June 24, 2016 | Marty Hope

Taking the plunge

Calgary couple's research, timing pays off during first home purchase

Booker and Lisa Zaytsoff didn't take the plunge into homeownership lightly.

About a year ago, the young couple started to investigate the marketplace, getting a read on what was happening – all the while putting away money for a down payment.

"Finally, we had enough saved up so decided to buy — something that, for us, had always been in the cards," said Booker. "What was important for us was location and price. The fact mortgage rates were low was a bonus."

The effort paid off for the Zaytsoffs. Earlier this spring, the Calgary couple bought an 1,800-square-foot four-level split home in Sandstone for under the listed price.

"If you have any doubts, be sure to have a fallback financial plan."

First-time buyers like the Zaytsoffs have much to consider when embarking on one of their biggest purchasing decision of their lives. The key is to be prepared, especially in markets like the one Calgary is currently going through, said Gary Siegle, Calgary-based vice-president of the Prairie region with mortgage specialist Invis.

"Lenders are nervous about the Alberta economic situation, so be ready to answer lots of questions and provide lots of documentation," he said. "In particular, variable income like bonuses, overtime and commissions have become less predictable, so lenders are not using the old standard of a two-year average."

Also consider the security of future employment and income.

"If you have any doubts, be sure to have a fallback financial plan," said Siegle.

If you're bullish on your future employment and/or income, then get yourself pre-approved for a mortgage, know what you want in a home, set a budget and start shopping the market.

Siegel also suggests would-be homeowners focus on what they can afford. That means budgeting and not going after the most expensive home they are qualified to buy. He points out there are a number of often-overlooked expenditures such as closing costs, moving expenses, legal and real estate fees.

When it comes to shopping the marketplace, real estate experts also suggest getting a feel for the market to see if the time is right, as well as to be prepared during price negotiations.

Earlier this month, CREB® reported year-to-date sales in the residential resale housing market had declined by more than 10 per cent as of the end of May, while listings had remained relatively flat when compared to last year.

That has created excess inventory on the market – CREB® reports months of supply in 2016 has increased more than 20 per cent – and therefore placed downward pressure on prices. The year-to-date benchmark price in Calgary has fallen by 3.5 per cent to $443,260.

"As we move into the second year of this environment, we expect to see additional housing supply pressure and further price declines," said CREB® chief economist Ann-Marie Lurie when looking forward at Calgary's housing market.

"If you are ready, this might be a good time to buy."

"Weakness in the energy sector is overshadowing all aspects of our economy, and with more people looking for work and fewer opportunities, we could see some families making adjustments to their housing situation."

In its semi-annual housing market outlook released last month, Canada Mortgage and Housing Corp. (CMHC) predicts the average MLS® residential price in the city will range between $444,500 and $449,500, compared to $453,814 in 2015.

"Job losses, especially among full-time positions, and reduced consumer sentiment will keep many buyers on the sidelines," said Richard Cho, principal market analysis Calgary for CMHC.

In 2017, house prices in the resale market are anticipated to gradually stabilize as the market shifts to more balanced levels. Improvements in economic conditions and housing demand combined with less supply will help support home prices, said CMHC.

The MLS® average residential price in 2017 is forecast to range from $450,400 to $455,600.

While the prospect of lower housing prices this year will appeal to first-time buyers, Siegle preaches caution when making purchasing decisions based solely on market trends.

"Don't let this lead you to buying before you are financially prepared," he said. "But, if you are ready, this might be a good time to buy."

Tagged: Calgary Real Estate | Calgary Real Estate News | Canada Mortgage and Housing Corporation | CMHC | Feature | first-time homebuyers | Mortgage | YYCRE