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I'm Worried for the First Time Home Buyer in Canada - YouTube
Channel: Chamberlain Real Estate Group
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the future of first-time buyers are at
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jeopardy and if you are ready to pull
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the trigger and looking at buying your
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first property in the next number of
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months or even years you are in the
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right place the first thing that i want
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to talk about is how did we even get
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here in this first place so the first
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thing is home values are increasing now
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i'm in calgary alberta and for us the
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last number five 10 years we've kind of
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have up and down markets in the last
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five years we haven't had increased
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prices in the properties now i know in
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other areas of the country they've been
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constantly seeing upward pressure on
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prices of homes and we're starting to
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feel it too and that's why i'm realizing
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how worried i am for first-time buyers
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for you as you're buying your first
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house
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the second thing
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is interest rates are starting to climb
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all right if you can see this chart here
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this is a chart i found on a website
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from a mortgage company and they're
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talking about potential forecasting of
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interest rates so by the end of 2023
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they are saying that the maximum number
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we could see
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is about four percent all right and the
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minimum is about three point three four
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percent on five year fixed products
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now
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i think this might be a little bit low
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because
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this is the number they projected 3.08
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was the average uh by the end of right
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now q1 of 2022 well we're already seeing
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a lot of 3.4 type percent products
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already on the market
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and so this number over here we could
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end up easily seeing four plus percent
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uh when we get into get into that market
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all right so interest rates are rising
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now this is also causing a lot of that
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to happen
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the third thing and this has surprised
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me is that the investor's share of the
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market has grown quite a bit and i was a
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little bit surprised by this when i
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found this and i think this was from the
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bank of canada in a study they did
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and when you look at this
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this is home purchases by first time
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buyers repeat buyers and investors
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have historically moved in tandem right
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so they usually have so you can see
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right here
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all through here
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these uh this is kind of always worked
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together but what's happened and this is
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now 2020 and so as when we came out of
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times
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uh basically there was a gap that
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started happening the investors
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repeat buyers
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and first-time buyers
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there is a gap and so this is causing a
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lot of problems in the market so
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investors are great to have they're
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fantastic
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but if there's too many what is that
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balance of having too many investors
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because we need them for inventory for
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rental properties
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and all that as well as landlords but
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what is that fine balance of too many
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investors buying properties versus
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homeowners i don't know the answer i'm
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just posing this question because i
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don't know the answer if you know the
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answer comment below or or battle it out
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below because i don't know that answer
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what i do know
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is as the first time buyers are getting
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squeezed out of the market here
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because more investors are buying and
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why is that happening well
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in calgary right now we're seeing a lot
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of investors coming to calgary and
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buying property because it's a lot
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cheaper than it is out there right and
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so home equity that is the word the word
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of the day is home equity they have seen
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their homes increase in value so let's
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say if this investor
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mr jones the investor has uh three
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properties um and mrs jones has three
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properties as well so combined this
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brother sis or whoever these two people
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have
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six properties and if all of these
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properties go up in value
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now they have all this equity to play
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with they might say hey you know between
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these three properties on my side i've
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got 175 or 200 or 300 000
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of equity that we can now use to do
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something else and same on the other
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side well now we've got five six seven
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hundred thousand dollars that we can go
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and start buying other properties in
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other places
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this is i think why we're seeing this
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happening and that makes it a lot harder
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for these first-time buyers like you in
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this market because you're competing
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against you know some pretty savvy
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buyers
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they aren't the first time buyers right
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they're repeat buyers they are buyers
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that have already owned a house they've
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gone through the process they're
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investors who they're not really
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emotionally playing the game they're
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just buying based on numbers and they're
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willing to pay more if they can
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rent it for more right so
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fomo i feel it for you and it's real
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right the other thing with first time
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buyers is down payment issues so in this
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market one of those things that you
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might have and you might be feeling as a
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first-time buyer
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is the
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fear of the properties increasing
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quicker and greater than how you can
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save for your down payment that makes
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sense so what i mean by that is if the
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market goes from 500 to 600 000
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like you're not gonna pay cash on that
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right you don't have to come up with an
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extra 100 000
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to buy this house well if you're putting
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five percent down and that's you know
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the minimum but if you're putting five
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percent down
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right here it actually is only a
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thousand dollar increase now not only
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that's still five thousand dollars but
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it is a five thousand dollar increase
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you gone from twenty five to thirty
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thousand dollars as a five percent down
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payment your closing costs are probably
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the same all that kind of stuff but you
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just your down payment is bigger now the
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other scenario
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is what if you were planning on putting
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15 down and now
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um the home values are increasing and
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you are seeing you know values of 100
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200 000 depending on where you are in
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the country
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might be 50 000 but either way you're
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seeing the values going up you may not
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be able to save more and have to look at
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now we can only put 12 percent down or
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maybe we can only put 10 down um and
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that that's that's real too
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all of these scenarios what do they
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equal increase monthly payments that's
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what they equal
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so regardless of any of these scenarios
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your monthly payment is going to change
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when values go up okay and that that's
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the reality
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the third thing that i have here and
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again i don't have answers i'm not uh
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an investment person for you to take an
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investment advice from uh outside of
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real estate but find a way to
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potentially future proof your down
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payment so find some investments find a
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way to instead of just keeping it all
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cash is there some place that you can
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put it that can earn some interest on it
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that can at least
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move it forward now you want to make
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sure that
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it is liquid that you can pull it out
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quickly because you don't want it tied
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up in something that you can't get to
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if you're using you know first time
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buyer home plan like an rsp first-time
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plan
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you know you want to be able to know
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that you can pull that out quickly so
