HOME & GARDEN First-time buyers seen as driving market force ACCORDING TO some of Canada’s leading real] estate experts, public opinion researchers and economists, first-time buyers are responding to improved conditions for purchasing homes. ; First-time buyers are seen as the driving force behind a return to greater market activity, with demand for. entry level housing brisk in most major urban areas. Virtually all major centres report an increase in market activ- ity over the summer and fall months and marginal price in- creases of 2% to 3%, this year over last. In some western cities such as Victoria, Vancouver and Edmorton, price increases for en- try-level homes are in the 4% tc 6% range. * . RE/MAX. Realty. forecasts de- mand for residential properties to remain at or.exceed current levels- throughout Western Canada, with price increases averaging 3% to 4% through 1993. In Central and Eastern Canada, greater sales have contributed to more balanced market conditions. Most cities are reporting a four to six month supply of housing on hand and anticipate price increases of between 2% and 3% for mod- erately priced homes. A recently held RE/MAX forum dealing with 1993 projec- 4&6 Projections two years out are for interest rates to settle in the 7% to 8% range. 99 tions, focused on first-time buyers. Among the most impor- fant findings, the forum conclud- C “Conditions for first-time buyers have improved dramatical- ly over the last 12 months. @ Greater affordability driven by lower interest rates, 5% down, CMHC-insured mortgages and to a lesser extent, RRSP home own- ership provisions, have made home purchases more attractive for first-time buyers. @ Lower prices. for moderately priced homes and greater supply, especially in the Greater Toronto area, have sparked renewed inter- est among first-time buyers. @ While there have been tremen- dous improvements in affordabili- ty in cities like Winnipeg, Regina, Saskatoon, Edmonton, and Toronto, first-time buyers are finding it increasingly difficult to find homes in Victoria and Van- couver, @ Despite more attractive condi- tions in the- market, the public lack of confidence i in the economy ‘as customers’ and uncertainty over jobs cor- tinues to hold back many poten- tial buyers and sellers. @ Interest rate levels will continue to fluctuate in the short term, with five year rates remaining in the 8.5% to 9% range. Projec- tions two years out are for interest rates to settle in the 7% to 8% “range. @ Interest rates will have less im- pact on volume of sales and real- tors are advised to focus on pro- viding improved quality of service understanding of market forces becomes more sophisticated. @ Market activity through the *90s will be driven more by new Canadians seeking their first homes. The impact of greater migration to B.C. is already hav- ing an impact on the levels and types of accommodation available in the Vancouver and Lower Mainland communities. The same factors will have a positive impact on markets in Central and Atlan- tic Canada. — Strong residential sales forecast DEMAND FOR moderately priced residential homes across Western Canada will ‘continue to be relatively strong through 1993, ac cording to a RE/MAX survey of broker/owners in British Columbia, Alberta, Saskatchewan and Manitoba. While entry level homes may vary widely in price, continuing demazd has !ed to record high sales end moderately escalating prices, in many lucations. First-time buyers account for a greater than ever share of the market and many are takiag ad- vantage of a combination of low interest rates, 5% down, Canada Mortage and Housing Corp. (CMHC) itsured mortgages and “Until December 51, 1992, only on instal. RRSP home ownership provisions to buy their first home. According - to RE/MAX of Western Canada president Robert Cherot, market activity will re- main brisk through 1993. ‘‘Homes are more affordable today, than they have been for some time. That is the driving force behind much of the market. And with in- terest rates remaining low for the foreseeable future, we expect sales to remain solid over the next 12 months, with. some growth in selected markets.” Despite the strong demand, RE/MAX predicts only margiial price increases of between 4% and 8%, for the average single family home, during 1993. “Prices will remain affordabie, because the market has remained fairly. balanced in most western Canadian cities,” says Cherot. “The supply of serviced lots and new homes is generally keeping pace with demand (with the ex- ception of Vancouver city and Victoria) and that takes the pressure off the market and helps to keep prices down.”’ In addition to first-time buyers, market activity has been spurred by demand for homes gencrated by newly arriving families from Eastern Canada and Pacific Rim countries. Demand for homes is particularly strong in Vancouver and the Lower Mainland. 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