B.C.’s home loan program draws more first-time homebuyers into marketSynergy Mortgage
[Source: Vancouver Metr0, February 16, 2017]
Realtors say clients are taking advantage of the B.C. government’s new interest-free down payment loan program, and it may be helping to boost condo sales especially in more affordable markets like East Vancouver and the Fraser Valley.
Meanwhile, higher-priced parts of Metro Vancouver’s housing market, and especially the single detached market, continue to lag.
“It’s raised the hopes of some people who didn’t have the down payment,” said Brian Rushton, a realtor with Century 21, of B.C.’s HOME loan program. “There’s been an increase in activity as it relates to first-time buyers.”
The taxpayer funded, interest-free loan program lends applicants up to $37,500 towards a down payment. Successful applicants don’t have to begin paying the loan back for five years, but must be pre-approved for an insured high-ratio first mortgage, where the down payment is less than 20 per cent of the home’s purchase price.
Steve Saretsky, a realtor with Sutton Group-West Broadway, noted that detached sales in the Fraser Valley are moribund, townhouses are going strong, but the condo market is “off the charts,” with condo sales up 42 per cent year over year.
“I think right now what’s driving the market is the quest for affordability,” Saretsky said.
“What I see in the market right now is a lot of first-time buyers. It’s kind of scary.”
Saretsky confirmed he has some clients who are or plan to take advantage of the B.C. HOME Partnership program, and has heard from other realtors that interest in the program is strong. Both Saretsky and Rushton emphasized that their information is anecdotal only at this point.
Several B.C. economists have warned that the program will have the effect of further inflating property values in Metro Vancouver, and could put some buyers at risk.
But it’s too early to tell how much impact the program is having on B.C.’s housing market, said Bryan Yu, an economist with Central 1 Credit Union. The current 340 applications represent just five to six per cent of overall transactions across the province in the same time period.
Yu expects detached houses to continue to fall in price: “The foreign buyer tax did do a number on that market and we’ll continue to see some price declines,” he said. But he expects condo prices to rise.
Despite accounts of multiple offers being made on some condo units, Saretsky is sceptical that the condo market is heating up. Prices have regained the ground they lost between June and December, when the entire market was cooling. But multiple bids are happening because the number of condos listed is low.
“There are five or six offers because there’s no inventory,” he said. “Sales are still down 25 per cent — I don’t think there’s as much steam as everybody thinks.”