It’s a great time for first time homebuyers to buy! Owning real estate is the foundation of financial freedom. It is a long-term investment but I believe it is worth it in the long run. Pay your own mortgage and invest in your future!
Vancouver Market Update
An expanding population base and job growth will keep demand for rental accommodation in Vancouver strong in 2012. More than 35,000 new residents are projected to settle in the region annually, many of whom will choose rental housing, at least initially, while becoming established in the community. The relative affordability of rental accommodation in Vancouver, compared to ownership housing, will also support rental demand. These factors, coupled with a scarce supply of new purpose-built rental units, will move the apartment vacancy rate lower and keep rents increasing in line with the provincially mandated allowable rent increase. The average two-bedroom apartment rent will increase to $1,285 in 2012. The vacancy rate is expected to decline from 1.4 per cent in 2011 to 1.1 per cent in 2012.
Home Buying Fundamentals
Two things to consider:
1) Allowable rent increases for landlords this year are 4.3%. Not all landlords will increase the rents by 4.3%, but they can if they choose to.
2) Vacancy rates are at an all-time low and net migration is remaining strong, which means it is hard to find a great rental apartment in your desired neighbourhood and within your budget. “Relative to other countries, Canada’s economy is expected to be a better performer. Canada is thus expected to attract more immigrants (net international migration), which will push net migration up. This will have a positive impact on housing demand in the medium to long term.” CMHC Housing Market Outlook - First Quarter 2012
Low interest rates
“Short-term mortgage rates and variable mortgage rates are expected to remain near historically low levels. The outlook also assumes that mortgage rates will remain flat through most of 2012 and start increasing moderately in late 2012 or early 2013. This will continue to support housing demand.” CMHC Housing Market Outlook - First Quarter 2012
Home Buying Scenarios
Scenario 1 - Jessica is a teacher and makes a salary of $42,000 and is looking for a 2-bedroom condo for under $225,000 in one of the following municipalities: Port Moody, Port Coquitlam, Coquitlam, Surrey, Langley, Delta, etc. With her salary she will easily qualify for a mortgage (provided they do not have significant outside debts, have a good credit rating, and have a 5% down payment – in this example $11,250 – either saved or as a gift). The monthly mortgage payments would be approximately $950, plus strata fees and property taxes estimated at $300. A cost of $41/day.
Scenario 2 – Jennifer and her boyfriend Shawn are both self-employed and have had a business for 2 years (both have completed their taxes and have two years Notice of Assessments (NOA) from CRA). They are looking for a 1-bedroom condo in downtown Vancouver for under $400,000. To qualify for a mortgage their combined income must be $75,000, using the average NOA’s line 150 from the past two years (provided they do not have significant outside debts, have a good credit rating, and have a 5% down payment – in this example $20,000 – either saved or as a gift). The monthly mortgage payments would be approximately $1600 plus strata fees and property taxes estimated at $400. A cost of $33/day per person.
This is obtainable with the right goals and guidance. This may not work for all, but it shows you it is possible. I am here to help you plan, budget, set goals and guide you to reach your goals of owning a home.
There are new rebates available to you for 2012 if you’re buying a brand new home. For more information on the HST rebate click here and for information on the first time home buyers tax credit watch this video created by CRA.
Home ownership is not for everyone, and great consideration is required when you’re reviewing your options, budget, finances and your overall long term life plan. With knowledge, understanding and support, owning your own home is possible and will be a cornerstone of your financial freedom. It’s what we don’t know that costs the most! So before you rule out homeownership, speak to Laura MacCormack and discuss your options.
Call now for a free mortgage consultation 778.388.4240!