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first-time homebuyers BC

Why Are First-Time Homebuyers Struggling in BC?

How to Break Into the BC Housing Market

Breaking into the real estate market in British Columbia is not easy. With soaring prices, stiff competition, and constantly shifting market conditions, maximizing first-time homebuyers’ purchasing power has become critically important. At D. Fritz Appraisals Inc. we strive to make the process of purchasing or selling a home less stressful for our clients by providing timely and accurate appraisals that can assist with making sound real estate decisions.

Come along as we discuss the challenges facing first-time homebuyers in BC and learn some effective strategies that can help in the journey toward home ownership. 

Victoria BC is a Tough Real Estate Market

As of July 2024, the British Columbia Real Estate Association indicates that a first-time homebuyer in BC will pay upwards of $950K. High prices combined with increased borrowing costs, have left many homebuyers delaying the purchase of their dream homes. It’s become commonplace for homebuyers to seek lower-cost alternatives such as moving away from major centers to more affordable communities or partnering with a friend or family member to purchase a house.

Though housing costs, monthly rentals, and property taxes are on the rise, solutions to housing insecurity may be just around the corner. While new government initiatives aim to decrease barriers to the housing market rollout, here are a few strategies first-time homebuyers are adopting to secure a home in Victoria BC, one of the most desirable places to live in the world.

Who Are The Average First-Time Homebuyers In BC?

It might come as a surprise to you to learn that first-time buyers in BC are getting older. Though people buying a home for the first time are made up of a diverse group of young professionals and families looking to settle down, the age range spans mainly the late 20s to early 40s. With the increase in purchase prices, it’s taking first-time buyers longer to save and young people are living with their parents longer.

Considerations Before Making An Offer 

Get Your Credit Score Up

It might not be what a first-time homebuyer wants to hear, but delaying the purchase of your first home might be the option that makes the most sense. Instead of going further into debt with a home purchase, focus on paying down any outstanding loans you might have and improving your credit score. A healthy credit score will make you more attractive to lenders.

Get Pre-Approved

It’s also important to get pre-approved for a mortgage before you start shopping around. Having less debt and a good credit score improves your chances of getting an appropriate mortgage to purchase a home. Knowing which homes are within your grasp helps significantly in the home search and also prevents the disappointment of touring homes that end up being out of your budget. 

Tax Incentives

In addition to saving and getting pre-approved for a mortgage, there are several tax incentives that first-time homebuyers may qualify for to stretch their purchasing dollars. Though the Canadian Mortgage and Housing Corporation (CMHC) has discontinued its first-time homebuyer’s incentive as of March 31, 2024, there are a number of other tax breaks that could help ease your monthly mortgage payments. 

To qualify for any of these incentives, administered through the Canada Revenue Agency (CRA), you must first file an income tax return.

  • First Home Savings Account (FHSA) – a registered plan that allows potential homebuyers to save, buy, or build a qualifying home tax-free (limits apply)
  • Homebuyers’ Plan (HBP) – allows withdrawals of up to $60K from an RRSP to buy or build a home. If the withdrawal is paid back into the RRSP within the required timeframe, it’s tax-free
  • First-Time Homebuyer’s Tax Credit (HBTC) – a tax credit of up to $1500 for eligible homebuyers
  • GST/HST New Housing Rebate – a rebate for individuals who have bought a new home or used a builder to substantially renovate their house, condo, duplex, mobile home, or floating home

Getting advice from a professional property appraiser like D. Fritz Appraisals Inc. before you purchase is an excellent idea. Professional property appraisers will let you know the home’s true value compared to the asking price and how it might change over time.

Thinking Outside The Box

A growing trend among first-time homebuyers is the increasing reliance on financial help from family and provincial and federal government programs to come up with the large down payments required. Co-owning properties with someone other than a spouse or significant other is one-way first-time homebuyers are breaking into the market. According to Royal LePage Real Estate Service, 6% of the 500 respondents surveyed co-owned their home and 41% have borrowed money from family.

In addition to cohabitation, and seeking help from the Bank of Mom and Dad, first-time homebuyers today have had to get more creative. Here are a few unusual strategies eager buyers are employing to break into the housing market:

  • Home Hacking – purchasing a multi-unit property, living in one unit, and renting out the remainder to cover the cost of the mortgage payment
  • Crowdfunding – do you have a large social media following? Then a crowdfunding platform to raise money for a down payment might be the answer.
  • Alternative Financing – seller financing, where the seller acts as the lender may be an option for buyers who don’t qualify for traditional mortgages.

While unconventional, these approaches might be just the extra help you need to get your foothold into the competitive housing market here in Victoria BC.

What Does the Future Hold?

In British Columbia, the changes to zoning laws for multi-family projects will increase the number of high-density developments. These changes should reduce the barriers to entry for first-time homebuyers and middle-income earners. For a deeper look, read our recent blog on Missing Middle, Affordable Housing.

Stronger BC, as part of the BC Homes For People Action plan, has committed $12 billion (2023 budget) over ten years to minimize the strain on homebuyers. See how your tax dollars are being spent here for a more detailed look.

Trust D. Fritz Appraisals Inc. For Fast And Accurate Mortgage Appraisals

When buying a home for the first time, one of the best ways to ensure you have prepared the winning offer is to consult with a real estate appraiser. D. Fritz Appraisals Inc. works with first-time homebuyers to provide the highest level of residential appraisal service on Southern and Central Vancouver Island. Our mortgage financing appraisals let you know the fair market value of the property you’re interested in purchasing. 

With turnaround times often coming in within 24 hours, our quick and comprehensive home appraisal reports will give your offer a competitive edge. To find out more about our mortgage appraisal services contact us online or give us a call at (250) 413-7319.

bc housing crisis

The BC Housing Crisis: What’s Being Done To Help?

