“I might never try and buy a home ever again. It’s just not worth it.”
That’s what one Burnaby real estate buyer says after a wild few months trying to buy a condo.
The buyer contacted me after reading about the experience of Sonia, who got “laughed” at for wanting a home inspection done.
This buyer said he had a similar experience as Burnaby’s real estate market heated up in the spring with some earth-shattering sales numbers.
“We kept getting told there were dozens of competing offers every time we wanted to make a bid,” the buyer said. “We were getting pressured to keep upping our bids way, way over-asking price. That was hard to hear. It was almost like the prices were being set artificially low to whip people into a frenzy. The deals sometimes seemed too good to be true and then they were.”
But it was one condo seller in the Edmonds area that really “pissed off” this buyer.
“It was like they were taking crazy pills,” he said. “We’d make an offer and they kept saying it wasn’t even close to be acceptable. They just felt like they could ask for anything and so we walked away.”
What makes this ever-increasing offers so hard to swallow is the fact that it takes such a huge down payment to get your foot in the door.
British Columbia homebuyers put down an average of nearly $160,000 to purchase a home during the first quarter of 2021, by far the highest level in the country.
B.C. buyers anted an average down payment of 22.45 per cent of the purchase price, or $159,762, to purchase a home. This is $101,191 more than the average in Quebec, where buyers paid the lowest down payments in Canada, according to a study released June 29 by LowesRates.ca.
The average composite home prices in B.C. and Quebec are $916,741 and $449,698, respectively, according to the Canadian Real Estate Association.
In Alberta, where the average home price is $442,808, the typical homebuyer puts down less than $63,000, the study found.
In Ontario, the average homebuyer this year is putting down $140,215, or 20.3 per cent of the purchase price, the report stated. The average composite home price on Ontario in the first quarter was $866,307.
The average down payments in Ontario and B.C. remained around 20 per cent because the average home price in those provinces is close to $1 million. A home worth $1 million or more is not eligible for Canada Mortgage and Housing Corp. (CMHC) mortgage insurance, so the down payment must be at least one-fifth of the purchase price.
Tighter lending rules, such as the revamped mortgage stress test, aren’t slowing the Canadian real estate market which is expecting a record-breaking 2021, the report noted.
According to the most recent forecast from CMHC, the number of homes sold this year could reach 602,300, up from around 550,000 in 2020.
"This could drive the average home price in Canada up about 14 per cent this year," according to LowestRates.ca
New mortgage borrowing across Canada increased 41 per cent in the first quarter compared to a year earlier, and the average amount for which borrowers were approved on new mortgages grew by 20.5 per cent to $326,930, according to newly-released data from Equifax.
“Despite a decline in Canadians’ credit card balances (their lowest point in six years), the number and amount of mortgages taken out by Canadians in 2021 has sent the country's consumer debt soaring to about $2.1 trillion,” the report noted.
LowestRates.ca CEO and co-founder, Justin Thouin, forecast that historically low lending rates will remain in effect this year. However, Thouin predicts that borrowing costs will rise in the second half of 2022 as the economy recovers.
- With additional reporting by the Western Investor
Follow Chris Campbell on Twitter @shinebox44.