Following five years of unprecedented growth in home values in Greater Vancouver, home prices began to moderate in 2008. Last spring it became apparent that a more buyerfriendly real estate market was afoot. In May, home price reductions began to occur across the Lower Mainland. Over the last 12 months, home prices, as calculated by the MLS®Link Housing Price Index , have declined 14 per cent for detached and condominium properties in Greater Vancouver, while townhomes have come down nine per cent in price. These figures provide a broad view of home prices in the region; however, they fail to explain what the changes means to the individual from a financial perspective.
Home prices and interest rates have both declined in Greater Vancouver. Together, these trends amount to a significant reduction in monthly payment costs on a new mortgage compared to last year. When mortgage rates fall, like we’re seeing today, from approximately five per cent to four per cent, this does not just represent a one per cent decline but a 20 per cent reduction in the amount of interest paid over the course of a mortgage. The typical single-family detached home in Greater
A typical home today in Greater Vancouver costs $653,000 and the current five-year fixed interest is 4.29 per cent. Today that same monthly payment on a 30-year mortgage with a 25 per cent down payment is $2,409.90. This amounts to a total savings of $891.68 each month. These are real dollar savings that have materialized in our housing market within the last 12 months.
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