First-time Home Buyers Flood Market

First-time buyers are “scrambling to realize homeownership” across Canada fearing housing prices will continue to soar, according to a recent report.

Higher housing values, tight inventory levels, and all-out bidding wars have yet to deter first-time buyers in major Canadian centres this year, the real estate firm said. “Entry-level buyers continue to be a driving force in real estate,” Michael Polzler, Ontario-Atlantic Canada, said in a statement. “Their undaunted enthusiasm is expected to translate into sales at or ahead of last year’s record levels in the spring.”

The 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.

“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,” Elton Ash, regional executive vice-president, of Western Canada, added. “Purchasers simply refuse to be priced out of the market, even though household income has not kept pace with housing appreciation.”

First-time buyers have turned to innovative financing such as new mortgage products with longer amortization periods. Some tap into RRSPs and borrow money from family, while others offset carrying costs through in-law suites, now factored into debt-service ratios by some lending institutions.

The greatest year-over-year price appreciation occurred in Edmonton, Calgary, Saskatoon, and Kelowna, B.C., where averages rose 52, 29, 26, and 23 per cent, respectively.

The average price in the country’s most expensive market, Greater Vancouver, jumped 11 per cent, from February 2006 to February 2007, topping the $500,000 mark. “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,” Polzler said.
“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 … and your dollar just doesn’t have the same purchasing power.”

James Manfron and his wife, who recently purchased a single-family home in Calgary, said the continuing rise in house prices was a “huge factor. It made us feel pressured to have to get something now instead of maybe giving us the time to look things over and say ‘oh maybe this one, maybe that one,'” said the 29-yearold, who is a home inspector. “You know every week that you wait, you know it’s going up.”

Condominiums, which can start at half the average price of a home, are increasingly a popular choice for first-time buyers. Condos currently represent just under one in every two sales in markets such as 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 such as Saskatoon, Regina, and Winnipeg, condominiums are gaining
Calgary Herald, CanWest News Service

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Published in: on April 5, 2007 at 3:17 pm  Leave a Comment