Over 400 Applicants Added to Overheated Condo Market
Throughout history Governments have always fumbled the ball when handling housing crises. This one in Vancouver is no different, it’s the same old story- reactive vs proactive.
Remember just a few short months ago when the BC government’s first time buyer loan scheme was announced, I called it a colossal failure. Enticing the wrong type of buyers into an overheated market at exactly the wrong time. Providing further stimulus to push prices higher.
Since the program began January 16, 432 applicants in Metro Vancouver have been approved. The result, more buyers competing for fewer and fewer listings.
Multiple offers are rampant, so far in March, 54% of Vancouver East condos have sold over asking price, 53% in Richmond, and 46% in Vancouver West and Burnaby. Prices are hitting new highs.
For context there were a total of 2106 apartment sales in Metro Vancouver in January and February combined, if those 432 applicants were successful in purchasing that would equate to 20% of the market. Simple math, far from perfect, but you get the idea.
So while CMHC and the Bank of Canada are discouraging over leveraged buyers the government is enticing them.
The program allows first time buyers to put down as little as 2.5%, the BC government will then match the other 2.5% adding up to a whopping 5% down. Of course should any of these buyers get into financial difficulty BC tax payers will likely be on the hook, unless prices rise. For example, if a buyer is struggling with payments two years in, and the market is down 5-10% not only will it wipe out any equity but the time selling costs are added, the BC government registered as a second mortgage, will not be paid out and the losses will be come at the expense of taxpayers.
Anyone still convinced this actually helps first time buyers?
Sellers are making out like bandits. The few who capitalize on this once in a lifetime opportunity anyways.