It Just Got Harder to Buy a Home in BC….

Did you know new mortgage changes and regulations are coming that will have a significant impact for home buyers?  Effective January 1, 2018 the new Residential Mortgage Underwriting Practices and Procedures (Guidelines B-20) will be applied to all federally regulated lenders.

The changes to the guidelines focus on:

  • the qualifying rate for uninsured mortgages
  • expectations around loan-to-value (LTV) limits
  • restrictions to purchases designed to work around those LTV limits.

What does this mean for homebuyers? I spoke with Geoff Lee of GLM Mortgage Group to give you the full details.

“The new guidelines will require that all conventional mortgages (those with a down payment higher than 20%) will have to undergo stress testing. Stress testing means that the borrower would have to qualify at the greater of the five-year benchmark rate published by the Bank of Canada (currently at 4.89%) or the contractual mortgage rate +2% (5 year fixed at 3.19% +2%=5.19% qualifying rate).”

These changes effectively mean that a buyer’s borrowing power is directly impacted—up to a decrease of 25%. Let’s look at an example:

BUYING A HOME

When buying a home with these new guidelines, borrowing power is also restricted. Using the scenario of a dual income family making a combined annual income of $85,000 the borrowing amount would be:

Current Lending Guidelines 

Qualifying at a rate of 3.34% with a 25-year amortization and the combined income of $85,000 annually, the couple can purchase a home at $560,000

New lending Guidelines

Qualifying at a rate of 5.34% (contract mortgage rate +2%) with a 25-year amortization and the combined annual income of $85,000 you would be able to purchase a home of only $455,000.

OUTCOME: This reduces your borrowing power by $105,000.  I’m sure you’ll agree that’s a significant amount.

*For more information on the other guidelines, read GLM’s full article HERE

In the above scenario, it is a scary thought that you would qualify for 20-25% less than you would under today’s current lending guidelines. In our Fraser Valley markets, this is exceptionally significant when the average detached home price is well above $800,000.

What can be done?  If you are thinking of buying, you may want to do so before these new guidelines take full effect in January of 2018. The market has maintained high median prices and low inventory over the past several months—and with the rate increases plus this new announcement- it is getting harder and harder to buy a home. Don’t wait- give me a call today and let’s meet to discuss how you can win! And remember, here at Young Real Estate Group, we get you more.

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Snap Stats September Edition

Housing has become a valued asset in an investment portfolio. Greater Vancouver has become viewed as a hotspot for global investors. This month, statistics explain why adding real estate to your portfolio just might be the way to go.

The market speed for the Fraser Valley is 36%  which officially makes it a seller’s market. This is due to a number of factors, but let’s start with sales. Total sales last month were 1464 which is 26% greater year over year and 14%  last month over month.

Next up, sale price.  The median sale price was $682,000 which is a 15% increase over this time last year and a 1 percent increase over the previous month.

Finally,  active listings. There were 4060 active listings last month which is a 9% decrease over this time last year and a 5% increase month over month. A property was on the market for 16 days before selling which is no change from one year ago and 23%  more than the previous month.

If you would like to see what the market stats for you specific area are, or would like to talk about listing your home please do not hesitate to contact us.

Don’t forget to visit our website too and check out our top tips for buying or selling a home…remember, at Young Real Estate Group we get you more!

 

What’s just Happened in Real Estate?

If you look at any major news site at least one of the headlines will be about Real Estate. With the Bank of Canada’s rate hike 2 weeks ago, along with low inventory, and fast-moving sales, real estate today can be confusing for the typical consumer. To make things easier on you, we’ve examined 3 trends and market changes that have created the current state of real estate.

 

  1. Bank of Canada Rate Hike.

On September 6, the Bank of Canada quietly raised its interest rate another 0.25%. This brought the rate up from 0.75% to 1%. Why did this happen? With Canada’s record year of economic growth, a higher interest rate is needed to cool the economy and ensure that inflation doesn’t get out of hand.  This can also have implications on mortgages. The lending rate of variable mortgages is tied to the Bank of Canada’s prime lending rate and it can impact the amount of homeowner’s payments. For more about interest rates and how they affect you click HERE.

