Vancouver developer offers to sell condos with 0% downpayment

Image from: http://www.townline.ca/
Image from: http://www.townline.ca/

A local developer Townline Homes has made some headlines in the last couple of weeks. This Vancouver development company wants to sell condos in their new development – The Strand, in Port Moody with a 0% downpayment.  This proposal has been already accepted by BC Housing. However, Canadian Mortgage and Housing Corporation (CMHC) has not approved the proposal yet.

How does the program work? 

The price of the condos will be discounted for a minimum of 8% (as recognized by CMHC). This discount will act as a downpayment. The buyer then mortgages the entire remaining amount. This program will require no vendor take back mortgage or a second mortgage. You will have to own the property for a minimum of 2 years before selling to keep 100% of the profits (including the developer discount).

Who can qualify for the program? 

This program was designed for lower income families who can not afford the cash downpayment required for most purchases. In order to qualify for the program you must be making under $65,000 (as a household) for a one bedroom condo, and under $92,000 (as a household) for a one bedroom plus a den condo.  This regulation is put in place to prevent wealthy investors taking advantage of the program.

ST-I
1 bedroom + den + workstation floor plan

Why was this program proposed? 

The program is proposed to help lower income families get into the real estate market. It is a noble cause. Although, the developer might have another reason – PR! It makes them look good and brings a lot of attention to the development. It is worth mentioning that only a small percentage of units in the development are dedicated to the affordability program. The rest of the development is sold as usual.

It’s a win-win situation for the development company. If CMHC approves their proposal, it makes them look awesome. Selling these affordable units will be very easy. If CMHC does not approve their proposal, the developer still comes up on top. Hey, at least they tried to do something.

But lets dismiss this program as a PR stunt; it is a great initiative. It will help some young people get into the real estate market. It is a true win-win situation. The buyers get to buy a brand new condo with 0% downpayment and the developer gets some pretty good exposure.

In my opinion we will see more affordability programs like this one in the upcoming years.

Should you hire an inspector for a walk-through of your new property?

Inspection-Passed

As real estate professional I get asked a lot of questions. “Should I get an inspection done, when I buy a property?” is among the most frequently asked questions. Here is a simple answer – YES! YOU SHOULD GET AN INPECTION DONE WHEN BUYING  REAL ESTATE! But what about brand new properties? Should you still get an inspection for brand new properties? If so, when should you do it?

The answer is YES! Even for the brand new house or a condo you should still hire an inspector. I am not some crazy “inspector employment advocate”. Experienced inspectors will be able to find hidden issues that might need attention, even in the brand new properties. If they don’t find anything, at least you will sleep better at night. That’s a scientific fact.

The question of “IF you should get an inspection?”, becomes “WHEN should you get an inspection?”.  Brand new properties can be either move-in ready, under construction or in the development stages. 

If the house or a condo is under construction or in the development stages the only time you will be able to hire an inspector is for the final deficiency report (also referred to as “walk-through”).

The deficiency report or the final walk-through is 1-3 hours inspection booked off for you and the developer to walk through the property and look for deficiencies. This date is usually set about a month prior to the completion date. All of the deficiencies found should be fixed before the completion date at the expense of the builder/developer. Ask your real estate agent about appropriate subjects to include in your contract. Feel free to contact me as well.

The walk-through is a great time to hire an inspector. He or she will be able to point out hidden deficiencies and save you time and money in the long run. As a curtesy let the developer (or selling agent) know that you will be hiring an inspector for a final walk through.

If the new property is move-in ready, I suggest adding an inspection clause into your offer, if possible. This way you will have 5-10 days to schedule the inspection and make sure that there are no hidden problems with the property before committing to the purchase. Ask your real estate agent about “the inspection subject”.

If the inspection is not possible before subjects’ removal (or you don’t inspection subject in your offer), you can still hire an inspector for the final walk-through. The same rules apply as before.

When buying real estate, it is always better to be safe than sorry. Always hire a professional inspector even when buying brand new construction.

