Thanks for everyone support there was a massive increase in views on my last article of the BC Home Partnership program. I even see people shared my linked on Revscene.net and quoted and discussed my post which is kinda shocking to me as I thought they are only about cars (apparently they have a “Vancouver’s Real Estate Market” forum).
This is a follow-up blog on my earlier post this week (you can view it here):
Anyways, just to illustrate how fast government can move the goal posts to mortgage lending, the day after people can apply the BC Home Partnership program in which CMHC insurance is a requirement, CMHC announced they are increasing premium by up to 92%!!! Look for a rush of buyers trying to close just before Mar 2017.
I have pasted the table here and the link from CMHC for your easy reference. I am sure government will hide this under the radar until last minute then media and your mortgage experts will come out in full force discussing this.
So the rules of the game are out, how should we play this as a savvy condo investor or for homeowners who wants to maximize the capital appreciation on their condo purchase in the next few years?
First of all, by reading my blog you are already getting the latest news before others, you are already ahead of the game.
All else equal, this BC HOME Partnership program will drive up demand for housing for sure. Despite the fact that Colin showed you in my previous blog how paying for CMHC insurance is not a good deal, most people will not see my blog and already submitted their applications. Also note this program will end Mar 31, 2020. From now until Mar 2020 there will be more people trying to save up and leverage their way to their first home ownership. The majority of these people will be targeting at the more affordable range of the condo market as they are likely tight on downpayment savings and do not have sufficient income to qualify for a large mortgage. When they are condo hunting they will focus on one bedroom between $300k-$400k, or two bedrooms up to $500k. This program will put upward pressure on prices for these units and they likely will experience above average price appreciation in the next 3 years until 2020.
Also if you are buying presale looking to resale at completion, make sure the completion date is before Mar 2020 as there will be a rush of buyers trying to beat the Mar 2020 deadline while driving up prices. Typical highrise condo takes 2.5-3 years to complete so your window of opportunity to buy pre-construction pre sale is for the next 6 months only. Typical lowrise condo could take 1.5-2 years to complete so your window of opportunity is longer however lowrise appreciation is always lower than that of highrise, all else equal, so please keep this in mind.
So Colin what if I don’t plan to flip, I want to buy and hold (rent out)?
All else equal, once the program ended in Mar 2020 and with the higher CMHC insurance premium still in affect, there will be more renters that will stay put as renters. Look for a strong rental market after Mar 2020 with upward pressure on rents. In this case, you do not have to worry so much about pre sale condo completing before Mar 2020. However if you are planning to rent your condo long term, make sure you choose a condo that will maximize cashflow. I’ll write a blog in the future on how to choose a condo specifically for rental purposes (ie ideal size, number of bedrooms, level in the building, amenities etc).
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**Disclaimer: Any comments on this site are my personal opinion only. Always consult professional when making buying decision. Writer is not responsible for any errors or omissions, nor responsible for any financial losses that anyone might experienced as a result, deemed directly or indirectly, from any recommendations in any articles in this blog.**