It seems like the intended purpose of the loan for first-time buyers is taking a different direction from its intended path, the five-year interest free loan to help first-time buyers gain entry into the housing market is stimulating a bigger problem. It was hopeful that the government’s efforts of introducing new laws will help cool down home prices but far from that, they are resulting to higher home prices instead. The new loan program although is helping first-time buyers participate in the housing market, it is at the same time increasing home prices as buyers are reviving the previous market trend-bidding wars.
Bidding wars are gaining momentum and according to real estate agent Steve Saretsky, Canadian real estate is selling more properties based on multiple offers. Bidding wars are more evident in condo properties which have been the most affordable home type in Canada’s hottest housing markets. Many homes are now being sold beyond their original asking prices and this situation will only come to an end if the supply end of the market is addressed. But presently, the housing market is highly concentrated with first-time buyers who are trying to actualize their home ownership dreams.
The loan program for first-time buyers has led to an increase number of active buyers in the hot real estate market. In just a short period of time, the government has already proved 356 applications for the loan program. Condominiums have become the popular choice for most buyers in comparison to other home types such as detached homes and single-family homes. However, first-time buyers entering the housing market are the worst hit by the bidding wars as they get really disappointed as they seen their choice of house been taken by another buyers through countless offers.
This leaves many first-time buyers wondering if entering the real estate market at its current state is the best thing to do.