NEWS

Liliana and Cris Manea were able to afford a duplex just minutes from their rental apartment.

When Cris and Liliana Manea decided to move out of their apartment last spring and buy a house, they started looking for properties priced around $450,000. With the average home in Greater Vancouver going for more than $600,000 at the time — including townhouses and condos — their options were limited. If they wanted to stay in their Vancouver suburb of Coquitlam, they'd be looking at 15 or 20 year old duplexes. For anything newer, they would have to move farther from downtown.

Then the credit crunch took hold, the stock market crashed and the economy hit the wall. That triggered a slide in Vancouver's housing prices which, for opportunistic first-time buyers like the Maneas, was a boon. By Christmas, they had signed the papers on a brand-new duplex. Location? Just three minutes from their current apartment. Naturally, the couple are thrilled: "The asking prices were not coming down that much, but the room for negotiation was way bigger," Cris says.

The Maneas are among a number of house hunters in cities across Canada - first-timers and serial owners alike - to have already taken advantage of the country's first serious buyers' market in years. Home prices in several parts of Canada are falling; in Vancouver, where the Maneas were shopping, the drop has been especially steep - at least 8% to 10% in less than a year. Toss in extremely low interest rates and the result is some unprecedented opportunity. As long as you accept two caveats: Your job or income should be secure, and you should be aware that if you're buying now, you're probably buying before the market has hit bottom.

The time certainly seemed right to the Maneas when, in December, the couple and their real estate agent spotted a new semi-detached home with an asking price of $579,000 plus GST, already $20,000 less than when the house was listed in June. In early October, the builder had rejected an offer of $545,000, but market conditions had changed since then. They came in with a lowball offer and got the house for $522,000 plus GST.

Though they shaved almost $80,000 off the original price, the couple still had to feel comfortable with a bigger mortgage than first planned. "Originally, I was thinking of waiting a few years to save a larger down payment," says Cris. "But I got more confident that I could buy this house when I got pre-approval from the bank at a good rate." The couple secured a variable-rate mortgage at prime minus 0.6%, which has them paying less than 3% on their new home.

Dave Watt, president of the Real Estate Board of Greater Vancouver, is quick to offer some perspective: Detached houses in the region are still averaging around $900,000. "It has been a long time since a first-time buyer ever dreamed about buying a detached house in Vancouver." However, Watt says the softening market may allow buyers to get a foot in the door, perhaps through a condo or townhome, or even a detached home outside the city. "Historically, the very best time to buy quality real estate is in times with the lowest amount of consumer confidence."

Vancouver isn't the only city where for-sale signs are lingering longer. A report by Re/Max predicts that 2009 will see the lowest number of home sales in the Greater Toronto Area since 2003. John Carser, a sales representative with Re/Max Omega Realty in Newmarket, north of the city, says he's spending more time convincing vendors to be realistic about their expectations. "I have to explain to them, 'This is where the market is going right now. That's why you're only getting one showing a week instead of one to three a day.'" Carser says sellers now have to work harder at staging their homes. "In a seller's market, the buyer comes into a cluttered house and says, 'What mess?' and the asking price is not as much of an issue. Now the buyer is in the driver's seat, and the seller has to do everything to make their home attractive to the buyer."

Two of Carser's clients, Adam Thompson and Laura Rossit, recently discovered that when they bought their first home last fall in Ajax, a half-hour east of Toronto. They had their eyes on a three-bedroom, two-storey detached house that was listed at $293,000. "Knowing where the market was going, we weren't prepared to pay anywhere near the asking price," Thompson says. "Had we bought eight or 10 months earlier, we probably wouldn't have had that choice." Not only did they get the home for $14,000 less than asking, they even asked the seller to knock off another $650 after the inspection turned up some needed repairs, a concession that would be unheard of less than a year ago. "For us, as first-time homebuyers, it worked out really well. I can't imagine having gone through this in a seller's market."

While Thompson and Rossit saved a relatively modest amount on their starter home, the potential deals in luxury properties can be far more dramatic. Nicholas and Gayle Black, a professional couple in Toronto, have been wanting for years to move into the Cricket Club, an affluent neighbourhood in the city's north end. Until now, it was simply out of reach for the couple (who asked us to change their names). But not anymore. "The way the market is now, it has become affordable for us," Nicholas says. "It's not a question of $50,000 or $100,000 less. The prices have dropped about a quarter of a million since the summer: Houses that were $2 million are now listing for $1.8 million, and you can get them for less than $1.7 million. Suddenly we are in the game for something that was unfathomable six months ago."

Another factor to consider: While homebuyers often talk about price drops being a wash if you're selling and buying within the same area, that's not quite true: An overall drop in prices favours the buyer who is moving to more expensive digs. For example, assume you're in a $400,000 home and want to move up to one priced at $700,000. If the price of both homes drops 5%, your upward move would leave you with a mortgage that's smaller by $15,000 - enough to upgrade the kitchen or a couple of bathrooms.

Vancouver Real Estate Board's Dave Watt knows that good times for buyers can mean tough times for agents. Some of his younger colleagues have never experienced a market downturn and may now be facing long stretches between commission cheques. But he also recognizes the upside to a slower market. "If you have a city where even people with good jobs can't buy a home, I'm not sure that's a good thing. Now when I speak to my own kids and their friends, they are excited. The thought of buying a house is on their radar again."

Call Lisa Au for more information
Invis Mortgage Associate
P: (403) 681-0217
F: (403) 277-8079