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First-time buyers acquire property prior to interest rate increases, says RE/MAX

First-time buyers acquire property prior to interest rate increases, says RE/MAX

Driven by the threat of higher interest rates down the road, first-time buyers are contributing to strong upward momentum in residential housing markets across the country, according to a report released today by RE/MAX.

The RE/MAX First-Time Buyers Report, highlighting trends and developments in nineteen major Canadian centres, found that low interest rates and balanced market conditions have provided significant impetus in 2011, particularly at lower price points. The trend was prominent in Quebec markets, particularly on the Island of Montreal, where supply remained limited in the lower end.  Just over 30 per cent of markets overall are reporting sales in excess of 2010 levels, while almost 70 per cent have experienced an upswing in average price.  Leading the country in terms of percentage increases in the number of homes sold are Western Canadian markets, including Saskatoon (up close to 15 per cent), Greater Vancouver (up close to 12 per cent), and Winnipeg (up just over 11 per cent).  With an average price hike of close to 20 per cent year-to-date (February), Greater Vancouver continues to show unprecedented strength, followed by Hamilton-Burlington (eight per cent), Quebec City (seven per cent), Winnipeg (close to seven per cent), Greater Toronto (five per cent), and the Island of Montreal (five per cent).

"Few things trump the fundamental belief in homeownership," says Sylvain Dansereau, Executive Vice President, RE/MAX of Quebec.  "Today's entry-level buyers are steadfast in their mindset.  They know they have to live somewhere, but they simply don't want to pay someone else's mortgage.  They're also motivated—keen to get in while conditions are the most favourable.  Savvy or practical, they remain a driving force in Quebec and across the country.  The bottom line is that the demand for entry-level product will remain steady.  The role of starter homes in the marketplace is becoming ever more vital."

Inventory levels, while tight in several larger centres, are more balanced overall, giving first-time buyers a good selection housing product from which to choose.  Not surprisingly, condominium apartments and town homes have become the first step for many entry-level purchasers, especially in Greater Montreal, Vancouver, Victoria, Kelowna, Edmonton, Calgary, London-St. Thomas, Hamilton-Burlington, Greater Toronto, and Halifax-Dartmouth where average prices have risen unabated in recent years.

"With the Canadian economy on firmer footing overall, residential real estate is well-positioned moving into the traditionally busy spring market," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada.  "Consumer confidence is climbing in conjunction with economic performance, and concerns over a secondary recession fade with each passing day.  The mood is cautiously optimistic as first-time buyers enter the market, with few throwing caution to the wind."

Changes to recent financing criteria have not created the anticipated run up in activity in most markets.  In Quebec, the effect was negligible.  From a financial standpoint, most rookie home buyers remain quite prudent.  Those making the leap are not doing it lightly, buying within their means.  While this most recent round of policy tightening will likely have a negligible effect on demand, the message is getting across.

Affordability remains a growing concern in most markets, and—aside from first-time purchasers—no one is more in tune with that than housing planners and developers.  In fact, the growing demand for reasonably-priced product is creating a shift in the country's housing mix.  That trend is expected to gain traction in coming years, as builders look to create greater options for those seeking to realize homeownership.    In recent years, builders have helped ease the move to homeownership by concentrating on intensification—condominium buildings with smaller suites and small-lot subdivisions offering detached, compact homes at a fraction of the cost of a traditional single-family home.   On the flip side, the affordability factor is also breathing new life into tired older neighbourhoods, and that, in turn, is contributing to rising values.

As prices escalate, first-time buyers are indeed spending more—some out of necessity, but others are simply in a position to do so.  Unlike in years past—a greater percentage of today's first-time buyer pool is comprised of dual-income, college or university-educated couples with solid earnings.  They're spending close to average price or slightly more to secure—in most cases—a better location or a home that will grow with them.   Yet, the fact remains that those on a tighter budget can get in for considerably less, with reasonable choices in every major market across the country.  Quebec markets were no exception, with Quebec City, in particular, boasting attractive affordability levels.   While some may feel discouraged by increasing prices, the underlying confidence in the concept of homeownership is rising.

"Despite homeownership rates approaching 70 per cent, there is clearly room for growth as entry-level buyers make their moves from coast-to-coast, undeterred by higher housing values and changes to lending criteria" says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic  Canada.  "Many purchasers intent on realizing homeownership 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."

RE/MAX is Canada's leading real estate organization with over 18,000 sales associates situated throughout its more than 690 independently-owned and operated offices in Canada.  The RE/MAX network, now in its 38th year, is a global real estate system operating in 80 countries, with over 6,300 independently-owned offices and over 92,000 member sales associates.  RE/MAX realtors lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral, and asset management.  For more information, visit:




Average Price

Five Per Cent




Greater Vancouver

$780 819

$39 041

$741 778

$3 479

$130 460


$489 113

$24 456

$464 657

$2 179

$81 722


$390 462

$19 523

$370 939

$1 740

$65 239


$313 242

$15 662

$297 580

$1 396

$52 337

Calgary Metro***

$410 664

$20 533

$390 131

$1 830

$68 614


$266 701

$13 335

$253 366

$1 188

$44 561


$292 463

$14 623

$277 840

$1 303

$48 865


$228 822

$11 441

$217 381

$1 020

$38 232


$334 357

$16 718

$317 639

$1 490

$55 865

Greater Toronto***

$442 978

$22 149

$420 829

$1 974

$74 013


$329 305

$16 465

$312 840

$1 467

$55 021


$283 844

$14 192

$269 652

$1 265

$47 425

London-St. Thomas***

$226 709

$11 335

$215 374

$1 010

$37 879

Québec City***

$239 329

$11 966

$227 363

$1 066

$39 987

Island of Montréal***

$354 549

$17 727

$336 822

$1 580

$59 238


$153 028

$7 651

$145 377


$25 568


$257 355

$12 868

$244 487

$1 147

$42 999

Prince Edward Island

$142 218

$7 111

$135 107


$23 762

St. John's***

$255 512

$12 776

$242 736

$1 138

$42 691

*Represents Gross Debt Ratio of 32 per cent, five-year closed fixed-rate mortgage at 3.89 per cent, and a 30-year amortization period based on February 2011 year-to-date average price. Income required does not take into account property tax, heat or mortgage insurance.
**Carrying Costs and Income Data Calculated by: Miles Kulik, Verico MHC Mortgage Services

Average Price Sources:
Canadian Real Estate Association
Local Real Estate Boards***

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Québec Landlords Association (1)

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