How Are Your $12 Billion Tax Dollars Being Spent?

The BC housing crisis is top of mind for anyone struggling to enter the housing market, find a rental, or hold onto their current home during these difficult economic times. Home prices, rental rates, and property taxes continue to rise, and with those skyrocketing costs comes housing insecurity. At D. Fritz Appraisals, we understand that finding an affordable home to call your own in desirable British Columbia has become a significant challenge. 

A 2023 Leger poll found that 68% of British Columbians are concerned that they won’t be able to pay their mortgage or rent, and another 93% agree that increasing rental prices have become a serious problem. 

While the BC housing crisis is hurting British Columbians, the provincial government is attempting to facilitate faster home construction and increase the number of rental properties through several initiatives. 

Read on to learn how Stronger BC has made strides to deliver homes for people more effectively.

Stronger BC

As part of the BC housing action plan, the province has committed $12 billion (2023 budget) over the next 10 years to improve the housing market in BC. 

A few of the steps the Homes For People Action Plan has taken include:

  • Fixing outdated zoning rules
  • Locating homes next to amenities such as transit
  • Fast-tracking approvals
  • Managing speculators
  • Maximizing rentals by reducing vacancy rates
  • Shifting short-term rentals to long-term rentals

1. Zoning Changes

Zoning changes are making a difference to the BC housing crisis. Here are just a few of those changes:

  • Adding a second, third, or fourth unit to your home is becoming easier. New rules and standardized designs are helping home builders speed up the construction of small-scale multi-unit housing.
  • A Secondary Suite Incentive Program (SSIP) allows qualifying homeowners to borrow up to $40,000 in the form of a forgivable loan to help with the cost of adding a rental suite to their home. 
  • Changes to the Strata Property Act will allow children to live in many homes with previous age restrictions. Fifty-five plus stratas will remain unchanged. Condo owners belonging to stratas can now rent out their vacant units as long-term rentals.

By removing zoning barriers and building more small-scale multi-unit housing, people who have been priced out of the competitive market will have a more affordable entry point. 

2. Affordable New Construction

Efforts are being made to make housing in BC affordable for everyone. The provincial government has a few strategies in place to tackle escalating house prices.

  • Programs such as BC Builds have partnered with local governments, First Nations, and non-profit organizations to develop housing for middle-income households. BC Builds leverages public, community, and non-profit-owned land to speed up development and lower construction costs. 
  • Changes to rules and regulations will allow more homes to be built near rapid transit stations like the SkyTrain
  • Over 12,000 beds will be added to schools across BC for students living away from home
  • Municipalities will have housing targets to meet to keep up with projected growth

Along with these improvements, steps are being taken to assist BC’s most vulnerable,  including rent banks for people in temporary financial crises, supportive housing for those experiencing homelessness, and more complex care housing.

Want to take a deeper dive into middle-income housing? Check out our previous blog, Is Missing Middle Housing The Answer to Victoria’s Housing Shortage?

3. Fast Tracking Approvals

A Building Permit Hub has been created to automate parts of the application process. Applications will be checked to ensure they meet the BC Building Code and Energy Step Code, minimizing delays. With online permitting, permit review and approval will be easier and faster.

In addition to the Building Permit Hub, an application portal for natural resource permits has been created. The BC Housing Taskforce will work across ministries to guide the natural resource permitting process.

The single housing application service includes permits issued by:

  • Ministry of Environment and Climate Change Strategy
  • Ministry of Forests
  • Ministry of Transportation and Infrastructure
  • Ministry of Water, Land and Resource Stewardship

Along with over forty new staff, a Housing Navigator Service is in place to assist with questions and provide guidance.

4. Minimizing Speculators

The Speculation and Vacancy Tax (SVT) aims to turn unoccupied rentals into long-term rentals in communities with the most significant housing shortages. Residential property owners will be required to declare for the first time starting in 2025. The province has provided this interactive map to help you determine if your community is in the taxable area.

In addition to the SVT, the BC Home Flipping Tax, effective January 1, 2025, is expected to discourage investors. This tax applies to homeowners who sell a residential property less than two years after purchasing. Proceeds from the Home Flipping Tax will be used to build affordable housing.

Besides the above taxes, the Foreign Buyers Tax has been increased to 20% and expanded to include more communities. 

All these changes combined hope to deter and penalize speculators.

5. Protecting Renters

Houses to rent in British Columbia are becoming fewer and further between. The province has recognized that the low vacancy rate for rentals has caused rents to soar. To help mitigate the increased costs, renters with an adjusted income of $60,000 or less can claim a renter’s tax credit of up to $400/year.

More help for renters is coming. The Short-Term Rental Accommodations Act provides governments with stronger enforcement rules to restrict short-term rentals to principal residences, increasing long-term rental availability.

To further protect renters, rental rates have been capped at 3.5%, below the inflation rate, to improve affordability.

For Expert, Detailed, and Trustworthy Valuations, Trust D. Fritz Appraisals

The current BC housing crisis may be just the impetus you need to add a secondary suite or a small-scale multi-unit to your property. Perhaps you’re interested in taking advantage of the Secondary Suite Incentive Program. Look no further than D. Fritz Appraisals Inc

Let us appraise your new construction or renovation to ensure your lender financing is approved. Our certified real estate appraisers provide accurate property value appraisals for homes at all stages of construction.

Serving Victoria to Nanaimo and the Gulf Islands, our expert team is approved by most banks, credit unions and private lenders. Contact D. Fritz Appraisals Inc. today, and we can tailor an appraisal report to meet your lending, selling, and appraising needs.