The Greater Vancouver housing market has slowed down considerably from the frenetic pace we saw last February and March, but it's still ticking right along.
The Real Estate Board of Greater Vancouver [REBGV] statistics show that March home sales were up 12.9 per cent from February sales but were still trending below the 10-year average in Greater Vancouver. Listing activity on the other hand was brisk.
The British Columbia Real Estate Association (BCREA) reports that the dollar volume of homes sold in B.C. declined 26.5 per cent to $3.8 billion in March compared to a year ago. The number of MLS® residential sales declined by 20 per cent and the average residential price in B.C. was 8.1 per cent lower than March 2011.
According to Cameron Muir, the chief economist for BCREA, "the spike in consumer demand recorded a year ago was not repeated last month. A marked increase in high-end home sales a year ago pushed up unit sales and skewed average prices higher, so it's no surprise to see fewer home sales and lower average prices in March of this year."
In Vancouver, though, it's a slightly different story with benchmark prices continuing to move up in all types of residential homes in the past quarter. Not surprisingly, the household income required to buy an average priced home in Vancouver is close to $150,000. Don't be alarmed if you're trying to buy your first condo-that number is based on an average of all home prices in Vancouver.
That said, if you're planning to buy a home in the near future, it makes sense to find out how much house you can buy based on your household income. And it's not a bad idea to get pre-approved and lock in a rate while you're looking. While the posted rates for five-year fixed terms are close to 5.5 per cent, a number of lenders are offering rates below 3.25 per cent if you shop around.
The Bank of Canada Benchmark qualifying rate recently bumped up from 5.24 per cent to 5.44 per cent. It's the five-year fixed term rate that CMHC uses to qualify borrowers for mortgage insurance. It's meant to ensure that buyers who opt for variable or one to four-year fixed term mortgages or whose down payment is less than 20 per cent are still able to make their payments if rates go up.
If you have a relationship with a bank or credit union, check out the current mortgage rates in B.C. on one of the many websites that track them before you apply for your mortgage loan. It's a good starting point if you're trying to negotiate a lower rate with your financial institution.
If you're not tied to a banking relationship, I recommend using a mortgage broker. They can prequalify you and help you find the lowest rates available from many of the banks and credit unions. It's shocking, I know, but most financial institutions won't offer you their lowest rate unless you ask for it.
Before you agree to anything, make sure that you understand all the features of your mortgage. Pre-payment options and penalty clauses can have a huge impact on the actual cost of your financing. Sometimes it's better to have a slightly higher rate with more flexibility.
Send me your questions. I've had hundreds of questions from readers in the past few months so beginning with my next column, every other column will be a Q&A. Please email any questions you have relating to Vancouver real estate. I won't be able to answer all of them but I'll get to as many as possible.
Deb Abbey is a real estate agent at Royal LePage City Centre in Vancouver. She is the author of two best-selling books on Sustainable Investment. You can contact Abbey through her website: abbeypartners.ca or email any questions or comments to firstname.lastname@example.org.