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First-time buyer boosts home sales despite erosion of affordability
Heated Spring real estate market forecast from coast-to-coast
VANCOUVER,BC, March 20 / - Higher housing values, tight inventory
levels, and all-out bidding wars have yet to deter first-time buyers in their
quest to realize homeownership in major Canadian centres this year, according
to a report released today by RE/MAX.
Note: Also attributing to this is the more flexible mortgage products offered by
mortgage brokers and low mortgage rates.
"Buyers are finding the means necessary to enter the market, even in the
western provinces, where double-digit price gains have been reported and sales
to listings ratios hover above the 80 per cent mark," says Elton Ash, Regional
Executive Vice President, RE/MAX of Western Canada. "Purchasers simply refuse
to be priced out of the market, even though household income has not kept pace
with housing appreciation. Something's got to give - and the trends identified
in this report show it's the how, what, where and when of the equation."
The RE/MAX Affordability Report, which highlights first-time buying
activity and trends in 13 housing markets across the country, found that
substantial price increases have had little impact on buyer intentions. The
greatest year-over-year price appreciation occurred in Edmonton, Calgary,
Saskatoon, and Kelowna, where averages rose 52, 29, 26, and 23 per cent
respectively. Average price in the country's most expensive market - Greater
Vancouver - has jumped 11 per cent, topping the half million-dollar mark.
While prices in these markets may now seem costly, entry-level product such as
condominiums can start at half the average price.
Affordability and accessibility have made the condominium lifestyle a
popular choice from coast-to-coast. Condominiums now represent just under one
in every two sales in markets like Vancouver and Victoria. In Edmonton,
Calgary, and the Greater Toronto Area, close to one in every three sales
involve a condominium apartment or town home. In smaller markets like
Saskatoon, Regina, and Winnipeg, condominiums are gaining momentum.
Condominium sales represent approximately 12 per cent of total residential
sales in Halifax-Dartmouth and Ottawa.
"Low interest rates and solid economic performance in most major Canadian
centres have also played a substantial role in providing purchasers with the
confidence to go out and buy their first home," explains Polzler. "Yet, in
some centres, there are other motivating factors at play. Price increases, for
example, are a reality in the marketplace. One year can set you back - from
location to house size - and your dollar just doesn't have the same purchasing
power."
Yet, buyers have found inventive ways to address that as well. Innovative
financing has allowed a growing number of first-time buyers to enter the
marketplace. With most prepared to up the ante to realize "the dream of
homeownership," unique new mortgage products with longer amortization periods
are helping to make mortgage payments easier to carry.
The offloading of family wealth and inheritance are also factors
influencing the up swell in home-buying activity, explains Ash. Some
first-time buyers are digging into RRSPs and borrowing money from parents,
while others are looking to offset carrying costs through in-law suites, now
factored into debt service ratios by a growing number of lending institutions.
"Despite a decade of year-over-year price increases, compounded by
challenging market conditions this year, entry-level buyers continue to be a
driving force in real estate," says Michael Polzler, Executive Vice President
and Regional Director, RE/MAX Ontario-Atlantic Canada. "Their undaunted
enthusiasm is expected to translate into sales at or ahead of last year's
record levels in the Spring."
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STARTING PRICE FOR AFFORDABLE ALTERNATIVES
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Residential Starting
MLS Starting Price
Average % Price Single-
Market Price(xxx) Change Condominium Family
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Greater Vancouver 1,300 11.4% 0,000 0,000
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Victoria 7,689 17.6% 9,000 9,000
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Kelowna(*) 4,081 22.6% 0,000 0,000
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Calgary 5,536 29.4% 0,000 0,000
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Edmonton 3,407 51.9% 0,000 0,000
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Saskatoon 8,585 26.3% 5,000 0,000
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Regina 6,096 -0.5% ,000 ,000
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Winnipeg(xx) 0,509 12.0% ,000 ,900
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Ottawa 3,215 5.8% 0,000 0,000
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Greater Toronto 2,003 4.8% 0,000 0,000
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Hamilton-Burlington 5,513 9.7% 7,000 2,000
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Kitchener-Waterloo 3,109 6.7% 0,000 5,000
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Halifax-Dartmouth 5,891 5.6% 5,000 0,000
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Source: CREA, OMREB (Central Okanagan)(*), VREB, CREB, EREB, WREB, TREB,
and RE/MAX
It's also important to note that current mortgage rates continue to be very low which makes homeownership that much more afordable for the first time home buyer.
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