Having decided Canada would not face the same scenario in the real estate market as the United States there was still speculation late last year about supposed free-falling property prices, fuelled by market trends in British Columbia and Alberta where rapid price increases and speculation had been prevalent. Based on current statistics there is now an emerging body of evidence that the Southern Central Ontario real estate marketplace is seeing what is best described as a “market adjustment” resulting in a soft landing and not the crash that much of the media projected.
In our local area, residential resale activity for June is up on the same month last year. In Oakville, by 18% and the ever
expanding Milton by 34%. Current data would suggest little movement up or down in average sales prices with Oakville
down 1% and Milton up 2% on last June.
The median sale price. which is the midpoint of all sales, in Oakville for the first six months of this year is $418,000 down
just 2% from the same period last year and in Milton at $325,000 is down only 1%. With the number of new listings also down, year to date and June statistics showing signs of pent up demand resulting in higher sales we could be moving back to a sellers market. Many of the economical problems facing home buyers today have been offset by lower mortgage rates and a stable market place.
There are signs that we may be recovering from the first recession since 1992. Buyers, Sellers and REALTORS® will certainly find this scenario much less stressful.Taking the stress out of buying and selling is our day to dayactivity.
If you are considering either buying or selling now could be one of the best times to be reviewing your options while the market is stable. Preparation is a key part of the process.
Canadians who are considering purchasing their first home are primarily motivated by lower home prices and very low interest rates, but some require confidence in the economy and their employment prospects before they will enter the market, according to a report released today by Royal LePage Real Estate Services. Eighty-six per cent of potential first-time buyers say low interest rates make them more likely to purchase a home; 81 per cent cite lower housing prices as a motivating factor; while 76 per cent cite job security and 64 per cent say a stable economy is an important factor in their decision to buy.
Potential buyers were asked to rank their top incentives for purchasing a first property. While home prices and interest rates took the number one and two rankings, respectively, the third most popular incentive was the First-Time Home Buyers’ Tax Credit. The recently introduced Home Renovation Tax Credit for 2009 was cited by 42 per cent of potential first-time buyers as either ‘very likely’ or ‘somewhat likely’ to impact their purchasing decision.
“When first time buyers stepped out of the market in the fourth quarter of 2008, at the height of the global recession, their absence was profoundly felt. Without significant volumes of entry-level homes trading hands, the entire market limped through the winter months. First time buyers are back in force this spring, and with them the beginnings of a market recovery. While these consumers appreciate government incentives such as tax credits, greater RSP deduction limits and rebates on home renovations, it is markedly improved affordability that is proving to be the powerful drawing card,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “Our survey demonstrates how important affordability factors such as interest rates and house prices are in stimulating demand.”
Across the country, potential first-time homebuyers agreed that affordability was their top consideration, however the survey also revealed differences amongst buyers in various regions of Canada. In provinces such as British Columbia where high housing prices have kept some buyers out of the market in recent years, 92 per cent of potential first-time buyers are now motivated by low interest rates and 96 per cent say lower home prices are likely to prompt them to buy.
In Atlantic Canada, where local economies have been resilient in the face of a worldwide recession and housing markets remain stable, 43 per cent of first-time buyers say they that job security is a factor in their decision to buy, while 84 per cent of buyers in British Columbia and Alberta said job security will influence them.
Atlantic Canadians were less motivated than other Canadians by declining interest rates, with only 72 per cent saying it will likely prompt a buying decision, compared to 86 per cent of Canadians overall. Buyers in Ontario and Quebec rated the Home Renovation Tax Credit as a bigger factor in their buying decision, compared to the Canadian average.
Mr Soper continued, “The significant response differences from region to region show how closely the residential real estate market is tied to broader economic trends and consumer confidence. Buying your first home is a major life decision, and people are more likely to purchase a home if they feel comfortable about the state of the economy and confident that they will have a job to support their new mortgage obligation.”
Top Incentives for First-Time Buyers across Canada Potential first-time buyers were asked to choose their number one incentive for purchasing a first property. The table shows the percentage of respondents who selected each factor as their top incentive.
Overall
BC & Territories
Alberta
Prairies
Ontario
Quebec
Atlantic
Lower Housing Prices
33%
49%
48%
55%
32%
13%
26%
Low Interest Rates
27%
32%
29%
4%
23%
41%
17%
First-Time Home Buyers’ Tax Credit
12%
3%
10%
22%
15%
11%
10%
Job Security
10%
6%
5%
2%
10%
16%
15%
Additional Government Actions to Stabilize Housing Markets
3%
3%
<1%
10%
3%
4%
<1%
Home Renovation Tax Credit
2%
1%
<1%
1%
1%
3%
11%
Stable Economy
2%
2%
<1%
<1%
3%
2%
<1%
Greater RSP Deduction Limits
1%
<1%
1%
<1%
1%
1%
<1%
Stable Financial Markets
<1%
<1%
<1%
<1%
1%
<1%
<1%
REGIONAL SUMMARIES
Atlantic
Overall activity in the housing market has remained steady in the Atlantic region with first-time homebuyers continuing to enter the market. Low interest rates and recent government incentives, such as the Home Renovation Tax Credit, greater RSP deduction limits and the First-Time Homebuyer’s Tax Credit speak to affordability. Buyers in this area are entering the market that would not have a few years ago, due to these influencing factors. Entry-level buyers in Newfoundland, Prince Edward Island, New Brunswick and Nova Scotia continue to search for detached bungalows, with the average price ranging from $157,000 in Charlottetown to $215,667 in Halifax during the first quarter of 2009.
