10 Steps to Buying a House in BC

You have found your dream home and are wanting to put in an offer. Watch this video from 2016 and review the updated list of 10 due diligence steps you should take to ensure you can move forward with confidence in 2021.

1. Find Out How Much you Can Afford

A mortgage broker or a mortgage specialist at your bank can take you through the steps to get pre-approved for a mortgage. A good mortgage pre-approval accurately measures your financial qualifications and how much house you can afford. Furthermore, the financial institution will provide a 90 or 120-day guarantee of its mortgage rate in case those rates jump while you are shopping. For more information on mortgage pre-approvals, visit the Government of Canada website.

It is important to note that a pre-approval isn’t a firm approval. When you’re ready to make a purchase, the lender will likely want to appraise the property to ensure that you’re paying market value and the property has an adequate lifespan. If the purchase price is well above market value or the home is deemed to have a short life expectancy, you may require a higher down payment. In some cases, the bank may not give you a mortgage at all.

When setting your budget, do not forget to factor in costs like closing fees and maintenance or repairs. Another cost to consider is condo strata fees.

2. Go to City Hall

Another due diligence step is to request any information City Hall may have on record about the property such as its zoning, lot dimensions, permits that have been issued or any future plans for the surrounding area. Checking the zoning is especially important if you’re planning to operate a business out of your residence, renovate or redevelop, or rent a suite in the home. Review all extensive renovations for proper permits.

3. Request a Property Disclosure Statement

While property disclosure statements are not required under BC law, realtors will often ask for one from the property’s current owner so they can give buyers as much detailed information about a property as possible. The property disclosure statement is a three-page document that itemizes potential problems like renovations done without a permit, unauthorized rental suites, asbestos insulation, unregistered easements or whether the seller is aware of any issues like the presence of an underground oil tank, moisture problems, if the property was ever used as a grow op, or if it has ever been designated as a heritage site. The statement can be legally incorporated into the contract for purchase and sale.

4. Do a Title Search on the Property

A title search will confirm whether the person selling you their property is actually the rightful owner. It will also determine whether there are any easements, right-of-ways, or covenants against the property that could affect its future development. It will show if there are liens or outstanding mortgages on the property. Click here for more information.

5. Ask for a Site Survey

A site survey will tell you what you are buying. It shows the property lines, how the property is aligned with neighbouring properties, and features like roads or sidewalks. It will also show where the house is positioned on the property. A lender will often require a survey certificate as part of their mortgage requirements. In some cases, the lender will request a title insurance policy instead of a survey certificate, and sometimes they will ask for both. Title insurance protects the lender against potential issues with a property such as encroachment or past fraud.
For more information about site surveys, visit the BC Land Title & Survey website.

6. Find out the Home’s Utility Expenses

Another due diligence step is finding out the home’s utility expenses. Utilities include gas, electrical, annual solid waste, water and sewer levies, and property taxes. Your realtor can request utility bills from the property’s current owner. Water/sewage rates as well as the taxes for a particular property can usually be found on a municipality’s website.

7. Hire a Home Inspector

A qualified home inspector will walk through and around the property to assess any major defects, safety concerns, or potential threats to the integrity of the home. Keep in mind that there are limitations to these inspections as they cannot see behind walls.

In a hot market it can be difficult, even impossible, to purchase a home with a “subject to inspection” clause. When this is the case, hire an inspector before presenting an offer. When you’re considering the qualifications of a home inspector, assess their knowledge, experience, training, certification, licensing and their level of participation in the industry. For more information, listen to our podcast episode on the benefits of working with an experienced home inspector.

8. Consult a Home Insurance Provider and Purchase a Home Warranty

Most lenders are going to require you to have insurance in place in order to get a mortgage. Home insurance helps pay for structural damage and loss of personal property from emergencies like theft or fire. If you’re buying an older home that has a wood-burning fireplace or knob-and-tube wiring, you may encounter some issues getting insurance or have to pay higher premiums. Insurance companies can deny coverage if the property has been poorly maintained or vacant for an extended period of time. Renovations could also affect your ability to get an insurance policy. Remember that events like sewer backups and earthquakes are not typically included in basic policies.

