High home prices combined with high mortgage rates are making it very difficult for many prospective homebuyers to attain a conventional mortgage. Mortgage broker Ron Butler was recently on BNN discussing this challenge and why demand for homes will decline, as a result. He is forecasting a slow fall housing market.

Click here for the direct link to the video shown below:

I maintain that anyone looking to get on the Metro Vancouver or Fraser Valley property ladder should still consider resale apartments in Abbotsford, as a viable way to get a toehold into the market. Sardis apartments, although slim on inventory, might also be an interesting option for singles or couples that are first-time buyers especially. These markets have average resale apartment prices between approximately $425,000 to $450,000. A 5% downpayment is about $21,000 to $23,000 at these levels, if one can qualify for a mortgage.

Abbotsford average resale apartment prices.

Sardis average resale apartment prices.


Amortizations Growing Longer and Longer

A good interview below at BNN regarding the growing trend of homeowners extending amortization periods by longer and longer time frames. 25 year amortizations were once the general rule of thumb or standard for amortization periods. This allowed people to pay off mortgages in a reasonable period of time by paying down principal steadily, term by term. However, this has all changed in the past year or so due to rising interest and mortgage rates.

I take my job as a real estate agent very seriously and view myself as having a fidicuary duty to my clients. That means guiding them in a way that serves THEIR best interests. This also means that I sometimes have to give advice and guidance that may temper their enthusiasm to take on a greater mortgage liability than they might be able to durably carry over time. For example, I have standalone webpages on affordability guidelines and budgeting that help my clients stay within reasonable and financially sustainable parameters when buying a home. This is not always popular with home buyers that may be pre-approved for mortgage amounts far in excess of what traditional affordability guidelines suggest to be more sustainable mortgage levels. 

I don't blame some people for stretching really far to obtain a property in very expensive markets like the Metro Vancouver and Fraser Valley areas. It's expensive here and relatively few people that are just entering the housing market can put together large downpayment amounts. Still, as many recent buyers are learning the hard way, it's one thing to purchase a property, it's an entirely different thing to be able to sustainably carry it financially over the full ownership and amortization cycle. 

When you extend amortization periods, you are paying more and more in the way of interest to the bank, while building little or minimal equity through principal pay down. At a certain point, one must ask, are you any different than someone renting a place, when most or all of your mortgage payment is continually going towards the interest portion of your payment? Extend and pretend has limits...

Here is a direct video link

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