Driven by the
threat of higher interest rates down the
road, first-time buyers are contributing to
strong upward momentum in residential
housing markets across the country,
according to a report released today by
RE/MAX.
The RE/MAX
First-Time Buyers Report, highlighting
trends and developments in nineteen major
Canadian centres, found that low interest
rates and balanced market conditions have
provided significant impetus in 2011,
particularly at lower price points. Just
over 30 per cent of markets are reporting
sales in excess of 2010 levels as a result,
while almost 70 per cent have experienced an
upswing in average price. Leading the
country in terms of percentage increases in
the number of homes sold are Western
Canadian markets, including Saskatoon (up
close to 15 per cent), Greater Vancouver (up
close to 12 per cent), and Winnipeg (up just
over 11 per cent). With an average price
hike of close to 20 per cent year-to-date
(February), Greater Vancouver continues to
show unprecedented strength, followed by
Hamilton-Burlington (eight per cent), Quebec
City (seven per cent), Winnipeg (close to
seven per cent), Greater Toronto (five per
cent), and Greater Montreal (five per cent).
“Despite homeownership rates approaching 70
per cent, there is clearly room for growth
as entry-level buyers make their moves from
coast-to-coast, undeterred by higher housing
values and changes to lending criteria” says
Michael Polzler, Executive Vice President,
RE/MAX Ontario-Atlantic Canada.
“Many purchasers intent on realizing
homeownership are scaling back on
expectations or are willing to sacrifice
location, quality and/or size to make their
dream a reality – not unlike generations
before them.”
Inventory
levels, while tight in several larger
centres, are more balanced overall, giving
first-time buyers a good selection of
housing product from which to choose. Not
surprisingly, condominium apartments and
town homes have become the first step for
many entry-level purchasers, especially in
Greater Vancouver, Victoria, Kelowna,
Edmonton, Calgary, London-St. Thomas,
Hamilton-Burlington, Greater Toronto, the
Island of Montreal, and Halifax-Dartmouth
where average prices have risen unabated in
recent years.
“With the
Canadian economy on firmer footing overall,
residential real estate is well-positioned
moving into the traditionally busy spring
market,” says Elton Ash, Regional Executive
Vice President, RE/MAX of Western Canada.
“Consumer confidence is climbing in
conjunction with economic performance, and
concerns over a secondary recession fade
with each passing day. The mood is
cautiously optimistic, as first-time buyers
enter the market.”
Changes to
recent financing criteria have not created
the anticipated run up in activity in most
markets. From a financial standpoint, most
rookie home buyers remain quite prudent.
Those making the leap are not doing it
lightly, buying within their means. While
this most recent round of policy tightening
will likely have a negligible effect on
demand, the message is getting across.
Affordability remains a growing concern in
most markets, and—aside from first-time
purchasers—no one is more in tune with that
than housing planners and developers. In
fact, the growing demand for
reasonably-priced product is creating a
shift in the country’s housing mix. That
trend is expected to gain traction in coming
years, as builders look to create greater
options for those seeking to realize
homeownership. In recent years, builders
have helped ease the move to homeownership
by concentrating on
intensification—condominium buildings with
smaller suites and small-lot subdivisions
offering detached, compact homes at a
fraction of the cost of a traditional
single-family home. On the flip side, the
affordability factor is also breathing new
life into tired older neighbourhoods, and
that, in turn, is contributing to rising
values.
As prices
escalate, first-time buyers are indeed
spending more—some out of necessity, but
others are simply in a position to do so.
Unlike in years past—a greater percentage of
today’s first-time buyer pool is comprised
of dual-income, college or
university-educated couples with solid
earnings. They’re spending close to average
price or slightly more to secure—in most
cases—a better location or a home that will
grow with them. Yet, the fact remains that
those on a tighter budget can get in for
considerably less, with reasonable choices
in every major market across the country.
While some may feel discouraged by eroding
affordability levels, the underlying
confidence in the concept of homeownership
is rising.
“While
market conditions are one thing that
influences first-time buyers, few things
trump the fundamental belief in
homeownership,” says Sylvain Dansereau,
Executive Vice President, RE/MAX of Quebec.
“Today’s entry-level buyers are steadfast in
their mindset. They know they have to live
somewhere, but they simply don’t want to pay
someone else’s mortgage. Savvy or practical,
they remain a driving force. The bottom line
is that the demand for entry-level product
will remain steady. The role of starter
homes in the marketplace is becoming ever
more vital.”
RE/MAX is
Canada’s leading real estate organization
with over 18,000 sales associates situated
throughout its more than 690
independently-owned and operated offices in
Canada. The RE/MAX network, now in its 38th
year, is a global real estate system
operating in 80 countries, with over 6,300
independently-owned offices and over 92,000
member sales associates. RE/MAX realtors
lead the industry in professional
designations, experience and production
while providing real estate services in
residential, commercial, referral, and asset
management. For more information, visit:
www.remax.ca.
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