Real estate warming up for spring
First-time owners drive market as housing affordability improves
More people are starting to show up for open houses.
Photograph by: Darren Stone, Times Colonist, Times Colonist; With files from Canwest News Service
First-time home owners are driving home-buying as affordability improves across the country, says real estate company RE/MAX.
Canadian real estate markets are "reawakening" as the weather warms up, said Elton Ash, regional executive vice-president for RE/MAX of Western Canada. "First-time buyers seem more acclimatized to economic factors, even though the barrage of bad news continues to flow.
"Those who are secure in their jobs, have accumulated good down payments and have acceptable credit ratings continue to venture forward, undeterred by tighter lending criteria."
In Victoria, the market's upswing is reflected in the number of people showing up for open houses, Wayne Schrader of RE/MAX Camosun said yesterday.
That's grown from a few couples in January and the months prior to 30 to 50 people since mid-February, he said.
Residential sales in the capital region rose to 403 in February from 247 in January.
The market is continuing to build and 59 per cent of sales are for properties
that changed hands for less than $450,000, Schrader said.
"Many first-time buyers are looking to downtown Victoria and Esquimalt to realize their dream of homeownership," the report said.
The starting price for a single-family home in Greater Victoria has dropped to $310,000 this year from $350,000 last year, RE/MAX's report said. Schrader noted, however, that in the capital region, few single-family homes are available in that range, or even at $350,000 to $380,000.
The report also put the starting price for a 1,000-square-foot condominium at $190,000 this year, down from $200,000 last year. Many condos are priced at more than $250,000, Schrader said.
Low interest rates and government incentives to home buyers and for home improvements are helping to fuel the market, he said.
Stephen Gagnon, a mortgage broker with Mortgage Architects, who works with RE/MAX, is seeing an increase in the number of first-time buyers this year. Minimum credit requirements have tightened in today's market.
First-time buyers will often put a five per cent down payment onto a purchase, with many choosing condominiums or townhouses, or single-family homes with rental suites to help offset mortgage payments, he said.
Mortgage rates can change daily and a variety of options are available. If a buyer put five per cent down on a $225,000 condo and signed up for a five-year fixed rate of 4.15 per cent on a 35-year amortization, monthly payments would be just over $990, he said.
RE/MAX said people are being lured out of the residential-rental market by lower mortgage rates and home prices.
"Increased inventory and longer days on the market coupled with the lowest lending rates ever are presenting opportunities that have not been seen in almost a decade," the company said.
Of the 32 local markets
it tracks in Canada, RE/MAX said 22 of them, including Victoria, are "firmly in buyer's-market territory."
It said single-family homes can be found in 40 per cent of these locations for less than $200,000 and condominiums for even less in more than 70 per cent of the markets.
Millan Mulraine, economics strategist with TD Securities, agreed that conditions are ideal for first-time buyers to enter the housing market, or existing homeowners to upgrade, if their respective financial situations are secure.
While it's hoped improved affordability might plant the seeds for future recovery in the housing market, Mulraine said many economic impediments remain.
"The economy as a whole is not in great shape," Mulraine said. "The Canadian labour market itself seems to be turning belly up. For a number of people, it clearly isn't a time to be purchasing or getting into a big investment like buying a home when you're not sure about your employment situation."
The Canadian economy lost a record 129,000 jobs in January, according to Statistics Canada, and a loss of about 50,000 jobs for February is expected to be reported tomorrow.
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