Tuesday, March 27, 2007

Healthy Spring Market Ahead - RE/MAX forcast

Re/Max forecasts heated spring market Mar 21, 2007

Higher housing values, tight inventory levels, and all-out bidding wars have yet to deter first-time buyers in major Canadian centres this year, says a new report by Re/Max.

“Buyers are finding the means necessary to enter the market, even in the western provinces, where double-digit price gains have been reported and sales to listings ratios hover above the 80 per cent mark,” says Elton Ash, regional executive vice-president, Re/Max of Western Canada. “Purchasers simply refuse to be priced out of the market, even though household income has not kept pace with housing appreciation. Something’s got to give – and the trends identified in this report show it’s the how, what, where and when of the equation.”

The Re/Max Affordability Report, which highlights first-time buying activity and trends in 13 housing markets across the country, says that substantial price increases have had little impact on buyer intentions. The greatest year-over-year price appreciation is in Edmonton, Calgary, Saskatoon and Kelowna, where averages rose 52, 29, 26, and 23 per cent respectively. Average price in the country’s most expensive market – Greater Vancouver - has jumped 11 per cent, topping the half million-dollar mark.

While prices in these markets may now seem costly, entry-level product such as condominiums can start at half the average price, says Re/Max.

Condominiums now represent just under one in every two sales in markets like Vancouver and Victoria. In Edmonton, Calgary, and the Greater Toronto Area, close to one in every three sales involve a condominium apartment or town home. In smaller markets like Saskatoon, Regina, and Winnipeg, condominiums are gaining momentum. Condominium sales represent approximately 12 per cent of total residential sales in Halifax-Dartmouth and Ottawa, says the report.

“Low interest rates and solid economic performance in most major Canadian centres have also played a substantial role in providing purchasers with the confidence to go out and buy their first home,” says Michael Polzler, executive vice-president and regional director, Re/Max Ontario-Atlantic Canada. “Yet, in some centres, there are other motivating factors at play. Price increases, for example, are a reality in the marketplace. One year can set you back – from location to house size – and your dollar just doesn’t have the same purchasing power.”

Re/Max says innovative financing has allowed a growing number of first-time buyers to enter the marketplace. New mortgage products with longer amortization periods are helping to make mortgage payments easier to carry, the company says.

The offloading of family wealth and inheritance are also factors influencing home-buying activity, says Ash. Some first-time buyers are digging into RRSPs and borrowing money from parents, while others are looking to offset carrying costs through in-law suites, now factored into debt service ratios by a growing number of lending institutions.

“Despite a decade of year-over-year price increases, compounded by challenging market conditions this year, entry-level buyers continue to be a driving force in real estate,” says Polzler. He says, “Their undaunted enthusiasm is expected to translate into sales at or ahead of last year’s record levels in the spring.”

This makes sense, Read more about the spring market cycle

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

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