The Vancouver Sun has some good tips for people who are completely unable to save up for the largest purchase of their life. People who either spend too much on entertainment and shopping or simply don’t earn enough to save. Buy a house.
Yes. Because the people that should be buying real estate are people who are unable to save up a few thousand dollars.
Their advice ranges from the ridiculous (reign in spending habits) to the sublime (ask mommy and daddy for a down payment).
Saving money for a down payment, especially in British Columbia’s high-priced housing markets, is one of the biggest challenges that homeowners face, but mortgage experts say, it’s not impossible.
The minimum down payment new homeowners need is five per cent of a home’s purchase price, which can be particularly difficult to accumulate for those in the most need: young people, often with student debt and lifestyles that involve a lot of restaurant meals and going to movies once or twice a week.
Yeah, that’s 5 percent goal is super-tough, but it just might be achievable according to ‘mortgage experts’. You can always tap into your RRSPs, and don’t forget that you can get yourself a zero-down loan (we call them ‘cash-back’ mortgages).
…some lenders have a cashback option that can be used against a down payment. “The clients have to take posted rates [not discounted] and some lenders will give you five per cent of the mortgage amount as cash back. On $400,000 that would be $20,000, the five-per-cent down payment that is required.”
The telephone company is building a condo tower and they’ve sold out their pre-sales units.
“It’s all geographic who’s doing well.”
Recent figures from the Real Estate Board of Greater Vancouver compiled by various real-estate analysts indicate higher numbers for unsold inventory than past years at the same time.
Local sellers all say that it’s not foreign investors driving the market for the successful projects, but local investors and people planning to live in the condos themselves.
Ms. Goertz said Telus offered its employees priority in sales at Telus Gardens and 150 of them bought, even though the price discount was a modest one per cent.
BLISTINGAGENT had an interesting point in the previous thread: A couple of years ago when the market took a dive a lot of presales buyers tried to walk away from their contracts and developers sued them for the difference between their deposit and the current value of the condos. What happens if the market takes another dive and Telus employees try to walk away from their presales? Dock their pay?
The Pique has an article about some remarkable goings-ons just a little ways north. Some hotel condo units in Whistler are now selling for half their peak price.
Those who own a condo unit in a Whistler hotel are sitting on great potential, but at the moment the units are not showing great value.
Real estate consultant Denise Brown with Re/Max Sea to Sky Real Estate reported that a unit originally sold in the Four Seasons Whistler for about $1.1 million was recently resold for only $520,000.
The so-called Phase 2 units in Whistler have fallen victim to the globally depressed financial situation, said Brown.
“We’ve seen the prices come down significantly,” she said.
According to Brown, this segment of the real estate business is at the bottom of the cycle so prices are good right now. She said the people who are happiest in the condo hotel market are those who are in for the long-term and have made a lifestyle choice in purchasing a condo unit in a hotel.
Lifestyle. Got it? Lifestyle, Lifestyle, Lifestyle. Just repeat the mantra and you’ll be fine.
Then there’s this gem:
Kelly said this segment of the real estate industry has improved in the last six months but people aren’t willing to spend as much in Whistler as they were a decade ago.
“It’s not anything wrong with Whistler or that Whistler is worth less,” said Kelly. “It is just that people are prepared to spend less.”
It’s not that Whistler is worth less than it has ever been worth, it’s that some people paid more than it was worth.
If you’re sharp-eyed you may have noticed some ‘special offers’ on 5 year fixed rates. BMO kicked off another low-rate war by once again offering a rock-bottom 5 year fixed rate of 2.99% and a new 10 year fixed at 3.99%.
Nobody wants to be left out of fun like that, so TD, CIBC and Scotiabank quickly followed suit and started offering a 2.99% rate as well.
How are customers responding?
Techar said reaction to BMO’s previous offer was fantastic. “We saw an increase in volume almost immediately and it continued for the whole two-week period.”
These deals are temporary and expire in a few weeks. You’d almost think something was about to happen March 29th, but who knows? Rumour has it more changes are coming to insured mortgage rules in Canada whether it’s higher down payment requirements or shorter amortization terms.
So is this a deal too good to refuse, or a trap for the gullible?
If rates start to rise, could it be a benefit to buy a home now? Would these ridiculously low rates offset a drop in prices at a higher interest rate?
What about in markets whose prices have fallen for the last few years? There are many of these across BC – The Okanagan has seen prices collapse by more than 30% so already.
And what does Mark Carney have to say about all of this?
“Canadian household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk,” Carney said Thursday as he held the bank’s trend-setting rate to 1 per cent.
The CBC has an article looking at the situation for middle-class home shoppers in Vancouver BC. They’ve noticed that incomes have dropped since the 70s while prices have risen.
So if you’re middle class in Vancouver you’re either priced out forever or something is going to change.
From that article:
Lawyer Nathan Hume and health researcher Angie Chan live with their two young children in a rented two-bedroom apartment in Vancouver.
With two good jobs, they had hoped home ownership in the city would be within their reach. But sky-high prices in Vancouver have left them without any options.
“We have a number of friends who are in the same situation as us — highly educated, they’ve got good jobs, they have young kids, and they’ve all left the city,” said Chan.
Hume says it is likely they could get a mortgage to buy something, but they don’t think that’s smart, when it would mean foregoing savings for retirement and their childrens’ education.
Any readers here have friends who have moved away from Vancouver simply do to house price dynamics? Any of you considering a move away based purely on the cost of housing?