Where Have All the (First Time Home) Buyers Gone? by Geraldine Santiago

By
Real Estate Agent with RE/MAX Crest Realty (Westside)

 

Where have all the first time home buyers gone?  According to a study by Ipsos Reid in Vancouver, first time home buyers are being pushed out of the housing market and statistics tell us that the numbers are dwindling. 

 

The price of housing in Vancouver has grown in leaps and bounds in recent years and far surpasses the average income.  First time home buyers, who are fresh out of University or college, have just entered the job market (and who may have student loans owing) have a difficult enough time saving for a down payment for the purchase of their first home.

 

Though first time home buyers are encouraged to use their registered retirement savings plan, RRSP for the down payment of their first home under the HBP or Home Buyer’s Plan, there are pitfalls to this.  For one, the maximum allowable withdrawal under the HBP is only $25,000 and in addition, this has to be repaid over 15 years.  

 

A single income buyer who, five years ago, could afford a one-bedroom in the Westside of Vancouver, is not able to do so anymore.  Instead, I am seeing first-hand that couples with dual incomes have to share the burden of making do with a modest one-bedroom apartment.

 

 

The solution is not as simple as one thinks because building more homes for the consumer has a huge price tag with land prices, labour and materials increasing year after year.  In addition, with HST looming, it will even be more unattractive for the first time home buyer to purchase with the cost of buying and borrowing adding to the expense. Vancouver itself has its own limitations being a port city.  In addition, mountains to the north are not yet developed for housing opportunities.  Lastly, there exist crown lands, endowment lands, and agricultural lands for the use of crops and agriculture which cannot be used for housing.

 

There should be greater incentives being given to the first time home buyer, such as not having to pay back the RRSP and having a higher limit in keeping with present market conditions.   

 

If no incentives are to be made to encourage the first time home buyer, there will not be a need in the future for new developments or housing.  The first time home buyer will not decrease but will be extinct with multi-generations living under one roof as first time home buyers will not be able to afford to purchase on their own.

 

Many first time home buyers would like to take advantage of low interest rates.  However, mortgage rates are only one factor in the decision to purchase a first home.  Buyers who were reluctant to buy a few years ago believed that the market would level off or cool down. When it would do so, these buyers hoped they could be able to buy under those market conditions.However, the housing market only cooled off for a brief period, and the advent of the Olympics in Vancouver in 2010 only made it worse with both global and local investors speculating and entering the housing market in Vancouver.  

 

 

Though I have seen some first time home buyers and young couples purchase homes, they were able to do so with their parent’s gift monies.  However, for those who cannot seek the help of their parent’s financial aid, what is to be done? What is the solution?

 

Fast forward to 2025 when my children are at the age of home buying.  Will my children have to rent for the rest of their lives?  Home ownership has huge rewards such as forced savings from its equity, a roof over one’s head and stability. 

 

 

Is this a local problem or an global one?  Real Estate property prices are similar in Europe, and in particular Spain and the UK where price houses have soared in the past few years making it also equally unaffordable for locals. To the South of us,  in the United States, mortgage rates are also at a historic low, AND market prices have dropped, but still there are no buyers there either.  

 

What are your thoughts?   I'd love to hear from you!

 

 



 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Location:
British Columbia Greater Vancouver
Tags:
where have all the first time home buyers gone by geraldine santiago

Post a Comment
Spam prevention
Spam prevention
Post a Comment
Spam prevention
Rainer
34,901

Geraldine Santiago

Geraldine Santiago
Ask me a question
*
*
*
Spam prevention