Burst Bubble in Real Estate? Actually…0.49%

Jeff Evans

Amidst all the doom and gloom about the real estate mortgage in Vancouver comes a story that puts it all into perspective.

I was visiting my father last week, and he couldn’t wait to show me an article in Macleans magazine talking about the major property value crash coming up. I read it quickly, it seemed to be more opinions than anything really substantial. I would agree that it’s hard to see the market appreciating by 5% or more per year in the future as it has until now, because real estate in the City of Vancouver is not very affordable by the average family.

However, many people are currently wishing to buy but are holding off until the ‘great crash” happens. I have heard about this “great crash” in 2008, 2009, 2010, 2011, and…2012. There have been dips at times in those 5 years, but they have lasted a few months at most and then the market resumes and those “dips” are quickly wiped away.

So, to those who are waiting on the great crash comes the latest housing statistics for Vancouver. The average MLS price in Vancouver in January 2013 was $248,651, and in January 2012 it was $752,380. That is a decrease of less than 0.5% in 1 year.

Now, that does mean its lower (marginally). Also, its different properties on the market now than last year, so these things are not 100% precise (meaning if there are less “high end” properties on the market this year than last year, the average MLS price will be lower).

The Real Estate Board of Greater Vancouver has also reported sales in February to be down by 24.5% from February of last year. However, they are UP by 33% compared to January, and we have seen quieter February’s since 2001. Did the market crash since 2001?

Sales to Active listings are also above 11% for the first time since June 2012. I think that is a significant sign of the tide starting to turn on the quiet market.

Now, if you own a property now, I would agree that now may not be an ideal time to sell unless you are wanting to buy a more expensive property. However, for those delaying buying a home to live in for the longer term…this is a great market to buy in. You have your pick of the litter!

Further, you aren’t going to save money by waiting, like those who waited the past year to save 0.5% on their purchases (in theory).

The spring market is now starting to bloom, and should be in full swing as soon as spring break is over (or maybe after Easter). Mortgage rates are the lowest they have ever been and if you build the savings from low mortgage rates into the price, you are likely still ahead of where you were a year ago. Its almost never a bad time to buy real estate. Contact me today and we can get started with arranging the financing necessary for you to find the perfect place for you and your family.

Author: Jeff Evans

I am a mortgage broker, hair salon owner, squash player, student, and husband, aspiring to do good for people.

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First Time Home Buyers Mortgage Broker Tips And Tricks
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Among the services I provide to my clients, I consider myself to be a "first-time home buyer mortgage broker".  As a first time home buyer mortgage broker, I know how difficult it is to get into the real estate market, particularly in Vancouver, and it brings me a particular amount of job to help someone get past the challenges if being a first time home buyer.

I have recently completed an e-book and will be launching it soon.  I believe it will be very helpful for not just first-time home buyers, but for anyone who is not as knowledgeable in residential mortgage lending, about how to make your home buyer mortgage broker application appealing to a mortgage lender.

As a sneak preview, here are three tips on improving your mortgage application as a first-time home buyer.

3 Home Buyer Mortgage Broker Tips

  1. Take advantage of the home-buyers plan to fund your down-payment.  This program is not technically ONLY for first-time home buyers, but all first-time home buyers are eligible.  Under the plan, you can borrow up to $25,000 from your RRSP for the purchase of an owner-occupied residence.  If you and your spouse are both applying, then you can withdraw $25,000 each. It is a loan, so it has to be paid back over 15 years (or 1/15th of the loan will be added to income for that year).  However, there is no withholding when you withdraw it, it does not have to all be declared as income on any given year, and you don't even have to use all of it for down-payment!  You can use it for any purpose that you need it for. A good mortgage broker, like myself, can help you with some of the finer details and complex situations that often arise from these situations.
  2. Make sure you pay your bills on time. If you have a high balance on your loan, or you have a lot of debt, those also have a significant negative impact on your credit score, but you can get the bills down and there is no record of your high debt levels.  However, when you miss a bill payment, it stays on your credit bureau for 6-7 YEARS.  This not just negatively impacts your credit score, but lenders look at this when assessing risk, and they have been particularly uncompromising and (unreasonable, paranoid, strict...and other words that I cannot put in print) in the last few years.  While you likely do not have to wait 6-7 years to become bankable if you have had gone through a period of bad credit, the less negative credit on the bureau, the better. At least make the minimum required payments and you will go a long way to making yourself appealing to them.
  3. Having no credit is just as bad as having bad credit. Many people feel that not requiring credit should prove your ability to pay your bills and should be good evidence of credit-worthiness.  This is not how mortgage lenders think.  If you currently do not have any credit, then you do not have any documentation that you are an acceptable credit risk, and no matter how strong your income is, you will have difficulty obtaining a prime mortgage approval.  Make sure you have at least 3 different credit facilities in your name.  (Secondary credit cards in a spouses name are not considered acceptable for establishing your credit).

I am excited to launch my home buyer mortgage broker e-book soon, in which I go into much greater detail and give many different ideas to help home buyers prepare for home ownership, but as a mortgage broker in Vancouver, you are welcome to contact me in the meantime to discuss your circumstances and see if there are any options for you.

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Good news regarding OSFI rule changes
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This is just a quick note to let viewers know that IF you are one of the people with 20% or more down-payment and are in a position that the new OSFI rule changes affect your pre-qualification, that I can extend the current guidelines into the new year by up to 120 days provided that I have an application and am able to get a pre-approval in place with a lender for you before January 1.Read More

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This is a continuation of the article published here about the OSFI B20 morgage guidline changes for 2017.

If you are familiar with mortgage brokers at all (which you probably aren't) you would know that we also have alternative sources of lending for situations where a mortgage borrower will not qualify with a prime institution.  We have what we call "B" lenders, who have higher rates but more flexible lending criteria, and we have private lenders, which are individuals and corporations who can lend money on on anything that suits them.Read More