Praising a forecast market correction in Vancouver as a return to sanity:
Most people agree that there’s a problem with the BC real estate market, and that problem is usually called ‘affordability’.
Affordability usually means what you’re buying is too expensive, but it can also mean that you just can’t afford the monthly payment.
Interest rates look at risk of rising, but have been at rock bottom levels for years. That means there’s not much room to move on ‘affordability’ when it comes to interest rates.
So we’re stuck with two options: price comes down or government starts giving away money.
Daily Hive says they know what this announcement will be.
Update: They were correct, here are some details:
The B.C. Home Owner Mortgage and Equity Partnership program will provide a maximum of $37,500 — or up to 5 per cent of the purchase price — with a 25-year loan that is interest-free and payment-free for the first five years.
“The dream of home ownership must remain in the grasp of the middle class here in British Columbia,” said Premier Christy Clark.
The intention of the program is to assist people who can afford the mortgage payments on a new home but are challenged to make the down payment.
The province will start accepting applications for the program on Jan. 16, 2017.
Homebuyers will pay no monthly interest or principal payments over the first five years as long as the home remains their principal residence.
After the first five years, homebuyers begin making monthly payments at current interest rates.
If too much debt got us into this problem, surely it can get us out of it right?
Meanwhile the Bank of Canada is warning again about huge mortgages and growing household debt.
We know the readership of this site has a deep and abiding love of all things real estate so we figure you might need this public service announcement. Don’t lend money to your real estate agent.
Rita Fulciniti put a down payment on a new west-end condo, thinking that home ownership would bring her a little comfort and financial security in her retirement years. Instead, the 66-year-old is living in a homeless shelter, broke, and still chasing the Toronto real estate agent who borrowed her life savings.
In March 2014, Fulciniti’s $42,000 down payment was for a second-floor unit in the Vivid Condos on Michael Power Place near Bloor Street West and Islington Avenue. A year later, while the condo was still under construction, Fulciniti learned her potential roommate wouldn’t be moving into the building.
Fulciniti approached Chaim Smilovici — who also goes by the name Howard Smilovici, and was a real estate agent with Adenat Realty at the time — to find a tenant who would help cover the costs of carrying the condo. It was the beginning of her nightmare, she says.
The real estate agent did find her a room mate (that’s good!) but borrowed $95k (that’s bad!) with an agreement to pay in full plus a $5k bonus and a 12% annual interest rate (that’s good!). He then lost all her money investing in a nightclub (that’s bad!).
Read the full article at the CBC.
The Canadian economic outlook is ‘uncertain’ and that sets a high bar for interest rate changes according to Bank of Canada Governor Poloz:
“The situation hasn’t changed much, as far as I can see,” Mr. Poloz said in the Q&A session following a speech in Toronto Monday evening.
He said the wide range of uncertainties that the bank outlined in its October rate decision, when it said it had considered a rate cut but opted to hold the line until more clarity had emerged on such issues as the U.S. election, the pace of Canadian trade, the evolution of the housing market and the impact of Canadian infrastructure spending “is still present. It’s only been a few weeks.”
Read the full article over at the Globe and Mail.
How do normal people afford to live in Vancouver?
That’s easy – Payday loans!
The cost of payday loans in B.C. can work out to the equivalent of an annual interest rate of more than 500 per cent, the FCAC report notes. And payday loan use has “grown especially rapidly” in B.C., according to a January report from Vancity, with British Columbians “using payday loans at an increasingly higher per capita rate than residents of other provinces.”
Read the full article over in the Vancouver Sun.