First-time buyers boosting resale housing market
First-time buyers are helping kick-start a sputtering resale real estate market, thanks to some contributing factors, say those in the know.
The low interest rates and other government incentives have helped first-time buyers get into home ownership, says Lai Sing Louie, senior market analyst with Canada Mortgage and Housing Corp.
"There are incentives for them to buy now. The first-time buyers can, for instance, take out $25,000 in RSP money (up from the previously $20,000 limit) without consequences, and if they bought after January 27, they are able to qualify for $750 in tax relief next year," says Lai Sing Louie.
"And mortgage rates are at a very good rate right now."
In fact, they're at record lows, so homeowners can get in and have payments that are much less than they were even a year ago, he says.
"People can get a five-year fixed rate for four per cent, whereas it was 6.6 per cent last year at this time," says Louie.
Combine that with the lower prices for condos in the market, and housing affordability is much improved, he says.
The average price of resale condominiums that sold through the Calgary Real Estate Board last month was $284,056 --down nine per cent from the same month last year when the average price was $312,620, but up from the average of $268,971 posted in February.
A total of 446 condos sold in March, compared to 565 in March 2008 and just 343 last month.
Taking the average March 2008 condo price ($312,620) with 10 per cent down, the mortgage amount would be $281,358. "At last year's interest rate of 6.6 per cent and amortization of 25 years, monthly payments would be around $1,917," says Louie.
Last month, that same condo would sell for an average of $284,056. "With interest rates at four per cent, the same 10 per cent down and 25-year amortization would mean monthly payments of $1,349. That's down $568 a month--much more affordable," says Louie.
"And that gives people a degree of certainty knowing what the mortgage will cost for the next five years."
The numbers are "encouraging," says Bonnie Wegerich, president of CREB and a realtor with Century 21 Castlewood Agencies. "Two years ago, young people couldn't afford to buy. Our statistics show that our most active sales by price category in condos was the $200,000 to $299,999 range."
In fact, of the 446 condo sales last month (compared to 565 in March 2008 and 343 in February), 263 units, or 59 per cent of sales, were in that range.
Listings are coming down as well, with fewer condos for sale compared to a year ago.
As of the end of March, 2,052 condos were in the inventory, compared to 2,781 last year for the same month. It now takes an average of 56 days to sell a condo, compared to 43 days in the same month the year before.