Will the new mortgage regulations effect Vancouver real estate market? [OPINION]

East-Vancouver-Real-Estate1-e1322854903399

Quick recap: New Canadian mortgage regulations will now require a minimum down payment of 10% for properties priced over $500,000 (but under $1,000,000).  The new regulations apply to all Canadian mortgages insured by the government. See full article here: link to the article.

The new down payment rules have gotten a lot of people talking. Many experts believe that these changes will have a significant effect on the real estate markets all around Canada.

I am here to offer my opinion on the subject. Keep in mind, it’s my personal opinion based on my experience and should be viewed as such.  I am an expert Metro Vancouver REALTOR®, and can only comment on the local market.

I don’t think that new mortgage regulations will have any significant effect on the Greater Vancouver real estate market.

It is true that a lot of Vancouver properties are priced over $500,000. It is also true that more properties will be reaching that price mark in the near future. In my estimate 90% of all one bedroom condos in downtown Vancouver will cost over $500,000 within the next 5 years.

So why do I say that this rules change will have no significant effect on the local real estate market? In my experience most people buying properties over $500,000 have at least 20-25% down payments. Let me explain…

  • Usually, the buyers of five hundred thousand dollar properties are upsizing from smaller cheaper condos or townhouses. They have gained some equity in their starter home and are ready to move into something larger and more expensive. More often than not, “upsizers” have enough equity in their home for at least 15-20% down payment for the new house.
  • Most first time home buyers will not qualify for a $475,000 mortgage with a 5% down payment. The first time buyers who buy condos or houses over $500,000 have their families help with a portion or the entire amount of a down payment. Most of the time these down payments are well over 10% mark (closer to 20-25%).
  • International buyers and new-comers to Canada will rarely qualify for a mortgage in Canada. And if they do, it’s usually for a special “new-comers to Canada” program. Most of these programs require a minimum of 35% down payment.
  • Of course there are exceptions. Some people will be effected by the change. Young professionals trying to buy their first house or a condo. Families who want to get their starter home. And migrants from other Canadian provinces starting their lives in Vancouver.

From my experience the percentage of the Vancouver buyers that will be effected by this change is very small. This small percentage will not have a substantial impact on the overall Vancouver real estate market.

In my opinion, there will be no real estate crash and no major changes to the market activity in Vancouver. Business as usual! The best advice I can give to someone who is looking to buy their first home or a condo – start saving your money for a down payment today and buy it as soon as you can. The prices are not likely to go down.

 

DISCLAIMER: I am not a licensed mortgage broker. This article expresses my personal opinion only! Do your own independent research before making any real estate decisions.

New 2016 Canadian Mortgage Regulations [EXPLAINED]

Mortgage-home-loan

There was a lot of fuss about the new mortgage regulations back in December of 2015. A lot of people seemed to worry over the new rules. So what happened and what are the new Canadian mortgage regulations?

On December 11, 2015, the Canadian Department of Finance, the Office of the Superintendent of Financial Institutions (OSFI) and the Canada Mortgage Housing Corporation (CMHC) announced the forthcoming changes to existing federal rules for government-backed mortgage insurance, capital requirements for residential mortgages. In short government agencies decided to change some mortgage rules.

All properties priced over $500,000 (but under $1,000,000) will now require a minimum of 10% down payment. Before this change the minimum down payment was set at 5%. Starting February 2016, when you buy a property for $500,000 you will need to have a down payment of at least $50,000 (10%) instead of $25,000 (5%).

Buyers of properties under $500,000 can still get away with a minimum down payments of only five percent.

The change has occurred to decrease the risk associated with high ratio government insured mortgages. This was a predictable change as federal government has made several changes to the Canadian mortgage regulations since 2008.

News of the new Canadian mortgage regulations has made some people very upset. New rules will force a lot of Canadians save up twice as much money for the down payment.

 

DISCLAIMER: I am not a licensed mortgage broker. This article is for informational purpose only. Consult with your licensed mortgage broker or financial institution before making any decisions.