A home warranty covers the repairs and replacements of your home’s major systems and appliances when they fail from old age. Carry out thorough research to compare different companies to find the best plan that meets your family’s future needs.

9. Check for a Buried Oil Tank

If you are purchasing an older home, your due diligence should include confirming there is no oil tank buried on the property. Many homes used an oil-burning furnace that was fueled from a tank buried somewhere on the property before the widespread adoption of natural gas or hydro for heating.

Some municipalities keep records of properties known to have oil tanks, or those that have had old tanks decommissioned. This is a great place to start.
New Westminster: call the fire prevention office to see if they have anything on file for your property
Burnaby: send an email to fire@burnaby.ca
Vancouver: call the city’s information line at 3-1-1 to check if there are any records for oil tank removals or abandonments
Coquitlam: call Coquitlam Fire & Rescue at 604-927-6400 to have them check their records

If those searches come up empty, you’ll have to check with the current owner to see if they have had the property scanned for an oil tank, or else hire a company that can do the scan. A basic scan will cost you between $80 – $150. It includes a technician scanning the property with a metal detector and probing device. For a more accurate and detailed scan, consider a company that uses Ground Penetrating Radar (GPR). Low clearance decks and metal debris may affect the ability to get a conclusive scan.

The decommissioning and removal of old oil tanks is labourious and expensive, especially if it’s leaking oil into the soil. Be aware that if a tank is discovered after you’ve acquired the property, you will be responsible for its removal as well as any remediation for the surrounding soil. Visit the British Columbia website for more information about residential heating oil storage tanks.

10. Confirm all the Items Included in the Sale

Unless specifically written into the contract, appliances like the stove, refrigerator, dishwasher or microwave may not included in the purchase. Garage remotes, window coverings, curtains, keys, sheds, appliances and corresponding warranty manuals, potted plants, shelving units that aren’t attached to walls are all items that should be specifically written into a contract. The inclusion of fixtures like TV mounts, blinds, security systems, hood fans and central vacuum systems should also be clarified.

It is also a great idea to research the neighbourhood and find out more information about where you will be living. Mapping out your daily commute to work, finding the best shopping centers and stores, and getting a better feel for your neighbours is a great start.

Once your due diligence checks out and you are confident in your purchase decision, you can remove subjects, submit your deposit, and wait for the day when you get the keys to your new home!

How realtors price a home

How realtors price a home to sell is influenced by a number a factors.
The sale price for a homes doesn’t just come from thin air. It’s based upon a number of pieces of information and analyses that can be assessed and applied to your home by your realtor. These include:

1. Reviewing the market

Realtors know the local property market; it’s what we do after all.
When realtors price a home to sell, they will look at recent sales and listings histories of similar homes in your area. This is called a comparative market analysis.

James Garbutt New Westminster realtor discusses how realtors price a home to sell.
Recent sale prices in your neighbourhood will effect how realtors price a home to sell.

 
It’s usually comprised of three elements:
• Houses currently for sale – this shows what other sellers in your area are hoping to get for their home.
• Houses that failed to sell – this helps set a ceiling.
• Houses that sold – this shows what buyers are willing to pay to live in your area, and what they’re getting for their money.
If there haven’t been a lot of sales in the neighbourhood to help come up with a value for your home, a realtor may calculate its “replacement value.”
The replacement value is an estimate of what it would currently cost to rebuild your home, including features and any additions.
You likely went through the exercise of getting your home’s replacement value appraised when you purchased home insurance. And you should be updating that information as you get your insurance renewed or after completing major renovations or an addition.

2. Inspecting your home

First impressions count for a lot in how realtors price a home. How well your home has been maintained, renovations, upgrades, additions, even the quality of appliances and fixtures will go a long way in determining what buyers will pay.

Curb appeal is an important important part of the process of how Realtors price a home.
First impressions count a lot toward how Realtors price a home. That’s called its curb appeal.

A realtor will inspect the interior and exterior of your home. They’ll note features that could help its sale price, even issues that could hurt it. They might even offer suggestions for renovations to your home that could significantly improve its marketability.

