First-time homebuyers, Vancouver market boost housing market this year
Posted: Apr 05 2011 Topic:
First-time homebuyers looking to avoid higher interest rates down the road are helping drive up the real-estate market in a number of Canadian regions, says a report issued Tuesday.
Real-estate services firm Re/Max said the prospect of higher mortgage rates has prompted many of those determined to get into the market to act in the early part of this year.
It also noted the federal government’s newly implemented conditions for mortgages that reduced the maximum amortization period for government-insured mortgages to 30 from 35 years, and limited the amount people can borrow when refinancing their mortgages to 85 from 90 per cent of the value of their homes.
Rather than diminishing overall demand, Re/Max said the new rules are prompting many to compromise on their expectations.
“Many purchasers intent on realizing home ownership are scaling back on expectations or are willing to sacrifice location, quality and/or size to make their dream a reality, not unlike generations before them,” said Michael Polzler, Re/Max’s executive vice-president for Ontario and Atlantic Canada.
Led by the Bank of Canada’s relatively low benchmark rate of one per cent, homebuyers continue to enjoy mortgage rates that are low by historical standards. However, it’s not expected to last.
Just this week, most of Canada’s major banks hiked their mortgage rates, with standard five-year, fixed rates moving up 35 basis points to 5.69 per cent a year.
Re/Max said that, so far this year, home sales are up from where they were at the same time in 2010 in about 30 per cent of Canada’s main markets, with prices rising in 70 per cent of markets.
The Vancouver region is particularly strong, with sales up about 12 per cent and prices rising 20 per cent.
Some of biggest sales gains are in the West, Re/Max said, including Saskatoon’s 15 per cent gain and Winnipeg’s growth of 11 per cent.
Some of the other areas where price growth is strong include Hamilton (eight per cent), Quebec City (seven per cent), Winnipeg (seven per cent), Toronto (five per cent) and Montreal (five per cent).