a house in Kingston, Ont., with a $250,000 budget. His biggest challenge, he said, is “determining if the value of a house now is inflated or not, and whether resale value in a few years will reflect the current value once the housing market equalizes.”

“Our main challenge is beating the fear of home prices falling on us,” added Joseph, a 28-year-old looking for a detached house in Calgary. “That is what has kept us renting.”

Read the full article here.

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Ray

“Total sales dollar volume was down 29.9 per cent to $2.39 million.”

Million, Billion… at this point does it really matter? Most of their statistics are probably off by a factor of 1000 anyways.

http://www.bcrea.bc.ca/news-and-publications/news-room/news-releases/2013-02-statistical-release

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Vote Down The Facts

gokou, demand has to drop as prices increase, due to affordability.

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b5baxter

@suomynonA Said:

” b5baxter: I don’t know how there could be a ‘conversion factor’ for the different numbers because they include different things.”

Yes, maybe ‘conversion factor’ is not the right term. It was just an attempt to estimate the additional amount of inventory in the additional areas that PaulB’s numbers included for the years we did not have his numbers.

BTW, after looking at the numbers again I realized that average was less than 8%. I used the 8% as a worse case scenario in estimating how far we had to go to match 1998 inventory numbers.

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southseacompany

And… China’s national broadcaster, CCTV, reports on Canada’s housing bubble.

http://www.youtube.com/watch?v=ixpr8guO0JA

“CCTV’s Kristiaan Yeo reports on Canada’s Housing Market. After long held beliefs that Canada’s housing market would remain stable throughout the financial crisis there are concerns now that it may drag down Canada’s economy. The international monetary fund warns that the economy may be facing a housing bubble and housing prices are ten percent over valued.”

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southseacompany

Maclean’s magazine says;

“Brace for grim housing market news”

http://www2.macleans.ca/2013/03/13/brace-yourselves-for-some-grim-housing-market-news-on-friday/

“January home sales data had us all wonder whether the downward trip the housing market had embarked on in mid-2012 was already over. After four consecutive months of declines home resales rebounded in the first month of the year from December. Had we already hit bottom?

We hadn’t. February home sales numbers, due out on Friday, will almost certainly show that housing has resumed its southbound trajectory — and at a faster pace this time.”

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VHB

Total days 20 Days elapsed so far 10 Weekends / holidays 4 Days missing 0 Days remaining 10 7 Day Moving Average: Sales 114 7 Day Moving Average: Listings 243 SALES Sales so far 1121 Projection for rest of month (using 7day MA) 1136 Projected month end total 2257 NEW LISTINGS Listings so far 2569 Projection for rest of month (using 7day MA) 2434 Projected month end total 5003 Sell-list so far 43.6% Projected month-end sell-list 45.1% MONTHS OF INVENTORY Inventory as of Mar 13th, 2013 16228 MoI at this sales pace 7.19 Half way through the month. Sales and listings well below normal. March sell list sell/list 2001 2315 3805 60.8% 2002 3392 5168 65.6% 2003 3304 4272 77.3% 2004 4371 5709 76.6% 2005 3938 5083 77.5% 2006 4033 5767 69.9% 2007 3582 5456 65.7% 2008 2997 5674 52.8%… Read more »

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Democrass

“So demand drops no matter which way prices move?”

Demand from speculators is a portion of total demand. When prices are falling, demand from speculators drops to zero. Demand from value motivated buyers increases. If speculators outnumber value buyers, then total demand will drop with falling prices. This is probably the situation in Vancouver.

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Short'em High

Check your data for Tue, Nov 23, 2010:

from -> 152, ?, 132

from VCI -> 137,76,154

http://vancouvercondo.info/2010/11/leave-the-wheeling-and-dealing-to-trump.html/page-2/#comment-107746

Any idea what really happened that day?

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gokou3

#39 VDTF

““People who understand nothing about human psychology will believe there’s pent-up demand. The reality is closer to the opposite, i.e. demand drain due to price drop.”

So demand drops no matter which way prices move?”

Where did I say that?

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vanpire

And I can already see what next moth’s emails are going to read: “Looks like you have missed your chance for saving $10,000 on the price of one of our new homes by taking advantage of the First Time Buyer Bonus. But do not worry, buyers who purchased homes in Phase One of our development three years ago have paid exactly same prices you could be paying today, minus all the awesome upgrades and allowances (up to $20,000) that you will get starting this month. They also got stuck with higher interest rates, dished out all those taxes and maintenance fees and lost thousands due to inflation while the resale value of their “investments” went down by a nominal %5 or more. So all in all, now is the time to visit our Presentation Centre. As you can see, you… Read more »

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suomynonA

BPOM: Oh yes, Online polls, that’s when Brads membership in the Church of Satan really comes in handy.