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that's a pretty important part when it
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comes to this if you're going to try to
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future proof your down payment but that
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is an idea
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that you may want to consider
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through the link in our description you
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will you can go to a page or you can
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choose a time
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book a call with us 15 minute blocks and
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have a conversation where we can help
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you through
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all of this
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you as a first-time buyer
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how do you compete
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right because we've got a lot of
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investors buying in this we have a lot
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of
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repeat buyers so people who've done this
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before and then you guys the first time
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buyers how do you compete with these
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savvy buyers in a market when yeah
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you're gonna be fighting for houses well
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the first thing
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is know what your shopping budget is
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talk to your lender talk to your
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mortgage broker talk to your bank
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and instead of this is what we tell our
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buyers here and our agents is instead of
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looking at 50 houses and you're going
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shopping and looking at houses
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take the same time and energy to make
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sure your lender and your broker has all
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of your documents
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get them all of the documents because
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then you are set you know how much you
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can fight for how much you can spend you
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know that you can have a letter from
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them that says you're pre-approved and
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ready to go you can plan with them uh
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when you found the best house and you're
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gonna fight for it okay do that please
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do that for me please because that is
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how that is probably the biggest way
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that you can compete is having knowledge
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on your side okay and knowing what your
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shopping budget is
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second tip
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shop 10 to 15
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under your max budget all right so what
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i mean by that is again let's use a 600
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000 number so let's say if you are
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approved all the way to 600 and you feel
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comfortable in your monthly payments
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all of that are okay
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up to 600 000. well
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don't go looking at houses that are
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listed at 600 000
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because what's happening in this market
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they're going for over that right all of
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a sudden a house that's listed at 580
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590
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is selling for 640 or sometimes even
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seven in in calgary anyways like we have
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some really big numbers that are
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swinging and changing things so what you
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want to do
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is actually look at houses that are
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maybe in that 520 range because now why
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now you can compete you can compete you
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can go and you can start looking at and
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saying okay i actually can increase my
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offer i can put a bigger over asking
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number down than
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just continuing to cause myself
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frustration and seeing a 590 house and
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writing 600 and being frustrated that i
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can't get it like that's like the
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definition of insanity is it not doing
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the same thing over and over and getting
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the same results and causing yourself
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problems i don't think that's the actual
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real definition but it's pretty close
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because that would drive me crazy
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if i was you i would be so frustrated
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i would be so exhausted in fighting for
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things that you just i just don't think
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you can get it because i know when i
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look at a house when i'm moving and i
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find the house
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man i want it i'm emotionally bought in
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you can only do that so many times look
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at a property fall in love with it go
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see it and try to win it and lose it
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like that's that's hard that is hard to
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do so don't do that so stop doing that
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start looking and fighting for the
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things you know you can win and
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sometimes what that means
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not only is it shopping 10 to 15 below
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your budget it also means that you need
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to look at a different type of product
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so if you're looking at night used to be
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let's say you used to be looking at 1900
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square foot houses
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and now they're you're priced out of
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that range you don't have a house yet
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well maybe you need to look at that 1400
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square foot house and make sure you have
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a finished basement or maybe it's
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finding a 1700 square foot attached
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property a townhouse something bigger
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but attached and it's less value
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proactively go and look for those types
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of product changes because then that is
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going to allow you to win put yourself
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in a position that you can win don't
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just keep trying to do stuff and and
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losing because that's frustrating all
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right now third thing
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have a letter ready have a template
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created
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a letter to the seller and if you've
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made it this far in the video i want to
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give you a free tip here we actually
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have a template for you so i'm going to
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put it in the description and i'm going
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to put a link here
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in the video but
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you can go and you can download a
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template on how to write a really good
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letter to the seller from you as the
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buyer and it's a guide that you can have
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that you can download you can use
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and create your letter to the seller
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this is this is big and i know a lot of
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people do it actually a lot less do it
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than you would think
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because sometimes we can have 10 offers
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on a property and still only one or two
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people are taking the time to write a
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letter to get them to know and it helps
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it can help with the right seller all
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right
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and the last thing is have an agent who
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knows how to hustle
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what i mean by this
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is if your real estate agent is simply
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writing an offer with you
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submitting the offer
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and waiting to hear back
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that's not working in your best interest
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you need an agent that works for you
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that is reaching out to that listing
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agent saying hey how many offers do we
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have i know we're an hour out like they
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need to become the best friend of that
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listing agent here's an example you know
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when you feel like you're sitting across
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the table from someone and it's like
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we're on different sides of the table
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you need an agent that knows how to come
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around the table hey buddy you know
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let's do this together i have a
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fantastic client they are ready to go
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they love this property please keep me
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in the loop how many offers you get who
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else is writing those offers
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and if you don't have an agent that is
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doing that for you
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unfortunately you're going to lose a lot
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of times before you finally win and that
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is what you need if you want that letter
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to the seller template go into the
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description you can download that uh
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it's just an enter your email address
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and you can download the the guide i
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know that the fomo is real for
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first-time buyers i am concerned because
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now we are starting to see it in calgary
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where a lot of other places around the
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country have seen it for a long time if
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you have tips that you want to share
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with the community that watch these
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videos put them below how did you win
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your house how many offers did you have
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to go through what was your experience
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like
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what would you have done differently uh
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let's create an amazing thread and help
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each other out uh as we are fighting for
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these houses because man being a first
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time buyer in this market is tough so
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thank you for this and i hope this is
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helpful uh we'd love for you to
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subscribe and be a part of our community
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here but we'll see you guys on the next
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video
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[Music]
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i can let
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