Quebec
First-time buyers continue to pursue the dream of home ownership in Montreal, as the number of entrants to the housing market has remained relatively stable. Low interest rates are contributing to increased market entry with 41 per cent of first-time buyers suggesting this is the key incentive driving the purchase of their first property, followed by 13 per cent who suggest lower housing prices might influence their buying decision. With 47 per cent of new buyers in Quebec planning to settle in urban areas, buyers are planning to invest and live in their first home for ten or more years. Fifty-six per cent of first-time buyers hope to purchase a property in the $150,000 to $300,000 price range.
Ontario
Encouraged by recent government initiatives, home ownership in Ontario is becoming a reality for an increasing number of younger purchasers. Across Ontario, 36 per cent of potential first-time buyers are most likely to purchase property in an urban setting. Condominiums continue to attract first-time buyers in the Greater Toronto Area with urban communities at accessible price points appealing most to market newcomers. In addition to affordability, location is a leading factor dictating condominium appeal. Neighbourhoods in Toronto’s east and west downtown core are popular with first-time buyers. In Ottawa, affordability continues to drive activity and most first-time buyers are opting to purchase in suburban areas where properties typically cost $50,000 to $75,000 less than in the city centre. Active first-time buyer markets include Orleans, Barrhaven and Kanata.
Manitoba & Saskatchewan Thirty per cent of Prairie buyers planning on purchasing their first home in the next three years will choose a detached bungalow. The second-most popular choice for first-time buyers is condominiums at 21 per cent, followed by detached two-story homes at 15 per cent. In Winnipeg, up-and-coming neighbourhoods for first-time buyers include River Heights – which has traditionally been attractive for people entering the market – Fraser’s Grove and East / North Caldonin. With a good selection of older bungalows and two story homes, Broders Annex is the hottest neighbourhood for first-time buyers in Regina.
Alberta
Alberta’s urban centres continue to be popular with first-time buyers, who make up nearly a third of home sales in both Calgary and Edmonton. Condominiums and detached bungalows are the most popular choices for first-time buyers in Edmonton, where lower housing prices and low interest rates are the biggest incentives for buyers entering the market for the first time. Popular areas for new buyers include the suburbs, where a new condominium may be within budget, the university area, where many parents are buying for their kids, Allendale and McKernan. In Calgary, new buyers are most interested in inner city condominiums and detached houses in the suburbs, with many seeking new or renovated homes.
British Columbia With home prices either flat or declining in many communities in British Columbia and with interest rates at record lows, first-time buyers are taking advantage of greater affordability, with female buyers leading the trend. Sixty per cent of the buyers getting into BC’s housing market for the first time are women. In British Columbia, 40 per cent of prospective first-time buyers intend to purchase a ‘fixer-upper’ while 80 per cent would take advantage of the Federal Government’s Home Renovation Tax Credit in making upgrades to a home. First-time buyers in Vancouver are favouring condominiums and townhomes, however an increasing number of entry-level buyers are finding affordable detached homes outside the city in the Fraser Valley suburbs.
The survey portion of the Royal LePage First-Time Homebuyers’ Report was conducted by Pollara from April 29, 2009 to May 8, 2009 among 474 first-time homebuyers in Canada. The online survey was conducted among a randomly-selected sample of 474 adult Canadians who are likely to purchase their first home in the next 3 years. A probability sample of this size with a 100% response rate would have an estimated margin of error of +/- 4.5 %, 19 times out of 20. The data was statistically weighted to ensure the sample’s regional and age/gender composition reflects the actual Canadian population according to the most recent Census data.
The average apartment vacancy rate in Alberta’s urban centres increased from 2.9 per cent in April 2008 to 4.6 per cent in April 2009. All centres except Grande Prairie reported a higher vacancy rate in 2009.
The 2009 vacancy rates ranged from a low of 1.2 per cent in Cold Lake to a high of 8.5 per cent in Grande Prairie.
Calgary and Edmonton, the two largest urban centres, reported vacancy rates of 4.3 and 4.7 per cent, respectively.
The provincial average rent for all unit types was $962 per month in April. At $2,088, Wood Buffalo had the highest average monthly rent amongst all urban centres in Alberta, while Medicine Hat had the lowest average rent at $654 monthly.