Frantic hunt for a house

New parents Bliss Prema and husband Seamus Russell have struck out five times when making offers on houses. In each case, they lost out in bidding wars.

The couple has found that hunting for their first house in the most popular price range -- between $400,000 and $600,000 -- in Victoria can be frantic, frustrating and emotionally draining.

"It's wild," Prema says. "You feel this panic."

Randi Masters, Victoria Real Estate Board president, sympathizes and urges the couple to "hang in" because more inventory is coming onto the market as spring approaches.

Also, the ranks of first-time buyers may also thin after new federal mortgage rules come into effect in April, Masters says.

The couple's latest offer in February was rejected even with a bid $30,000 above the asking price. It was nixed by their one condition -- a building inspection to be completed within one day, Prema says. The winning bid had no conditions.

They are seeing two-hour open houses filled with other hopeful buyers, with offers accepted at 8 p.m. the same night, Prema says.

In that kind of atmosphere "you don't know if you can trust your own judgment," she says.

Prema, 36, teaches yoga. Husband Russell, 35, is a business financial consultant. They want a three-bedroom house between $400,000 and $550,000, a place to raise baby Uisce. "We would love to have grass, a garden and a backyard," Prema says.

The couple's struggles illustrate where the action is in the market. In Greater Victoria, the average price of a single-family house in February was $620,833, and the median was $560,950. Almost half the single-family houses sold last month were for less than $550,000.

Prema had originally expected to find a house, negotiate in a calm atmosphere and eventually come to an agreement.

"We thought we were being the clever ones. We have our financing in place," she says. "Instead, everyone is racing to buy the house as quickly as possible."

Their first bid last year was $14,000 over the asking price, Prema says. They fell in love with the house and "our hearts got broken" when they didn't get it.

They took a break from house hunting last year, returning to the market in December to find it heated and prices higher, she says.

Masters agrees that the market can be "pretty intense." She says it is partly due to a push among buyers to find a home prior to new federal rules, coming in April 19, applying to mortgages backed by Canada Mortgage and Housing Corp.

Borrowers will have to be able to afford a five-year, fixed-rate mortgage, and someone wanting to refinance a mortgage can borrow only up to 90 per cent of the assessed value of the home, down from 95 per cent.

Masters anticipates only modest increases in interest rates later this year.

Buyers in B.C. who are looking at new homes are also trying to find a place before the harmonized sales tax is introduced in July. Under that program, the HST rebate applies only to properties selling for up to $525,000.

CMHC said recently that new-housing construction will rise in 2010, putting a lid on home prices this year following their 19 per cent surge in 2009. Between 152,000 to 189,300 housing starts are expected in 2010, up from 149,081 units last year, the national housing agency said.

Describing the current state of affairs as a sellers' market, CMHC said the relative lack of new listings for existing homes has pushed some of the demand into the new home market, which helps explain the forecast for higher housing starts activity in 2010.

But it added that it expects prices to remain stable in 2010 around the MLS average reached in January this year of $328,537 nationally, as the new housing stock brings balance back to the market.

(prepared by Carla Wilson/Victoria Times Colonist/Vancouver Province)