 

  1. Continued Low Inventory

According to my Snap-Stats, in August the total number of listings was down from last year. The total listed homes came in at 3,884 this year, compared to 4,174 in 2016. This is an ongoing trend in The Fraser Valley and Metro Vancouver detached home market. As fewer homes become available, pricing continues to push upward. This is great for sellers but creates the perfect storm for buyers looking to get into the market.

 

  1. A Shift to Townhomes and Condos

August Sales numbers were pushed above average levels due to a demand for condos and townhomes. Last month, 3,043 residential properties sold, marking a 22.3% increase compared to 2,489 sales in August of the previous year, and a 2.8% increase over this July. When compared to the August sales average from the last decade, 2017 sales were 19.6% above average. This surge in sales in Metro Vancouver is being led by first time homebuyers looking to buy property listed between $350k – $750k.  With demand rising, developers are working to keep building, and many new developments are planned for 2018.

 

The Metro Vancouver and Fraser Valley real estate markets continue to change. Each day new statistics show that we are currently in one of the best markets for sellers, and also one of the most difficult for 1st time homebuyers. However, to the buyers – do not get discouraged! At Young Real Estate Group, we are committed to helping you find the right home in your budget – no matter what it takes. For those thinking to sell, don’t hesitate. Now is one of the best times in Real Estate to place a “For Sale” sign in your yard.

To learn what your home is worth, or to buy a home, please contact us. We happy to serve you whether you’re selling or buying. Call us at 604-533-3491 or email by clicking here.

Guest Post: The Top 10 Latent Defects in Home Inspections

We are excited to have one of the sharpest Home Inspectors with us today! Say hello to Daniel Fedosenko of Mr. Home Inspector Ltd! Daniel has been in the industry for a number of years and has a wealth of knowledge when it comes to home inspections. From Vancouver to Hope and everywhere in between they are helping homeowners check off all the boxes when it comes to home inspections. So without further ado, take it away Danny!

I have worked with Alistair Young and his team for a number of years. At Mr. Home Inspector our goal is to:

  • Offer solutions to issues/challenges (not just reported problems)
  • Go above and beyond the call of duty, and
  • Provide exceptional customer service in the Lower Mainland (from Squamish to Hope).

Today, we wanted to cover the topic of Latent Defects.  Latent defects are those which would not be revealed by any inquiry which a purchaser is in a position to make before entering the contract. Here are the top 10 Latent Defects that you may miss if you don’t have a proper home inspection done!

  1. Bathing area moisture issues behind tile surrounds: water damage.
  2. Pest infestation in attic, crawlspace, and or living areas: damage and air qulity issues can arise.
  3. Plumbing issue: polybutylene pipes with plastic fittings 1978-1995 years installed. Water damage and insurance issues, extra costs
  4. Hidden water leaks: ceilings, walls, or floors: water damage and extra costs will occur.
  5. Grade levels around homes too high up onto the structure: structural rot and extra costs will occur.
  6. Electrical panel size 60 amps: causes insurance issues and extra costs to upgrade the panel size to minimum 100 amps.
  7. Poor ventilation in attic causes mildew/mold in areas: air quality issues and extra costs to treat area.
  8. Toilet tanks by Crane manufactured between 1980-1991 (tanks prone to crack): water damage
  9. Basement and crawspace water leakage issues: water damage and extra costs to address.
  10. Aluminum wiring 1960’s to 1970’s: expands and contracts and loosens and can cause a fire.

There you have it folks–these 10 defects can be avoided by having a home inspection done before you move into your new home. Get in touch with me and my team today, we promise to help you find any issues and find a solution!

 

6 Tips for Homebuying Success

You did it! You have saved, saved, and saved some more and you finally have the money needed for a down payment! This is an exciting time for you—and also one that can be filled with questions. As a first-time homebuyer, the market can be confusing and misleading. However, there are tips that you can use that will make the process a memorable one for the right reasons.

  1. Research the Area

Really get to know the community you are looking at buying in. Find out what it has to offer in terms of nearby schools, drive time distances to work, and other destinations. Your dream home may become less dreamy when you discover you are 30 minutes away from the nearest grocery store!

 

  1. Get a Home Inspection

A home inspection will put your mind at ease that your prospective purchase is in good condition. The last thing you want are unexpected surprises once you move in and it’s too late. Make sure you choose a credited home inspector and review the report with them understanding that any repairs will be money out of your pocket once you own the home. Knowing all the facts is a good thing!