3. Economic factors that affect how realtors price a home

When times are good, people are working and feeling confident about the future, they’re more inclined to make the financial commitment to become a home owner. If there’s more demand for homes than there is supply, prices go up.
A realtor has their fingers on the pulse of current economic factors that could impact how much you decide to sell your home for.

4. Your property assessment notice

Property assessments are used by municipal governments in helping them determine property taxes. But they’re not a particularly accurate measure of a home’s current market value.
Still, some homeowners look forward to January when they receive their notice in the mailbox from BC Assessment. This notice is their estimate of what your property was worth the previous July 1. BC Assessment is a crown corporation that reviews close to 2 million properties in the province every year.
To come up with an appraised value for a property, appraisers analyze all real estate transactions in the neighbourhood before or after the July 1 assessment date. They’ll also inspect new construction, verify the physical condition of properties as well as the property’s current ownership through the Land Title and Survey Authority.
When appraisers evaluate a property, they’ll consider its unique characteristics, location, size, age, quality, condition, as well as any additions like garages or sundecks.
All of the information is input into a database that can be updated by occasional visits. The database is used by BC’s municipalities as part of their formula for setting property taxes.
But that assessment is pinned to one date and it often doesn’t take into account renovations that may have been done inside or elsewhere on the property, or changes in the market after the assessment date.
Ultimately the decision on how much to sell your home for is up to the seller. But an informed decision is more likely to get you the result you desire.

Cooling housing market continues

If a cooling housing market was the intent of the provincial and federal governments’ recent policy changes, they succeeded.
Those changes have made it even more difficult for a real estate market that was already cooling late last spring to recover from its usual summer slowdown.
Property sales in Greater Vancouver in October fell 38.8 per cent from a year ago. The 2,233 total sales was also 15 per cent less than the 10-year average for sales in October.
Buyers and sellers are pulling back to see how the foreign buyers tax, introduced by the BC government in August, and new mortgage rules implemented by the federal government earlier this month, will affect them, said Dan Morrison, the president of the Real Estate Board of Greater Vancouver. “Changing market conditions compounded by a series of government interventions this year have put home buyers and sellers in a holding pattern.”
In fact, new listings were down 17 per cent from September, and 9.5 per cent less than the 10-year average for the month.
The slower sales and listings are reflected in a slight moderation in prices. Although overall, it’s still a pretty healthy market, as the ratio of sales to active listings is at 24.4 per cent, well above the 12 per cent ratio most analysts agree tends to signal a downward pressure on prices.
The benchmark price for a typical residential property in Greater Vancouver, including detached homes, condos and townhouses, is $919,300. That’s .8 per cent less than September, but still 24.8 per cent more than a year ago.

Cooling housing market in New West

In New Westminster, the benchmark price of of $526,700 is down 2.5 per cent from September, but up 23.1 per cent from October, 2015.
As in most communities, single-family detached homes in New West took the biggest short-term hit. Their benchmark price of $1,046,000 is down 3.7 per cent from September. But that’s still 24.5 per cent more than it was a year ago.
Townhouses slipped 3.5 per cent to a benchmark price of $517,200 that’s 17.5 per cent higher than last year.
Condos in New West fell only 1.9 per cent since September. Their benchmark price of $376,800 is 23 per cent higher than October, 2015.

Not all of Burnaby a cooling housing market

cooling housing market doesn't affect townhouses in East burnaby
Townhouses in East Burnaby bucked the cooling housing market and actually went up in price

 
While areas of Burnaby showed similar declines, there were some positive glimmers.
The benchmark price for a townhouse in East Burnaby actually went up 2.6 per cent over September to $530,300; thta’s 20.5 per cent higher than a year ago. And condos in North Burnaby increased .4 per cent to a benchmark price of $467,600, 26,2 per cent more than last year.
The stats

Best time of year to buy a home

The best time of year to buy a home is often determined by your particular circumstances; sometimes you just don’t have a choice.

Best time of year to buy a home, when you’ve got time

If you’ve got the luxury of time on your side, the best time of year to buy a home can depend whether you’re more concerned about getting a deal or finding the exact home you want in your desired location.

Winter isn't always the best time of year to buy a home, because there's usually not much available.
The winter can be a slow time for home sales. There’s usually not much available, but sellers could be motivated.

