Is this a good time to buy?
Q: I’m renting right now and thinking about buying my first condo, but price is a big concern. Is this a good time to buy?
A: I’ve had several questions asking about affordability in Vancouver. When it comes to housing, those two words are rarely spoken in the same breath. We live in one of the most beautiful, temperate, culturally diverse, exciting cities in the world. It should come as no surprise that it is expensive to live here and that housing prices are high compared to most regions in Canada.
The easy answer is that it is a good time to buy property when it is a good time for YOU. Are you keen to begin building equity and pay yourself instead of your landlord. Do you have a down payment saved or can you borrow money from a family member? Is your employment relatively secure?
There are several programs available to first-time home buyers that can save you money. Details on these incentives would fill a whole other column, but your REALTOR® can go through them with you and help you take full advantage.
But you want to know whether now is a good time in comparison to sometime in the future, so let’s look at current market conditions first, and then at interest rates.
What is the market for condos like? Is there a lot of supply? How does that affect prices?
Over most of the last ten years, Vancouver has been a seller’s market. Anyone who’s been in the market to buy property during the hottest times knows all too well how that goes: seeing 19 pairs of shoes at the front door at an open house; dealing with the stress of multiple offers; bringing our home inspectors along with us to showings, and listings that are sold before we even get a chance to see them. I very clearly remember the frustration of searching for my home during one of those times in recent history.
But Vancouver is not a seller’s market right now. We determine what type of market we are operating in by dividing the number of homes available for sale by the number of properties that were sold last month. That calculation gives us the number of months’ supply.
- A Seller’s Market = 0- to 5-month supply
- A Balanced Market = 5- to 7-month supply
- A Buyer’s Market = more than a 7-month supply
Vancouver is presently a balanced market, though we are leaning a bit toward a buyer’s market in many housing segments including apartment strata units. In the city of Vancouver, there are almost 20% more listings on the market than there were this time last year. If you’re shopping for a home in much of the city right now, you will find that you have choices, a lot less pressure, and a bit of time to make a good decision. Average prices for strata units are presently very close to what they sold for two years ago – they have come down a bit since the spring. This is obviously great news for buyers.
But there’s even more good news for buyers, this time in the area of interest rates which, somewhat surprisingly, remain at an all-time low.
First-time buyers will often borrow as much as they can afford and are most comfortable with a fixed-rate mortgage so they know that their payments will not increase over the length of the term. Today’s qualified buyers can lock in for as little as 3.39% on a five-year, fixed-term mortgage. Historically, this is about as good as it gets.
So, there is choice in the market, prices have come down from their highs of earlier this year, and interest rates are at all-time lows. Assuming that you’re in a position to buy, the only reason to wait would be if you believed that prices were going to come down even more. But trying to time the market precisely is simply not possible and prices could well increase while you’re waiting.
Real estate prices in Vancouver go up over time. Historically, if you bought a home that you lived in for several years; you made money when you sold. There is no reason to believe that will not be the case for you now. This would hold true even in a seller’s market with average interest rates. The fact that market conditions and interest rates are in your favour is a significant bonus, and those conditions won’t last forever.
I came across this quote yesterday that illustrates the point:
“Don’t wait to buy real estate. Buy real estate and wait.”