| Calgary Herald |
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They're back--but if they're not, they should be. A few years ago, before diminishing affordability sent them scurrying to the sidelines to continue to share accommodation or hang out at their parents' homes, first-time buyers were a force to be reckoned with.
If they had full-time jobs and could muster together five per cent of the value of a home for a down payment, they were in.
They were the starting point that set the whole chain reaction in motion.
They would buy a resale home and the sellers would move to something else, and those sellers --well, you get the idea.
I recall a housing seminar that strongly suggested first-time buyers were accountable for something like 35 per cent of all homes sold in Calgary.
Then, prices started to jump. Homes were selling in a matter of hours at above asking prices.
Multiple offers forced many potential purchasers to bail because their budgets just weren't high enough to compete.
Sellers, meanwhile, were reaping the benefit of being behind the steering wheel.
Well, things have turned. Firsttime buyers are back in the game, if they want to be.
Sellers are having to bring their asking prices back to more realistic levels to attract an anxious, but cautious, pool of buyers who know they now have more say over what happens in the marketplace.
At the same time, though, jobs are being lost in some sectors, salaries are likely being frozen, and consumer confidence has taken a hit. While there is some pent-up demand for homes, the buyer pool has gotten shallower. Sellers have to realize this.
On the other side of the coin, while zero-per-cent down payments and 40-year mortgages have gone the way of the penny match, mortgage rates and housing prices are trending down--at least for the time being.
That should be good news for those looking at home ownership for the first time.
Add to this the fact builders are focusing on giving home shoppers more for their money. in many homes, prices have been cut by many builders, and they are open to negotiation.
There also seems to be a new emphasis on quality now that the market has somewhat calmed.
Bill Bobyk, general manager of the Sterling Group of Companies, says there are two basic reasons people should be buying: "very good" prices and attractive mortgage rates.
Another factor to consider is that "because this is not the market to be flipping homes, people should be buying with the intention of living in them for a few years," he says. "Buy them because they can be homes, not a short-term investment."
Another thing to remember are the tax breaks for buyers and home renovators in February's federal budget, presented by finance minister Jim Flaherty.
"The federal government's recent budget has added more reasons for Canadians who aren't yet homeowners to consider entering the real estate market this year," says Gary Siegle, Calgary-based regional manager for mortgage brokerage Invis. "For those who are feeling secure about their income and want to take advantage of low rates and a more affordable market, the budget provisions could make an enormous difference in terms of the properties they can afford."
Homebuyers can now withdraw up to $25,000-- up from $20,000 --from their RRSPs as a down payment under the Home Buyers Plan.
Secondly, they can qualify for a $750 tax credit to help them pay for closing costs, such as appraisal or legal fees.
"We are now seeing more first-time buyers seriously considering making the jump this spring into ownership," says Siegle. - Get documentation, such as proof of income and down payment, in place. A mortgage expert can also check credit history to ensure lender's requirements are met. - Apre-approved mortgage can save time, so establish a price range. Mortgage rates are also guaranteed by many lenders for up to three months. - In this type of market, there is room to negotiate with sellers on prices as well as any other terms set out in the listing, such as possession date, appliances being added, and home inspections.
There are plenty of homes to choose from, so don't rush things. - A mortgage is a big debt--probably the largest debt anyone can incur. As a result, it's wise to try to get it paid off as soon as possible.
There are several payment acceleration options out there, so find out what they are and save money in the long run. - Find a mortgage and a home that suits your lifestyle. The mort-gage should reflect your current financial status, but also fit with long-term goals. Don't just buy for the sake of buying in a buyer's market. Find yourself a home that fits your lifestyle as well as your future needs.
mhope@theherald.canwest.com
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