 
Last week’s blog looked at the best time of year for sellers to put their home on the market; spring is the busiest time for listings because homes show well when the weather is good, sellers have had the winter to prepare and buyers are out and about visiting open houses. Inventory is high.
But so is competition. And, typically, prices.
If you’re looking for the perfect home that ticks all your boxes, the odds are in your favour in the spring because there’s more selection. But those sellers are also looking for a new home, along with all the first-time buyers flush with optimism, saved-up downpayments and mortgage pre-approvals.
If you’re buying a new home in the spring, you’re more likely to find yourself in a multiple offer bidding war. That could end up blowing your budget to pieces.

Best time of year to buy a home, when you’re on a budget

When price is your primary concern, the best time of year to buy a home is when the market is a little slower, like the summer or winter.
With fewer buyers out and about, you may be able to get a good deal, possibly even a discount. Especially if a seller has kept their home on the market through the fall and into the winter months, rather than relisting it the next spring when the market is more buoyant; they’re likely highly motivated to sell so they could be willing to move on price.
But fewer listings means you may have to be prepared to compromise some of your wish list for your new home.

The best time of year to buy a home may be the fall

The best balance of available listings and price typically occurs in the fall. Inventory is usually still good so you could find a home that suits your needs. And you may be able to get a good deal if sellers are keen to close before the market has its usual winter slowdown in December.
 

Anytime is the best time of year to buy a home if you're shopping for a condo or townhouse
Condo and townhouses tend to sell steadily throughout the year.

 
If you’re in the market for a condo or townhouse, you don’t have to mind the calendar as much. Condos tend to be less prone to wide swings in price and availability because their appeal is based more on location, amenities and lifestyle.

Other factors that influence the best time of year to buy a home

Of course there are other factors that come into play to determine the best time of year to buy a home.
If there’s an indication interest rates could be moving up, that could spark a frenzy of buyers (a.k.a. competitors) eager to jump into the market while it’s still affordable. Conversely, if interest rates are on their way down, some buyers may hold off entering the market just to see how low the rates they may go.
The same can happen if a major new employer is bringing more jobs to town, or taking jobs out of the community.
As we’ve seen recently, external factors like government policy can also tip the real estate market in favour of buyers or sellers.
Whatever kind of home you’re shopping for, and whatever time of year you’re prepared to buy, you should begin your research months ahead of time. Work with a realtor so you have a feel for the market. Stay on top of the news to gauge the economy and other external factors that could affect the market. You want to ensure you’re prepared to make an offer when the property you desire comes along at the right price.

Best time of year to sell a home

The best time of year to sell a home is when you’re ready to sell it.
That’s the short answer. But of course it’s more complicated than that.
Just like the calendar, the real estate market has seasons. There are times of the year when it’s easiest to show your home at its best to potential buyers. And there are times of the year when buyers are actively shopping for a new home and inclined to make offers.
You’re more likely to sell your home quickly and for top dollar when those times coincide.

The best time of year to sell a home is spring.
Spring, when gardens and tress are blossoming, is the best time of year to sell a home.

 

The best time of year to sell a home is …

If you’re selling a house, typically spring is the best time of year to sell a home.
In nature, spring is a time of renewal. Same for home buyers.
Home buyers emerge in the spring flush with optimism. They’ve survived another winter in their current digs; but it’s time for a new start, time to address those nagging issues like space or location that have made their current home a challenge.
If those buyers are a family with school-aged children, it’s especially important for them to get the process of finding and moving to a new home into gear in the spring so the household is settled and the kids are registered for their new school in time for fall.
For sellers, the spring is the best time of year to show off your home. Especially if you’ve used the winter months to clear the clutter from the garage, repainted the living room, tended to those persistent maintenance issues in and around the house. With the trees trimmed and the gardens bursting with new flowers, your home is sure to have great curb appeal.
If spring is the best time of year to sell a home, isn’t everyone else also trying to sell their home in spring too?
When the market is buoyant and buyers are eager, prices are likely to stay healthy; if your neighbour’s house sells for top dollar that’s good news for the price you’ll be able to ask for your own place.

