FIRST TIME BUYERS FIND WAY TO GET A HOME
The Vancouver Sun, April 23rd, 2008
Despite
continuously rising prices, first-time homebuyers are still finding
ways to get into the market, real estate firm Re/Max said in a report
Tuesday.
Even
if it means sacrifices such as purchasing a smaller property, taking
longer to pay it off, or living in a less-than-ideal location, buyers
"remain steadfast in their determination to purchase a home," the
report said.
In
B.C., that is still translating into some multiple offers, and homes
selling over asking price, said Karel Palla of Vancouver-based Re/Max
Select Properties. But these are much fewer in number as "we head
toward more normalcy," he said.
"The market continues to be healthy, but we aren't seeing the same urgency," Palla said.
Re/Max
estimates about 35 per cent of home sales in Greater Vancouver involve
a first-time buyer. But with the average home price in the area now
more than $600,000, buyers looking for affordability may want to look
elsewhere. For example, a three-bedroom detached home can still be
found in Abbotsford for as little as $237,500 and in Surrey for
$279,000, the report said.
In
Victoria, the average home price has eclipsed $500,000, but 62 per cent
of sales went for less than that, as first-time buyers focused on
entry-level condos under $250,000, Re/Max Camosun's Wayne Schrader said.
In
Kelowna, where the average price of a home is close to $500,000,
first-time buyers are also considering alternative locations, the
report said. But only 29 per cent of homes sold so far this year have
been below the average price. While inventory levels have improved
compared to a year ago, there is still a shortage of starter properties
listed for sale, the report said.
Helping
with affordability is lower interest rates, with the Bank of Canada
again cutting its overnight lending rate on Tuesday, a move immediately
reflected in variable mortgage rates and usually followed by fixed
rates.
Buyers
are also increasingly turning to "innovative financing," with longer
amortization periods -- now as long as 40 years, up from 25 years --
being used by 62 per cent of first-time buyers, the report said.
While
that may conjure comparisons with loose-lending standards in the United
States' subprime-ravaged housing market, Michael Polzler, Re/Max's
regional director for Ontario and the Atlantic, said mortgage
qualifications remain tougher in Canada.
"If the client is perceived of being a risk in Canada, it's much harder to get this type of financing," Polzler said.
And
while longer-term mortgages may mean people are paying for their houses
beyond retirement, such measures let younger buyers get a toehold in a
real estate market that's been on a seven-year bull run and is only now
easing slightly, Polzler said. The Canadian Real Estate Association
recently reported sales fell 7.1 per cent in the first quarter of 2008.
SEARCHING FOR AN AFFORDABLE HOME
Re/Max
has looked for affordable houses across Canada. Here are some
less-expensive listings it found for three-bedroom, single-detached
homes in British Columbia:
ABBOTSFORD / ESQUIMALT / KELOWNA
Purchase price: $237,500 / $380,000 / $239,000
10% downpayment: $23,750 / $38,000 / $23,900
MONTHLY PAYMENTS*:
25-year mortgage: $1,363 / $2,180 / $1,371
30-year mortgage: $1,265 / $2,025 / $1,273
35-year mortgage: $1,202 / $1,923 / $1,209
40-year mortgage: $1,158 / $1,854 / $1,166
* mortgage amounts include high-ratio insurance premiums
Source: Re/Max
B.C. market still healthy as people 'steadfast in their determination' to own, report says.
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