Media urges first time buyers to rent right now, not buy

Two days ago we told you have BC Real Estate Association Chief Apologist, err... Economist, Cameron Muir was insisting that there was no need to worry about real estate sales because one-third of our real estate market is first-time buyers.

Muir is adamant there is no shortage of those 'first time buyers' to keep greasing the wheels of our Lower Mainland property ladder:

“As long as we have first-time buyers that can get into the market to buy the homes from the people who are moving up, moving over, moving down, then the market should remain healthy.” 

With that in mind, you have to imagine that Muir is less than enthralled with the latest offering from the Globe and Mail Newspaper.

In an article titled, 'What’s the rush, first-time buyers? Now's the time to rent' the G and M proposes that the working title for the next phase of the housing market might just be titled: Revenge of the first-time buyer.

Rookie home buyers have been whip-sawed in recent years. They’ve been fed a line that renting is disastrous behaviour, and they’ve been witness to steep price increases that suggest they need to immediately buy a house, any house, before they’re priced out of the market. Last month, the federal government piled on with new rules that will result in higher mortgage payments for many first-time buyers.

But first-timers are about to get some leverage. Housing markets in a few cities are cooling, and some forecasters see national prices falling 10 to 25 per cent. Meantime, interest rates are expected to more or less remain at today’s fantastically low levels for a while longer.

Prudent first-time buyers will exploit this. They’ll build up their down payments, they’ll prepare themselves by researching the costs of owning a house and they’ll venture into the market with firm limits on what they’re willing to spend. First-timers account for just over one-third of the housing market, which means they have quite a bit of clout. If they were to take a buying hiatus, it could really slow the market down.

The obvious benefit of waiting to buy a home is that you have a chance to save a bigger down payment.

Listen closely... hear it?

That's the sound of Muir choking on his morning wheaties as he reads that.

The article continues:

TD’s forecast on prices reinforces the argument for first-time buyers to take their time. One of the prime motivators for rookie buyers in the past couple of years has been the fear that price increases would eventually make a house unaffordable. Market conditions across the country differ, but some of the hottest markets are now slowing. Nationally, TD has been forecasting an average decline of 10 to 15 per cent over the next three years. Mr. Alexander calls it a “steady cooling.”

Forecasts of more severe declines are out there. For example, the firm Capital Economics has said we have a housing bubble in Canada that will take housing prices down 25 per cent when it bursts over the next couple of years.

The logic is inescapable.

Buying right now, especially for first time buyers, is the wrong thing to do.

And the Globe finishes with the best piece of advice you can get right now:

Renting is not a waste of money. It’s what you sensibly do while waiting for the right time to buy a house. Right now, it makes sense to wait longer.

Amen to that!

(Hat tip: @YVRHousing tweet)

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