First-Time Home Buyer Incentive doing little to help buyers break into Vancouver market

VANCOUVER (NEWS 1130) – Here’s some good news for anyone trying to break into Metro Vancouver’s real estate market – prices continue to drop with even condominiums now seeing a decline for the first time since late 2014. But even so, it seems a government program meant to give first-time home buyers a break isn’t doing much of anything to help them get a foothold.

The problem is – according Penelope Graham, managing editor at Zoocasa – the restrictions the government program places on mortgage and purchase prices are just too low in a market like Metro Vancouver.

“They’re not really making a dent in the market, and they’re not really giving the home buyers the leverage they need to really break into the market,” she says.

To be eligible for the Canada Mortgage and Housing Corporation’s First-Time Home Buyer Incentive, an eligible buyer can not have a combined household income that exceeds $120,000 and the mortgage they take out can not exceed four times their income.

“So if you were purchasing a home with a minimum five per cent down payment and you have the maximum allowed income, the calculations show that the maximum home price you’re looking at is about $505,000,” Graham tells NEWS 1130. “It can go upward of about $560,000 if you are making a larger down payment, but in a market like Vancouver, where the benchmark home price in June was over $900,000, it’s not really going to put a dent in the affordability issue for many first-time home buyers.”

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However there are still some options for buyers who wish to use the incentive.

“Out of the 16 markets we looked at, seven still had housing stock with benchmark prices that could be considered eligible for the incentive,” she says.

“The first one was Maple Ridge with a benchmark condo unit around $355,000, followed by North Delta at about $377,000. In Surrey you are looking at about $416,000 and then Langley, Port Coquitlam, Pitt Meadows, White Rock and South Surrey are all in the range of about $450,000 to $500,000 for a benchmark condo unit.

“You’re looking at smaller home types,” Graham adds. “It really does mean they have to hone their expectations if they want to work within the confines of the incentive.”

Regardless, companies like Royal LePage say now is a good time for first time home buyers with prices dropping across the region. Its latest report shows a 4.1 per cent drop in the aggregate home price over the previous three months compared to the second quarter of 2018, with plenty of homes on the market.

“When broken down by housing type, the median price of a two-storey home and bungalow declined by 3.3 per cent and 7.6 per cent respectively, to $1,509,711 and $1,315,612. The median price of a condominium decreased 2.8 per cent year-over-year to $668,389,” the real estate service states, pointing out condo prices declined for the first time since the third quarter of 2014.

“A wider variety of available homes to choose from is giving home buyers extra time to plan and make decisions,” says Randy Ryalls, general manager of Royal LePage Sterling Realty. “A better understanding of the reality of the real estate market in the region is helping both home buyers and sellers to manage expectations and make better-informed transactions.”

With files from Ash Kelly and Kurtis Doering.