As the tumble in real-estate values and cheap mortgages boost first-home affordability, the opportunity to find and price a residence with measured purposefulness is great, but daunting
Kim Pemberton
Sun
Dan and Lucy Robison (above, with children Joan, 14, and Roland Simard, 12) bought in Coquitlam. Photograph by: Jenelle Schneider, Vancouver Sun, Vancouver Sun
Clayton Aelbers bought in Burnaby. Photograph by: Bill Keay, Vancouver Sun
As a first-time homebuyer Cynthia Barros is excited about owning her own place, although worried about getting the timing right.
Barros and a friend plan to co-own a home, their way of possessing that first rung of the property ladder.
And while the two women have saved enough money for a down payment and figure they can get a townhouse or apartment in Burnaby, New Westminster or Coquitlam for $400,000 or less, there is one drawback.
Barros has just finished university, but has to wait until she has a full-time job before she’s eligible for a mortgage. Her friend already has a full-time job.
“I’m happy prices are going down. It helps people like us who couldn’t afford a place before the market crashed,” Barros says.
“I definitely want to get into the market now because I know it’s going to recover.”
Barros, although unable to buy currently, is an anomaly among first-time buyers because if she could she would take the plunge.
Most first-time buyers today are hesitant and will end up waiting too long before getting into the market, David Watt of the Real Estate Board of Greater Vancouver says.
The irony is they are in a much better situation now in a buyer’s market with low interest rates. But they will wait until it’s a seller’s market before making a purchase, Watt says.
“It’s human nature. Buyers love to buy when everyone else is buying and that is typically a seller’s market,” he says.
Watt adds he talked recently with a mortgage lender from one major charter bank in Vancouver who reports there’s a huge inventory of pre-qualified “people who are just sitting on the fence.”
“It takes more courage to go against the crowd and buy in a buyer’s market.”
Others in the housing field agree it’s unusual more first-time buyers are not jumping into the market, considering the benefits. These include lower interest rates and the ability to shop around to negotiate the best deal possible without worrying they will end up in a bidding war or have to forgo the home inspection clause.
“People will buy but they just need to know they have a really good deal. The problem is they don’t know it’s a good deal and that insecurity breeds inaction,” Cam Good of Mac Real Estate Marketing Solutions says.
Good believes the time is right now, particularly for first-time buyers because of the affordability.
“It’s as good as it gets now in terms of affordability. It’s been a long time coming.”
Clayton Aelbers, a first-time buyer in Burnaby, knew a good deal when he saw one.
The 25-year-old steel fabricator bought last February and paid $255,500 for an apartment listed for $279,000 across the street from Central Park. The owner had died and her sister in Australia wanted a quick sale so he was able to “scoop in” before the first open house and buy the place.
“I had looked at over 100 places and was on the computer every night searching,” says Aelbers.
His only negative was an earlier pre-approved interest rate of three per cent for three years had run out and he ended up with a four per cent rate. Still a good rate, he says, so he doesn’t have much to complain about.
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The days of standing in line overnight to get first dibs on a condo appear to be over at the moment and buyers have the luxury of shopping around for the best deal.
“The panic has been taken out of the purchase,” says Peter Simpson, of the Greater Vancouver Homebuilders’ Association.
“Before people would line up overnight to buy a condo and they felt if they didn’t buy right then and there the guy behind them would. Now they can take their time to get the right place in the right location. But they need to know what’s involved.”
Catherine Reid, 31, who is a single professional, bought her first home — a two-bedroom apartment in New Westminster — for $250,000 in October.
Thanks to the market switching from a seller’s market when she first started looking four years earlier to a buyer’s market she was able to take her time.
“There was a lot of talk of the market changing and I thought I’d take advantage of that,” says Reid.
“I had more time to consider places. Before I didn’t have any time and I couldn’t put any subjects into the contract. I felt a pressure to make an offer right away,” she says.
Wanting to take a break from that pressure cooker, Reid at one point took a break from looking for 18 months when prices climbed too high.
She began her search in earnest in August when it was evident the market was becoming a buyer’s market.
The wait worked out for Reid, who feels she benefited from lower prices.
The home she ended up buying, after only two months back on the search, was originally listed for $30,000 more than she paid.
Her return to the market and the decision to act quickly is typical of young single female buyers, says David Watt of the Real Estate Board of Greater Vancouver.
“As a rule, they are quicker to do it. They’re serious about long-term investing. They don’t talk about flipping. They’re real believers in the long term and controlling their own destiny. Any realtor on the street will tell you that,” says Watt, adding that unfortunately the information is only anecdotal.
Cameron Muir, the B.C. Real Estate Association’s chief economist, says he believes buyers today not only have more time to investigate their choices but they have the ability to negotiate an attractive price.
“The irony of markets is that there’s no shortage of buyers when prices are near a peak and a scarcity of buyers when prices are near a trough,” he says.
“Affordability is much better today than it has been for two years. This bodes well for the first-time buyers, particularly when you look at low interest rates. . . . Unfortunately some buyers are sitting on the fence anticipating even lower prices.”
Muir says he doesn’t expect prices will make any further significant drops. And he anticipates, once buyer-confidence returns, a “modest increase” in sales by the spring.
“My advice would be to secure your financing, get the lowest (interest) rate and then take your time. You don’t have to rush in and take the first home that is acceptable” he says.
First-time buyer Dan Robison and his wife bought his three-bedroom townhouse in Coquitlam two weeks before getting married last July. He is 48 years old.
The couple paid $369,000 for a home he estimates was under market value. A similar townhouse next door sold for $10,000 more. Robison credits a first-time homebuyer seminar he took through the Greater Vancouver Home Builders’ Association with giving him the knowledge to buy with confidence.
“It was a huge help. I should have a badge — I attended 10 shows for 10 years,” says Robison.
“When it came time to buy I had a lot of information I learned from the experts (speaking at the seminar panel).”
Robison says he was so confident he bought a home offered by an owner and went without a realtor himself for a further cost savings.
He remembered a piece of advice from one of the seminars and that was to ensure the paperwork was in order so the seller couldn’t opt out of the deal or keep his down payment.
Robison says this advice was critical for him because after the deal was signed the seller had 10 other calls from others wanting to buy the home for a higher price.
“You hear horror stories of people losing deposits. But we did our homework. This is a life-time investment and if things go wrong with the property there’s not a lot of recourse after it’s bought,” says Robison.
His advice to other first-time buyers is to educate themselves by taking a course, make sure they get a home inspection, and don’t pay more than what they can afford.
The Greater Vancouver Home Builders’ Association will be sponsoring the 15th annual First Time Home Buyers seminar on Tuesday, March 24 from 7 to 9 p.m. at the Sheraton Guildford Hotel in Surrey.
Anyone interested can call 604-588-5036 to register for this free event.
(This year participants are being asked to bring a non-perishable food item to donate to the Surrey Food Bank).
Simpson says typically 800 people attend each year, making this the largest event of its kind in North America.
Speakers include a representatives from the banking community, real estate, home warranty, home ownership protection office, the Canada Housing and Mortgage Corp. and a real estate lawyer.
“We get high-level speakers to cover everything you need to know,” he says.
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