 

  1. Use a Mortgage Broker

One of the easiest choices you can make during this process is to work with a mortgage broker—and get pre-approved! Pre-approval will give you a set budget that your realtor can work off of. This way you can have your dream home—but stay on budget too.

 

  1. Avoid Large Purchases while House Hunting

As a first-time buyer, you will want to avoid making any large credit purchases while you are house-hunting. Large credit purchases will alter your debt-to-income ratio which will directly affect how much you qualify for a loan. The less you have in the “debt” category typically will result in you qualifying for more.

 

  1. Look past Décor

When entering a home, you have to look past the cosmetic décor items such as paint colour, furniture, finishes, etc. They are easy, low cost changes that you can easily switch out if you choose to purchase the home. As a buyer, remember that the homes you are looking at will undoubtedly have the current owners touch to it but this is easily fixed.

 

  1. Make a List

While you will need to retain some flexibility in this list, make a list of both your needs and wants. Your list should encompass your basic desires (like neighbourhood and size), all the way down to the smaller details like kitchen and bathroom layout. Match the property as closely as possible to your list and be honest with your realtor when looking at properties.

Finally, use a local realtor! Realtors that are well-versed in the area will have a better idea of fair-market value in the area. This will allow you to make an offer that is in line with the true price of the home vs. the listing price. Using a local realtor will also help you to have more insights into the neighborhood. They can help you determine the walk-score, tell you about nearby points of interest and have information about the general population in the area. A realtor well-versed in the area can be an invaluable resource especially for first time buyers!

Are you a first-time homebuyer? Give us a call at Young Real Estate Group and we will meet with you to help start the process!

July Market Update

July’s market update is live! As we head into the dog-days of summer, real estate is still going strong in the Fraser Valley. We are still in a Seller’s Market, with a 43% home selling rate.

There were a total of 4087 active listings in July. This is up from the previous year slightly. There were 1744 sales made in July, which was on par with last year’s sales at this time as well.

One of the most interesting, and still a concern for many first time and buyers in general, was the rise in sale price of 15% from last year. The main issue that is driving prices up continuously is the lack of inventory. Despite a record setting month in construction, there is still a high demand and low supply.

If you would like to see your snap-stats report for your area, get in touch with us and we will set you up!

4 Secrets of Real Estate Investing

The recent boom in BC real estate is getting people excited about real estate investing. Investing in real estate can give you a strong source of income and move you toward financial freedom and the life you have always imagined. Here are 4 key Secrets to buying your first investment property.

  1. Budget—and Stick to It

One of the most important aspects of investing is ensuring you understand your borrowing limitations. Blindly looking at properties before assessing your finances can be a recipe for disaster. Take the time to meet with a qualified mortgage broker to determine how much you can afford to borrow responsibly before you start shopping.

  1. Find the Right Property

Once you have a set budget, you can begin looking for a property. It may be tempting to scour the listings on your own, but working with an experienced local realtor will be a great addition to your team. Working with someone who has first-hand experience in investing will help you find the right property, on budget, in the right area, and provide you a higher return.

  1. Have a Home Inspection Done

Any property you want to purchase should be inspected.  Find a licensed home inspector who will point out any potential problems with the property. This can help you avoid costly repairs down the road. Also, if there are minor updates needed to the home, find a contractor who you can trust can put value back into the property when the time comes to sell or rent it out.

  1. Keep Records of Everything

Keep proper records of income and expenses for your property. Set up a separate, business account so you can easily trace your expenses associated with your real estate investing. This will make tax season and filing a breeze each year.  Along the same lines, if you are buying with a partner ensure you have an agreement in place to protect both of you should things not work out as planned. Have your lawyer draft or review the agreement.

As a bonus tip, it is important to take time to build your “investment team”. Finding people that you can trust and work can make a large impact on your success. To build your network come to our Investors Network Seminar on Tuesday August 15. We are a dedicated group of entrepreneurs who can advise and guide you. You also get monthly training about the real estate market, mortgage changes, and much more!

As always, if you have questions or would like to find the right property, give us a call. Young Real Estate Group is here for you!