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vanpire

Here’s the first paragraph of an email I received from a developer this morning (a third one of this kind just this month, no less): “Time is running out! Just a quick reminder to let you know, if you want to take advantage of the BC First Time New Home Buyers’ Bonus, now is the time to come down to visit our Presentation Centre! This is the last month that you could be eligible to receive up to $10,000 government bonus* for purchasing one of our MOVE IN READY homes!” Oh, OK, right… I knew I’m forgetting something – the first time buyer bonus is running out at the end of this month, I better hurry to get me a $500,000 townhouse in Surrey taking advantage of the free money our Great Government is giving me for absolutely no reason… Read more »

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HAM Solo

Looks like we’re “penting up” demand even further with a sub 100 sales day in march.

Pent up demand in Vancouver RE market, like a python’s pent up demand two days after swallowing a whole pig. Arizona (whose price/rent relationship never got half as stretched as Vancouver) is just now coming back after 6 years, and only then in the context of a Federal Reserve bond buying program intended to lower the interest on a junky mortgage to the level close to the US long bond…which is what the CMHC is already doing for us here. Pumpers may have laughed at bears for a couple of years…but we will be able to return the favour for a decade.

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paulb

New Listings 201
Price Changes 93
Sold Listings 95
TI:16228

http://www.paulboenisch.com

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Anonymous1

Cbc.ca. Has a story on illegal immigrants in Canada. Immigration officials have started Site raids. Estimates are 80,000 people in BC are illegals..mostly in vancouver.

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Anonymous1

Wakup call #15.

Either you’re a liar that people believe at face value or your sadly misinformed.

Bond yields are at lows. Not rising since august like you you say.

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Vote Down The Facts

“People who understand nothing about human psychology will believe there’s pent-up demand. The reality is closer to the opposite, i.e. demand drain due to price drop.”

So demand drops no matter which way prices move?

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Best place on meth

That asshole Brad J. Lamb just ordered all his employees, relatives and business associates to vote for him.

http://blog.buzzbuzzhome.com/2013/03/most-trustworthy-expert-toronto-real-estate-market.html

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Anonymous

His biggest challenge, he said, is “determining if the value of a house now is inflated or not, and whether resale value in a few years will reflect the current value once the housing market equalizes.”

There are proven ways to do that……it’s been discussed many times here.

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gokou3

RE #32. Agree. People who understand nothing about human psychology will believe there’s pent-up demand. The reality is closer to the opposite, i.e. demand drain due to price drop.

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suomynonA

b5baxter: I don’t know how there could be a ‘conversion factor’ for the different numbers because they include different things.

If I recall correctly Paulb includes land, that would account for the higher number.

So theres no way to ‘convert’ one number to another unless all sectors/ areas are moving in lockstep. Best to just compare single source to single source where possible.

Love the inventory graphs by the way!

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UBC in crisis mode

“I am baaaaaack!”

This 2010 foreclosed property (asking $2,900,000 then) is back, first tried $4,788,000, now new listing for $4,488,000:
5662 CHANCELLOR BV, University, Vancouver West

http://www.realtylink.org/prop_search/Detail.cfm?MLS=V995717&REBoards=All&From=MLS

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Anonymous

….Te math says rent, so I do. When the math says buy, I’ll buy. All I NEED is a calculator….

No, no, no! What you need is a variety of parasitic organizations overwhelming you with groundless RE tenets, fudged statistics, and outlandish promises of infinite returns in order to relieve you of the burden of carrying that chubby down-payment.

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Barb Rennie

It is like most things, if everybody wants it, then it makes you want it too. But if nobody wants it, then you wouldn’t want it. Like men, fashion, iphones….
When real estate becomes “affordable, attainable, abundant” buyer’s so called “pent-up demand” evaporates. First time homebuyers do not have the desperation of getting into the market as they did last year. Unless the government is giving away free downpayments, there is no urgency to buy in today’s uncertain market for most folks. They usually buy in a rising market, not a falling one.

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An Observer

@FleetwoodBoy

You’re right about people thinking about monthly payment vs total cost and to add to that, most people don’t think over leveraging themselves on the monthly payment is a problem because worst case scenario is that they sell for a huge profit…

One point though that might surprise you – you mention $800K being over a million once it is paid off. If you use an average of 5% for the interest rate over the 25 years that $800K will actually require $1.4 million in payments…

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