The next best time of year to sell a home is fall

Not everyone is prepared to sell their home in the spring. The fall is also desirable.
The weather is still good, so buyers are out and about. Save for Thanksgiving, most weekends aren’t busy with holiday activities. Anyone thinking of moving is keen to get it done before winter and the Christmas season kick in; they’re serious and motivated.
There’s usually fewer listings in the fall. That’s less competition for your home, so you may be able to get a better price. In fact, if it’s a rising market prices may peak in the fall; that’s what happened locally in three of the last eight years.

Any time is the best time of year to sell a home – if it’s a condo

Of course these timelines don’t really apply to the condo and townhouse market; they tend to sell steadily any time of year.

Any time is the best time of year to sell a home if it's a condo
Sales for condos and townhouses tend to be pretty steady all year.

 
That’s because condos and townhouses are generally geared towards first-time buyers and downsizers who don’t have to worry about things like getting their kids registered in a new school. They’re shopping for location, proximity to their work or recreational activities. They’re looking at indoor space and amenities that aren’t as tied to the weather outside. They’re buying lifestyle.

When not to sell your home

Whether you’re selling a house or a condo, it’s best to avoid December. With so much going on leading up to the Christmas holiday season, the last thing on most people’s agenda is shopping for a new home. Not that it doesn’t happen; but if you can hold off until January, you’re likely to see more active buyers and get a better price.
Unfortunately, not everyone is in control of the timing to sell their home.
Which brings us back to our opening point; the best time of year to sell a home is when you’re ready to sell. If you work with your realtor to set a proper sale price, maximize its exposure and show it off to its fullest potential, your home will find a buyer.

Winning strategies for multiple offers

Multiple offers can be the most stressful way to buy a property. When the Metro Vancouver real estate market was red hot last spring, there were multiple offers for desirable properties. And even some not-so-desirable ones. Multiple offers can be great for the seller; not so much for the buyer. Unless you’re prepared.

1. Know your numbers

While it’s always good advice to get your mortgage pre-approved by your lender, it’s especially important if you think you’re going to be getting into competitive multiple offers. You want to know exactly how much money you have available and how high within that budget you’re willing to go. Being pre-qualified also shows sellers you’re serious.

2. Do your research

Work with your realtor so you have a firm grasp on the local property market. Research similar homes in the same neighbourhood to see what they’re selling for. This is called a comparative market analysis. Knowing the range of prices for nearby properties will give you an idea of the range of offers you could expect from other interested buyers.

3. Be certain

Don’t get into multiple offers just for the thrill of the chase.
You need to be certain the property is right for you. That means the home itself ticks all the boxes you desire. And so does the neighbourhood and community where it’s located. Take the time and effort to check out the nearby schools and daycares if you have kids, your access to transit, the commute to your job, parks, crime rates and any potential issues with future developments.
Visit the home again, if there is an opportunity. Go through it with a critical eye to ensure it meets your needs. You want your second or third impression to be as good as your first.
When a property attracts multiple offers, it’s going to be stressful for all the bidders; you want to make sure it’s worth it.

4. Timing is everything in multiple offers

We often hold “sneak peek” open houses on a weekday evening before a new listing’s first weekend open house. That’s the time to pounce, if you think there’s going to be multiple offers for the property you want.
Getting into a property before the weekend open house rush can give you a chance to talk to the agent in a more relaxed setting so all your questions get fully answered. It’ll also buy you a few precious hours to carefully consider your opening offer, do a little more homework like getting a title search done, determine if there may be an oil tank on an older property, get your financing finalized.

5. Keep your offer simple

In multiple offers, the highest number doesn’t always win. A seller that is keen to get the deal done will often look past the dollars and cents to ensure the best offer is clean, with no financing hiccups that could derail the transaction. They also won’t want to see conditions that could delay the sale, or end up costing the seller money.

6. Be flexible

If you’re in a bidding war of multiple offers, try to structure your offer so it meets as many of the sellers’ needs as possible. After all, they’ve got the decisive upper hand.
The seller could need a longer closing date to give them time to find a new home and pack up their things. Or they may want to get things over with as quickly as possible.
Doing as much as you can to ease the seller’s stress could give you the edge, even over higher offers.

