HOUS­ING Home search: Mu­si­cian beats in­ter­est-rate hike

The Georgia Straight - - Housing - By

LCar­l­ito Pablo

ike many of his ac­quain­tances, Eric Men­des was hes­i­tant about buy­ing a home.

“Ev­ery­body talks about ‘Oh, no, you have to wait. Some­day the mar­ket is go­ing to crash,’” Men­des re­called in a phone in­ter­view with the Ge­or­gia Straight.

They be­lieved that be­cause prices were head­ing for a col­lapse sooner or later, that would be the right time to buy.

“They are, like, years wait­ing, you know, for the crash. And, yeah, I was one of them,” the 38-year-old graphic de­signer said.

But the longer he held out, the less he was con­vinced that he’d be bet­ter off. In Jan­uary 2017, Men­des got him­self preap­proved for a mort­gage, which turned out to be pro­pi­tious tim­ing.

The fol­low­ing sum­mer, the Bank of Canada raised—for the first time in seven years—its key lend­ing rate, which in­flu­ences in­ter­est rates on mort­gages. The in­crease, from 0.5 per­cent to 0.75 per­cent, was fol­lowed by four more hikes. On Oc­to­ber 24 of this year, the cen­tral bank brought its bench­mark rate to 1.75 per­cent.

More in­creases are an­tic­i­pated. In an­nounc­ing the lat­est ad­just­ment, se­nior deputy gov­er­nor Carolyn Wilkins in­di­cated that the bank is look­ing at a rate of 2.5 per­cent to 3.5 per­cent down the road.

“Right now, with the mort­gage rates ris­ing, I would not be able to qual­ify,” Men­des said.

Two months af­ter get­ting preap­proved, Men­des signed up real­tor Richard Mor­ri­son. Men­des was rent­ing in Van­cou­ver, and with Mor­ri­son’s guid­ance, he be­gan to gain more con­fi­dence. The two are of a sim­i­lar mind when it comes to per­sonal fi­nances.

Even be­fore his mort­gage preap­proval, Men­des knew that his big chal­lenge would be com­ing up with a down pay­ment, so he saved all the money he could. He shared a car with a friend. He brought lunch to work. The São Paulo na­tive formed his own Brazil­ian band called Sam­ba­cou­ver so he could earn ex­tra money play­ing in clubs and en­joy the free nightlife.

For his part, Mor­ri­son is an ad­vo­cate of fi­nan­cial dis­ci­pline. He wrote a chap­ter ti­tled “Best Ad­vice: In­vest­ment Is Sac­ri­fice” in the book Real Es­tate Ac­tion 2.0 by Van­cou­ver-based in­vest­ment ad­viser Ozzie Jurock.

In Jan­uary this year, Men­des moved into a two-bed­room condo in Sur­rey’s fast-grow­ing city-cen­tre area, known tra­di­tion­ally as Whalley.

Mean­time, Moody’s An­a­lyt­ics, a U.s.–based fi­nan­cial-in­tel­li­gence com­pany, is­sued a re­port in Oc­to­ber 2018 stat­ing that the Cana­dian prop­erty mar­ket is not about to suf­fer from sig­nif­i­cant pric­ing de­clines.

In Sur­rey’s city cen­tre, Fraser Val­ley Real Es­tate Board fig­ures show that the me­dian price of con­dos has in­creased by at least 21 per­cent over the past year. In Oc­to­ber this year, it was $419,500, com­pared to $345,500 for the same month in 2017.

Men­des, who is sin­gle, pur­chased his two-bed­room condo for less than last year’s me­dian price of last year. He said that had he waited some more, he could not have af­forded a sim­i­lar prop­erty.

“I am very glad and not look­ing back,” Men­des said.

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