- Thrive Mortgage Co.
WE ARE BACK! Introducing the YVR REMO Show
Updated: May 4, 2020
Episode 1 - Biggest Stories of 2019 & Opportunities for 2020.
The YVR REMO show talks all things Vancouver real estate & mortgages. We take boring topics and make them interesting. With new episodes premiering every week, we tell you everything you need to know to put cash back in your pocket, create wealth in real estate, and simplify the complicated.
In episode one we touch on three of the biggest stories of 2019 in the real estate market. These include:
1. The Housing Market in the Greater Vancouver area and Fraser Valley. We're going to talk about what happened, the dip, and the stats.
2. Interest rates. Not the most interesting topic but what we do explain will get you excited.
3. Government Intervention and First Time Buyer's Programs
We round off the podcast by talking about some tips and strategies going into 2020. We will outline where we see opportunities for our buyers out there to save a lot of cash or how to get in the market.
The Housing Market
Going into 2019 there was a lot of negativity surrounding the housing market. Stats proved that the market, home sales, and home values came down. One stat shows that detached homes in the Fraser Valley came down on an average about $100,000. That is roughly 10% of the property value!
The media grabs ahold of that information and then puts focus on different locations such as West Vancouver with massive drops. People watch this negativity and stop buying.
The good news is that things have started to pick up!
In addition to negative media, there were also real estate regulations put in place in 2018-2019. These include foreign buyer restriction vacancy taxes.
A lot of people that bought in 2016, 2017, or 2018 might have paid a premium. When these people see the negative media they may become hesitant to sell, and when seeking professional advice are advised to hold onto their property.
When we talk to our clients about buying a property or investing, we always ask how long do you plan to keep it? We usually talk about a five to seven year cycle.
The biggest dip was in July. That's when the BC assessment values are actually taken. Jumping into some some of the positives, that's when we saw the market start to come back in a big way. The last six months of the year were easier than then and than we've seen in a long time. That's what evened year out to be very similar to what it was in 2018. BC Assessments are based on a computer algorithm, so your property value has likely changed substantially.
A lot of our clients in the summer were looking at buying an investment property or refinancing at some capacity and those appraisals were coming in low. Anybody who was looking to do that refinance or access that equity mid-last year should talk to us again. Values are strong like the last quarter of 2019 was very strong. There's been a lot of people looking to get into the market for the last four or five years and the market has been insane. Because of this a lot of people that have held off waiting to see what happened and when the market slowed down a little bit, that triggered people. They figured they could actually get a property without having multiple offers and having to go subject free. They might be able to get a bit of a deal. It brought a lot of the buyers that were on hold. We had a ton of pre-approvals that were sitting on the fence for two years and they finally got into the market. Everyone's talking about but inventory is very low at the end of the year, which again essentially creates a real estate uptick right because you have a lot of buyers looking get into the market with not a lot of inventory on the sales side which is going to push values up.
This is the most common topic for questions we get asked. Lenders are getting more creative because they want more business. Between January of 2019 to December 2019 we had a 1% swing. That is a pretty big amount in such a short time. This is a big reason we saw house prices come back. To give an example, if you drop the rate down from 3.9% to 2.9% for every $100,000 you borrow you save about $55 a month! On a $500,000 mortgage that's roughly $275 in savings per month! This all plays in when it comes to what the principal pay down is. There's a lot more going towards the principal.
The lowest rate of 2019 ended up being around 2.5% which occurred near the middle of the year. The year started off at 4%! The average right now is hovering around 3.1%
Government Intervention and First Time Buyer's Programs
As soon as people realized the government wasn't going to step in and help, the flood gates opened. We are starting to see multiple offers again. If you look at 2018 being a fairly strong market and if you compare the actual home sales in 2019, there was only a hundred less home sales in 2019 compared to 2018. We didn't see a lot of people take advantage of the first time buyer's program throughout 2019. This could be for many reasons but we felt like it was because of the state of the market as well as a lack of knowledge. Essentially, it's a government funded downpayment assistance program. it doesn't give you your downpayment. What it does do, is it adds to your downpayment to lower your cash flow. There's no interest and payments but they're taking a portion of equity of your home when you sell. That is how they make their money back with this program. This can be huge depending on how long you hang onto the property and what the market does. We found very little benefit in the program itself and don't feel like it was structured the way it should have been.
Tips and strategies
If you're and employee working for a company and had a great year in 2019 but don't have your t4 yet, we do have certain lenders that will look at your year to date paystub. What we would need is last pay stub of 31st, December 2019. That will show the amount that you earned in 2019. We can actually use that income to help you qualify before the t4 is issued.
If you had a bad year in 2018 or 2019, keep in mind that we can use your last two years before's income. We can look at your 2017 and 2018 in addition to that if you don't know your taxes yet so we don't have to show your taxes paid off. As soon as you file your taxes, that tax bill shows up if you cannot buy or refinance with an A lender with a CRA bill outstanding.
If you have any other questions or concerns, feel free to contact us!