8. Don’t be afraid to stand out

Submitting an offer that’s an odd number and still within your budget could help it stand out from other offers with neat, rounded numbers.
Another strategy is to include a personal letter or family photo with your offer; personalizing your offer may make it harder to turn down.
You can also strengthen your offer by attaching bank draft for a five per cent deposit; a 10 per cent deposit will make your offer even stronger.

9. Trust your realtor

Presumably if you’ve gotten to the stage of writing offers on properties, you’ve developed a relationship with your realtor. You’ve discussed your needs, your budget and your financing limits. You trust them to represent your best interests in a bidding war of multiple offers. Even if that means conceding defeat.

Just make sure you’re available by phone when offers are being presented; your realtor may want to tweak yours to get it accepted. At the end of the day, there’s no magic formula to ensure you’ll win a bidding war for the home you want. Sometimes sellers will follow the money and take the highest offer. Sometimes they’ll want to know a little about the buyers and they’ll favour one with whom they sense a connection. Sometimes it’s impossible to know what factors a seller will consider when they choose a winning offer. But if you’ve done your homework and followed these tips, you can be a solid contender in any multiple offers.

Listen to The Garbutt+Dumas Real Estate Podcast on Dealing with Multiple Offers: Sellers Perspective and Dealing with Multiple Offers: Buyers Perspective

 

Infill housing being considered in New West

Infill housing like laneway homes and coach houses isn’t yet allowed in New Westminster. But that could soon change.
Communities around Metro Vancouver are trying to come to grips with rising housing prices that are limiting choices for families and young adults. Some are being forced out of the cities and neighbourhoods they love. The problem is compounded as available land is built out.
Filling in existing properties with more types of housing is one solution.
The City of New Westminster is currently reviewing its Official Community Plan to create a vision that will meet the city’s housing and land use needs for the next 25 years. Infill housing is part of that plan.

Infill housing like laneway homes create more options for residents
The design and construction of infill housing like laneway homes is often strictly regulated so they conform to the neighbourhood.

 

Guidelines for infill housing

In September a draft report on design guidelines for infill housing like laneway, carriage homes and triplexes was presented to city council. The report is part of an ongoing review of land uses in the city’s Official Community Plan to regulate its future growth. More housing choice beyond single family homes and apartments or condos is one of the goals of the plan. In fact, two-thirds of the participants in a series of workshops supported laneway and carriage homes.
But wanting infill housing like laneway homes is still a long way from actually getting it. Infill housing has to be designed to fit within existing neighbourhoods and have minimal impact on streetscapes and neighbours.
Already the city has determined two neighbourhoods will need special attention as it considers infill housing: Queensborough because it has no lanes and Queen’s Park because of its heritage  character.
In its report, the city is proposing infill housing like laneway and carriage homes can be 350-950 square feet. They’d also have to be at least 16 feet from the main house and four feet from neighbouring properties “to help ensure adequate open space, light and privacy for the new unit and the main house.”
Each laneway home would also have to have its own private outdoor space of at least 160 square feet and there would have to be a planted area between the home and the lane to “create an attractive interface between the lane and the new unit.” A three-foot path from the unit to the street would also be required to make it easy for emergency services and visitors to find it.
Laneway homes could also be two stories, but the second storey would have be smaller than the first, integrated into the roofline and its windows would have to be oriented to minimize overlook into neighbours’ yards.
There’s also guidelines for lighting, parking and even the removal and protection of trees. And the city must decide whether each infill housing project must apply for rezoning, or whether it will amend zoning generally to allow the construction of laneway homes and carriage houses.

Public consultation for infill housing

The city is in the midst of public consultations including open houses and workshops to consider the draft guidelines for infill housing like laneway homes and carriage houses. The next one is Saturday, Oct. 15, at Richard McBride School.
There’s also an online survey.
The guidelines will then be presented to a design panel and the city’s Advisory Planning Commission. That will be followed by consultation with stakeholders like builders, designers and developers.
The report also recommends once the guidelines have been finalized, the city should issue only a set number of permits as a trial period to determine their success and viability.

Laneway homes becoming popular

Laneway homes and carriage houses are becoming an extremely popular and affordable way to provide new housing options in desirable neighbourhoods.

What are laneway homes?

