First time buyers are entering a market which is characterized by high prices, but one which is still very affordable because of historical low interest rates. CMHC predicts prices to remain steady. The closer the buyer is to the core of Vancouver, the pricier the real estate. A buyer looking outside of the city should focus on key transit locations as these properties will continue to be in demand for years to come as population in Vancouver grows. To get the home of your dream, considering downsizing by at least one vehicle per family and moving close to premium transit routes.
For current homeowners that have significant equity in their principal residence strong consideration should be given to purchasing revenue property for a retirement nest egg. Reliance on government pension should be avoided and independent financial strategies to maximize retirement income should include premium real estate. Vancouver is expected to hold its value given the expected population growth over the next 10-15 years. Real estate is a long term investment and this is one corner of the world where you can rely on one thing…everybody seems to want to live here.
The pertinent facts: (source CMHC Fall report November 2011)
In recent months, housing starts have been supported by low interest rates and an improving employment situation. They are, however, expected to moderate through 2012. Housing starts are forecast to be 191,000 units for 2011 and 186,750 units for 2012.
Alberta and British Columbia:
With respect to 2012, total housing starts are expected to moderate, but Alberta and British Columbia starts are expected to buck this trend and grow by 15.3% and 7.1%, respectively.
Sales of existing homes through the Multiple Listing Service® (MLS®) 2 are forecast to remain stable through to the end of 2011. MLS® sales are expected to increase modestly in 2012. Overall, 450,100 sales are forecast in 2011, followed by a 1.9% increase to 458,500 in 2012.
With balanced conditions expected in most markets, the average MLS® price is also expected to remain fairly constant for the rest of 2011 and rise slightly in 2012. For this year, the average MLS® price is forecast to be $363,900, while 2012 will see a modest increase to $368,200.
Current market conditions:
Over the past quarter, listings continue to increase giving buyers more time to make decisions and more options for choosing their next home. The market continues to be a buyers market and buyers should take advantage of this situation to get the best possible price and terms. Over the past 10 years virtually every time I have seen a break in the market, it is followed within months, at the drop of a hat, by an extreme change characterized by frenzied buying, multiple offers, high pressure decision making, and escalating prices at a fearsome velocity. Potential purchasers considering a near future transaction should start seriously considering before the devil we call the hot Vancouver real estate market comes round again.
Having said that, I’m pleased to say that we have had more first time buyers into our office in the last few months than we have seen in over 2 years. This is a very healthy sign for our market as it is those buyers that characterize those good market fundamentals are present.
Advice for First time buyers:
Vancouver is going to continue to be a prime market for global real estate shoppers and will continue to be pricy compared to other cities. First time buyers to our market need to understand that we now live in a major metropolis and we have to adjust our lifestyles in order to afford real estate. First time buyers should consider downsizing to at most one vehicle. Average car annual operating costs are $8000 including insurance, maintenance, and loan payments. In terms of mortgage servicing costs this can allow the first time buyer to purchase a home worth $150,000 more than their budget would otherwise afford them. That’s enough to guarantee most first time home buyer’s a prime spot close to premium transit routes. A car can only depreciate. Historically, real estate over time helps you build equity, wealth, and security.
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