The decision to buy a house is a little like the decision to have a baby -- there's no such thing as the perfect time. But it helps to make an informed decision, to weigh need against desire and facts against speculation.
So, if you're considering buying Vancouver real estate in 2013, here are 6 things to think about:
- 1. Home Sale Prices
Home prices in the Vancouver area declined 2.3 percent over the course of the past year, according to the MSL Home Price Index, as reported by the Real Estate Board of Greater Vancouver (REBGV). The average price of a home in Greater Vancouver was $590,800 in December. This is a decline of 5.8 percent from the peak reached in May when the average selling price was $625,100.
Averages and fluctuations in home sale prices are not consistent across all markets. Contact Rick Clarke, a experienced and friendly Realtor on staff, to find out the current selling prices of homes in your desired municipality and neighborhood.
- 2. House Availability
Home sales are down in the Vancouver area. December sales were 38.4 percent below the 10-year sales average, according to REBGV. December 2012 sales totaled 1,142, compared to 1,658 in December 2011.
Slow sales tend to favor the buyer but, again, not all neighborhoods are equally affected by sales trends. A Vancouver real estate agent knowledgeable about your desired location can help you make the buy now/buy later decision based on detailed figures for the neighborhood and properties that interest you.
- 3. Mortgage Rates
Mortgage rates, particularly 5-year rates, held steady at low rates throughout 2012. There's a modest risk of a rate increase this year, according to Canada Mortgage Trends. Geoff Lee, a Vancouver mortgage broker, posts these rates for the first week of January:
6 months: 3.95%
1 year: 2.74%
2 years 2.69%
3 years: 2.75%
5 years: 2.99%
7 years: 3.69%
10 years: 3.79%
- 4. First-Time Homebuyer Benefits
If you're buying a new home in Vancouver or anywhere in British Columbia and it will be your first home, you qualify for a $10,000 rebate from the provincial government. This offer only applies to newly constructed homes and is set to expire in April.
- 5. Sales Tax
If you buy a new home before April, your purchase will be subject to 12 percent HST. The sales tax on new Vancouver properties will lower to 7 percent GST in April. If you're a first-time home buyer, you can determine whether it makes sense to wait a few months to purchase by calculating the 5 percent difference in sales tax savings against the $10,000 rebate.
- 6. Home Loans
Qualifying for a conventional mortgage became harder in November when the government imposed new rules on federal government institutions.
The rules do not directly affect credit unions and private mortgage companies, but all lenders may follow the government's lead.
If you have limited funds to make a down payment or less than perfect credit, the sooner you apply for a home mortgage in Vancouver the more likely are to find a non-federal lender who had not adopted the government's rules, which include these:
- Consideration of your ability to make monthly mortgage payments when you renew your mortgage as well as your ability to pay at the time of application.
- Greater proof of income required for persons who are self-employed.
- Tougher debt ratio requirements for obtaining sub-prime loans.
- Inclusion of home heating costs in determining qualification for a mortgage.
History and Future
Spend some time studying the history of the Vancouver real estate market in which you wish to buy a home. But don't depend too much on it when making your buying decision.
As billionaire Warren Buffet says, "If past history was all there was to the game, the richest people would be librarians."