Laneway homes are small detached houses on the back lane of an existing single-family property.
More than 1,000 laneway homes have been built in Vancouver since they were first approved in 2009.

 
Laneway homes are small detached rental houses  that are typically at the back of a property opening to a lane. They’re usually one and a half storeys with one or two bedrooms. Most of them also integrate a garage as regulations require they be built in the space normally occupied by a garage.

What are carriage houses?

Carriage houses, or coach houses, are also secondary dwellings on a property; but they can be strata titled and sold separately from the main house. Carriage houses in Vancouver also don’t have to be situated on a lane. They can be larger than laneway homes, as long as the combined floor space ratio of the carriage home and main home doesn’t exceed .75 of the entire property.

Why are laneway homes popular?

The first laneway home in Vancouver was completed in 2010, less than a year after the city adopted a bylaw allowing their construction in single-family zones, on lots at least 32.15 ft. wide. Since then there have been more than 1,000  construction permits issued.
In a community where property values are rising, space is limited and supply of rental housing is tight, laneway homes “contribute to the overall sustainability of the city,” says the City of Vancouver’s website. “They give people more opportunities to live close to where they work, shop, and play, and they make the city’s urban lanes more green, livable and safe.”
They can also help homeowners with the mortgage.
Typically laneway homes cost about $300,000 to build, including permits, sewer and water hookups, and can be rented out for $1,500-2,500 a month.
“Generating a second stream of income by investing in a laneway home is more affordable than applying for a secondary mortgage to purchase a condo,” says Kenny Wong of PHW Homes, a Burnaby builder that specializes in constructing laneway and custom homes.
Laneway homes are permitted to varying degrees in the City of North Vancouver, the District of North Vancouver, West Vancouver, Richmond, Coquitlam, Port Moody, Maple Ridge and Surrey. They’re not allowed in Burnaby.
New Westminster is currently considering the regulation and construction of laneway homes and other infill housing options. We’ll look at that process in the second part of this blog, later this week.

September home sales absorb policy changes

A strong demand for condos helped New Westminster buck the overall softening of September home sales in Metro Vancouver.
The 91 condos sold in the city in September was actually 11 more than the 80 sold in the same month last year. The benchmark price for a typical condo in New Westminster also went up 2.3 per cent over August, and 27.8 per cent higher than a year ago, to $384,400.

September home sales still strong for New Westminster condos.
September home sales were still strong for condos in New Westminster.

 
That’s been our experience as well; demand for condos, townhomes and lower-priced “family” homes in the city is still good, while luxury properties and fixer-uppers have come off a bit since the market peaked in the spring.
For detached homes in New Westminster, the benchmark price in September was down 1.7 per cent from August to $1.085,500. But that’s still 31 per cent higher than it was last year and a 64.4 per cent increase from five years ago.
Townhomes fell 2.6 per cent from August to a benchmark price of $535,600. But a year ago the benchmark price for a townhome in New Westminster was $437,900.
Overall the benchmark price in September for a typical residential property in New Westminster was .9 per cent higher than last month, and 28.5 per cent higher than a year ago.

September home sales slip in Lower Mainland

Throughout the Lower Mainland, the composite benchmark price of all properties slipped .3 per cent in September to $829,400. The 2.253 sales in the month was 9.5 per cent fewer than in August and 32.6 per cent less than the 3,345 sales in September, 2015. It was also the first time since May, 2014 that the number of sales dipped below the 10-year average for the month.
“Changing market conditions are easing upward pressure on home prices in our region,” said Dan Morrison, the president of the Real Estate Board of Greater Vancouver. “There’s uncertainty in the market at the moment and home buyers and sellers are having difficulty establishing price as a result.”

Policy changes affect September home sales

The new rules for mortgage insurance, announced by the federal government on Monday, could also affect the market once they kick in on Oct. 17 and Nov. 30, as they’ll make it harder for some buyers to qualify for mortgages if they need mortgage insurance. That’s on top of the recent 15 per cent tax now being charged to foreign buyers of Metro Vancouver properties that was enacted by the provincial government last month.
In Burnaby, the sales of detached homes went up 31.8 per cent over August, but down 32 per cent over a year ago. Sales of townhomes and condos slipped 28.9 per cent and 9.8 per cent respectively from the previous month. The composite benchmark price for all properties in East Burnaby fell 1.7 per cent from August to $854,700. But it was only off .1 per cent in North Burnaby to $799,200 and South Burnaby to $866,800.

