The price of homes is so insane in Vancouver that the government is pitching in to help first-time buyers come up with a down payment.
On January 16, the province of British Columbia will start a program that will offer to match the nest egg saved by prospective first-time buyers.
The government will dish out up to $37,500 CAD or five per cent of the purchase value – something that will no doubt help a lot.
“People need a partner in scraping up that first down payment,” said B.C. Premier Christy Clark. “It’s getting harder and harder all the time.”
Under the new program, the 25-year loans will have no interest and no repayment for the first five years.
Before you get too excited, however, keep in mind that they will only be available to first-time buyers who already qualify for a mortgage under the recent, stricter rules introduced by the federal government (the same ones that are contributing to a growing number of families raising kids in apartments in Toronto).
As Bloomberg reports, the initiative is estimated to cost about $703 million CAD over the next three years and help roughly 42,000 households to enter the market.
Of course, we’re all aware of the seemingly impossible-to-break-into housing markets of Vancouver and Toronto. In Vancouver, the cost of a typical single family home has swollen to $1.5 million, with Toronto not far behind.
While things like this past August’s 15 per cent tax on foreign buyers and October’s tightening of mortgage rules in October have taken some pressure off the prices in Vancouver, it isn’t helping enough.
As Bloomberg reports, prices remain about 20 times median household earnings – 20 times.
The program will be restricted to households earning up to C$150,000 and purchasing a property that’s worth C$750,000 or less (which, frankly, still won’t get you a lot).
They also must have been Canadian citizens or permanent residents for at least five years and reside in the province. The province will fund the loans with revenue from property taxes, including money it has collected from the recent tax on foreign buyers.
Your move, Ontario.