Can I afford to buy?

Many potential home buyers would like to start building equity in their own home, but are held back by concerns about cost. In fact, the Canada Mortgage & Housing Corporation estimates that 40 per cent of renters in Canada today can afford to buy their own home. If affordable housing options are available to so many renters, what's holding them back?

Sometimes the media reports of housing prices can give a misleading impression about the cost of home-ownership. The media typically report median or average prices without explaining the distribution of home prices behind those figures.

Median Price

A median is that price at which half the homes sold for more while half sold for less. That means that there are just as many homes that sold at a price lower than the median than those that sold at prices higher than the median price.

The median price doesn't give any indication of the spread of these prices. Many properties are sold at much lower and higher prices, of course than the median price.

Average Price

An average price is the total dollar volume of homes sold for a particular period, divided by the number of units sold.

Average prices are typically reported for the sales activity in a given area for a given month, quarter or year, and provide a snapshot of past activity. Average prices of properties sold in the past give only a limited indication of what housing inventory for sale is priced at today. An understanding of the housing in a particular community is needed to put average prices into perspective. For example, sales of a new sub-division or townhouse project of larger, upscale homes at higher prices will bring the overall average price up, giving the impression that all housing prices have risen, when in reality, prices for the older, smaller housing units in the community may not have changed, or they may have even have dropped.

Affordability & Selection

Attractive mortgage rates combined with affordability and selection have made B.C. increasingly popular for buyers. (For price and sales information Statistics area on this site.) A REALTOR® with experience in the community in which you're interested in buying can provide a knowledgeable market analysis and show you what is available within your budget.

For further information, contact a local REALTOR®. You may well find that you can afford that dream of home ownership after all. Contact us

Incentive Programs for Buyers

CMHC Home Loan Insurance (5% down program). Under this program CMHC insures mortgages where buyers have only a 5% downpayment. Buyers must meet standards for a five-year fixed-rate mortgage even when choosing lower interest or short-term mortgages.

RRSP Home Buyers' Plan for First-time Buyers. Participants are eligible to withdraw up to $25,000 tax-free from their RRSP for a down payment. Couples can withdraw up to $50,000.

• Participants must be first-time buyers, not have owned a home that has been used as a principal residence within the last five years and must intend to occupy the home as a principal residence.
  The minimum repayment schedule is 15 equal installments. The funds to be withdrawn must have been invested into the RRSP for a minimum of 90 days prior to withdrawal.

Property Transfer Tax Exemption for First-time Buyers. First-time buyers are exempt from the Property Transfer Tax (PTT). The PTT is charged at a rate of 1% on the first $200,000 and 2% of the remainder of the purchase price.

• To qualify for an exemption, a buyer must not have owned an interest in a principal residence anywhere.
• The purchaser must be Canadian citizen or permanent resident and have resided in B.C. for a minimum of 12 months prior to the purchase or transfer.
• To qualify for the full exemption,. The purchase price can’t exceed $425,000. There is a partial exemption for properties priced up to $450,000.
• Mortgage financing must be 70% or greater of the purchase price and there are limits to the amount that the mortgage can be paid down in the first year.
• The property must be an owner-occupied principal residence

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For more information on this article or how we can help you with your real estate needs, contact your Royal Pacific REALTOR® at 604-266-8989 or use our online form for 24/7 service Contact us