Real Estate
Apr 22, 2009

First-time homebuyers rule current housing market

By: Martha Uniacke Breen

First-time homebuyers rule current housing market Author: Style At Home

Real Estate
Apr 22, 2009

First-time homebuyers rule current housing market

By: Martha Uniacke Breen
If you've been thinking about buying your first home or condo, but have been hesitating because of fears about falling prices and the shrinking economy, the time to act may well be now. According to a recent panel of financial and real estate experts convened by the Bank of Montreal (BMO) as part of its launch of a new information kit for first-time homebuyers, the recent market offers some genuine opportunities for first-timers.
 
The panel did not mince words when it came to the near-collapse of the residential market over the last year or so. BMO senior economist Sal Guatierri pointed out that home sales are down as much as 40 percent nationwide and that the construction industry will continue to bleed jobs for the next six months at a rate unseen since the early '80s. But Century 21 Canada president Donald Lawby added that the truth is both more complex, and less alarming, than the statistics indicate. "Markets are always local," he explained. "The Windsor market is substantially different from the Edmonton market, and the worst market statistically (Vancouver/Lower Mainland) was the highest-flying at the peak. Also you have to consider the type of housing. Last year, top-end sales especially were way down, but the entry level—which tends to drive the market as a whole—is showing signs of life."

Today's real estate market
One of the most important changes in the character of today's real estate market is an effective end to the kind of quick-flip speculation that helped drive prices through the roof at the height of the boom years. The panelists generally agreed that while there’s no guarantee that prices will decline any further, the precipitous drop of recent months is over and that modest, more normal increases are expected to return, especially for those who are buying a home rather than a pure investment. "The people who had to sell at any price have already sold and left the market," explained Toronto realtor Brad Lamb, "and power-of-sale homes [which have a dampening effect on overall housing prices] are almost non-existent now. So affordability and value are much more solid, and you can get very attractive mortgage rates now."

The end of bidding wars
Also, an end to the hysteria of bidding wars, condition-free offers, and especially the inflationary effects of speculation, has made it much more comfortable for buyers in general and first-time homebuyers in particular. Phil Soper, president and CEO of Brookfield Real Estate Services, pointed out that recent initiatives by the federal government such as an increase in the amount of RRSP savings you can take out for a down payment, tax credits for renovations, and of course, the lowest interest rates in history, make it an attractive time to buy.
 
Condo sales, which have suffered particularly with the end of the boom, also hold some hidden opportunities. New sales (and construction) have slowed to a comparative trickle, while some 25,000 pre-sold units are expected to close in the next year in Toronto alone, effectively flooding the market. Yet, if you're willing to buy and hold on to your purchase for a while, things may be very different a few years from now. "Unfortunately, the construction industry will continue to suffer, and we could even see a shortage of condos by 2011," said Sal, leading to a return to increased demand and comfortably rising property values.

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First-time homebuyers rule current housing market