Should Trump Tower Vancouver change the name? [OPINION]

Image from: www.trumpvancouver.com/
Image from: www.trumpvancouver.com/

You have most likely heard about Donald Trump running for the President of United States of America. Donald is a bit of a character and likes to say/do a lot of controversial “stuff”. His racist and sexist remarks offended thousands if not millions of people. Among the offend people are many Vancouverites.

Trump happen to have his name on one of the tallest (second tallest after Shangri-La) buildings in Vancouver. “Some” Vancouver residents (at least 50,000 singed online petition) including former city planner Brent Toderian and Vancouver Mayor Gregor Robertson are against having Trump name as part of the Vancouver skyline.

Vancouver Mayor even wrote a letter to Holborn Group (more about them later) expressing his opinion and asking them to change the name of the building.

“As mayor, I’m proud that Vancouver is known throughout the world for our steadfast commitment to diversity, equality and freedom from discrimination and hatred,” he wrote.

“In contrast, Donald Trump’s hateful positions and commentary remind us all of much darker times in our world’s past — and it is incumbent on all of us to forcefully challenge hatred in all of the ways it confronts us.”

So should the name of the tower be changed? In ideal world the answer is – YES! Of course, it should be changed. Unfortunately, we don’t live in an ideal world. Changing the name of this tower is not that simple.

Holborn Group is the owner and the developer for The Trump tower. They have licensed “Trump” name from Donal Trump. Plus Trump Organization was chosen to operate the hotel inside of the tower. Holborn Group and Trump Organization have strong contractual ties. Not to mention the fact that a majority of 217 condos have already been sold. I would imagine that some of these buyers purchased their condos based on what Trump’s name represents in the world of real estate luxury. Not based on his personal political views.

Here is what Joo Kim Tiah, CEO of Holborn Group had to say on the matter.

“While Holborn Group owns Trump Vancouver, we have contractual obligations to the Trump Organization, banks, purchasers, consultants, trades and business partners. These legally-binding contracts cannot be altered,”

In my opinion, the name of the tower should definitely change. It will probably change in the years to come. One thing is certain – there are a lot of angry buyers who want their money back.

Property Assessments grew by 16% in 2016

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Within the next few days owners of more than 500,000 residences in Greater Vancouver will be receiving their 2016 Annual BC Property Assessments in the mail. These assessments will reflect property values as July 1, 2015.

What are property assessments and why are they important? Well, property assessments is an estimated value of your house or a condo by a government agency – BC Assessments. Based on this calculated value the annual property taxes are paid. The higher the BC Assessments value is, the higher annual property taxes are.

There is another important function BC Assessments serve – determining property’s value. Often times when the listing agent tries to determine a listing price of a property he or she will take BC Assessments value into the consideration (not always as each agent has a different way of determining a listing price).  Other times potential buyers will look to BC Assessments or Tax value and try to determine a fair price for a property (that seems not to apply to a current real estate market).

What can owners expect to see this year in their property BC Assessments? Based on the released BC Assessment for this year an increase of 15-20 percent will be typical for a single-family homes in Vancouver, North Vancouver, West Vancouver, Burnaby, Tri-Cities, New Westminster and Squamish (See chart below of a complete breakdown). Don’t be surprised if your home BC Assessments value comes with an increase of 25%.

Overall, Greater Vancouver’s region total assessments increased from $546.7 billion in 2015 to $636.2 billion in 2016. A total increase of about 16% in one year. Almost $8.3 billion of that increase is due to new construction, subdivision and reasoning of properties. Take a drive down Cambie Street and you can witness rezoning of properties working at its finest.

All of this is good news for homeowners who are planning to sell their properties in a near future. However, many homeowners who were not planning to sell this year might be forced to do so because of the high property taxes. At least their properties have gone up in value.

If you are a property owner and need more information or have additional questions you can visit www.bcassessment.ca website for all of that.

Here is an example table showing some of the increases for single-family homes and residential strata units for sample Greater Vancouver communities.

BC Assessments Data for 2016
Image: BC Assessment

What do you think about the increase of BC Assessments? Leave your comments below.