September home sales in Burnaby were down.
September home sales slipped across Burnaby but prices are still strong over year ago.

 
Still, prices are up 24.7 per cent over a year ago in East Burnaby, 28.2 per cent in North Burnaby and 28.4 per cent in South Burnaby.
And while the market may be catching its breath to absorb recent policy changes the sales-to-active listing ration in September was still 24.1 per cent. Generally analysts say home prices feel pressure to go up when the ratio is better than 20-22 per cent don’t start going down significantly until that ratio falls below 12 per cent.
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Mortgage insurance criteria changing

New mortgage insurance criteria could make it a little tougher for new homebuyers to get their first mortgage. The new measures were announced Monday by federal Finance Minister Bill Morneau. Beginning Oct. 17, all homebuyers that require mortgage insurance will have to qualify at the Bank of Canada’s conventional five-year-fixed posted rate. That includes homebuyers seeking a five-year fixed-rate mortgage which used to be exempt from the requirement.

Mortgage insurance criteria includes a “stress test”

Typically the Bank of Canada’s five-year-fixed posted rate is higher than most buyers would actually pay through their lender. Qualifying at that rate acts as a kind of stress test to ensure a homebuyer’s mortgage payment, property taxes and heating costs don’t exceed 39 per cent of their household income, and all debts aren’t greater than 44 per cent of income. The Bank of Canada’s rate is updated weekly. On Sept. 28, it was 4.64 per cent. The current rate at most commercial lenders is less than 3 per cent. “The first set of measures is meant to ensure that Canadians are taking on mortgages they can afford, even if interest rates go up or their income drops in the future.” said Morneau. As realtors we often feel uncomfortable working with clients we know may be stretching themselves too thin to get the property they love. These new mortgage insurance criteria will make it harder for them to get overextended and help us feel more comfortable writing offers for them. Mortgage insurance is a requirement for any mortgage obtained from a federally-regulated lender when the homeowner’s downpayment is less than 20 per cent of a property’s purchase price. That’s known as “high-ratio” insurance and it protects the lender if the homeowner defaults. The premiums are paid by the homeowner. Lenders can also obtain “low-ratio” mortgage insurance for homeowners whose downpayment is greater than 20 per cent of a property’s purchase price. Its premiums are usually paid by the lender.

New federal mortgage insurance criteria are intended to help ensure a stable housing market
New mortgage insurance criteria announced by the Federal government on Monday could affect new homebuyers applying for their first mortgage.

As of Nov. 30, the mortgage insurance criteria for both high and low ratio policies will be the same:
a loan for the purpose of purchasing a property, or subsequent renewal of such a loan
the property being purchased will be occupied by the owner
a maximum amortization of that loan for 25 years
a maximum purchase price of less than $1 million at the time the loan is approved
a minimum credit score of 600 when the loan is approved
meeting the new stress test criteria

The new mortgage insurance criteria apply only to new applications and not existing mortgages or mortgages up for renewal. Morneau said low interest rates and changing attitudes about debt are encouraging some households to take on more debt than they can handle. “Affordability is an issue that concerns many middle class families,” said Morneau. “Federal government policy cannot control house prices directly but it does have a role in ensuring that housing markets are stable and functioning efficiently.” Morneau also said the government will begin a series of consultations on spreading the risk of mortgage insurance so taxpayers won’t bear the full brunt of defaulted mortgages. Currently all mortgage insurance in Canada is provided by the Canada Mortgage and Housing Corporation, a federal crown corporation, and two private insurers whose policies are also backed by the federal government minus a 10 per cent deductible.

The Minister said the government will also close loopholes surrounding capital gains tax exemptions on the sale of a principal residence to ensure those exemptions are only available to Canadian residents and that families can only designate one principal residence in any given year.

Update

On Oct. 16, I was interviewed by local television on what these changes to mortgage insurance criteria will mean for buyers and sellers in the local real estate market. Here is the link: New federal mortgage rules come into effect todayGlobal TV