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Tuesday, August 23rd, 2016

First-time homebuyers helping to drive real estate sales But more potential buyers worried about growing costs

First-time home buyers are a key driver of the housing industry. Photograph by: Kathy McCormick, Calgary Herald

First-time home buyers are a key driver of the housing industry. Photograph by: Kathy McCormick, Calgary Herald

CALGARY — First-time homebuyers have accounted for about one in every two homes sold in Canada in the past two years, over more than a quarter of a million sales per year across the country, says a new report.

A housing report by the Altus Group, an economic consulting firm, says the majority of first-time buyers are in the under-35 age group with the 25-34 segment alone accounting for six out of every 10 first-time buyers.

Many first-time buyers are more ‘mature’ with about one in four aged 35-49 years old.

The report says over one-fifth of first-time buyers purchased a newly-built home. Of these, about one in three opted for a condominium unit.

About one in four recent first-time buyers was a single-person household.

“The average house price for a recent (first-time buyer) in Canada was about $273,000. This is about four times the average annual household income of about $69,000 — up substantially from the price/income ratio of 2.7 per cent for (first-time buyers) in the 2001-2002 period,” says the report.

Sano Stante, president of the Calgary Real Estate Board, said first-time buyers are significant for the housing market “because it feeds all the markets downstream.”

He said it’s important first-time buyers have “sustained” home ownership.

“We wouldn’t want buyers to get into the market only to not be able to sustain that purchase years down the road,” he said. “It’s OK that buyers are holding off perhaps a little longer, maybe they’re saving a little bit more, putting a little bit more down, or maybe waiting until they’re a little bit older to purchase provided it’s more sustainable and they have endured home ownership.”

First-time buyers have taken advantage of various means to help them get into home ownership: minimal down-payments; longer amortization periods to reduce regular payments; variable rate mortgages to reduce regular payments; RRSPs for down-payments; and help from family.

But the FIRM Residential Mortgage Survey, conducted quarterly by the Altus Group and Ipsos Reid, found first-time buyer intentions among those who currently rent were down from a year ago and were also below the average level of the 2002-2009 period. Softer first-time homebuying intentions are tied to the additional tightening in mortgage insurance rules in the past two years.

“First-time buyers make the home sales world go around, playing an important role as buyers in the newly-built market, and also in purchasing existing homes so that the sellers can buy another home, often in the new home market,” says the Altus Group.

“The buoyant population in the key first-time buying age groups is positive for demographic demand from this market segment. However, given prevailing house price levels and the cumulative impacts of more stringent mortgage insurance criteria, access to the market has become more restricted for these potential (first-time buyers) — which is expected to keep proportionately more of them on the sidelines until there are affordability improvements.”

 

mtoneguzzi@calgaryherald.com

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/First+time+homebuyers+helping+drive+real+estate+sales/4778173/story.html#ixzz1MpBwOD1n

 

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