Rising housing values and lack of inventory
challenge first-time buyers, says RE/MAX
“Homeownership continues to be primary objective”
While higher housing values and tight inventory levels have hampered home-buying activity so far this year, longer amortization periods and alternative housing types have offset the impact on most major markets across the country, according to a report released today by RE/MAX.
Despite a higher degree of frustration in the marketplace than in previous years, the RE/MAX Affordability Report found that first-time buyers, in particular, remain steadfast in their determination to purchase a home. In fact, entry-level purchasers are adjusting their expectations by sacrificing size, location, and even long-term financial freedom, to overcome challenges such as rising prices and serious supply issues. Innovative financing has become key to homeownership in today’s environment – with longer amortization periods gaining favour in 62 per cent of the major centres surveyed. Low or no down payments were popular with first-time buyers in 38 per cent of markets.
First-time purchasers continue to play a pivotal role at both a local and national level. The impact they have on the housing market is significant, as they are the impetus for sales in the mid-to-upper price ranges. As long as this segment of the market remains healthy, the real estate outlook will continue to be favourable.
Inventory levels, however, remain one of the foremost concerns facing purchasers across the country. A shortage of available entry-level product was identified as a major obstacle impeding buyer intentions in three-quarters of markets surveyed in the report, including St. John’s, Moncton, Fredericton, Halifax-Dartmouth, Ottawa, Greater Toronto Area, Hamilton-Burlington, Niagara Falls, Winnipeg, Regina, Saskatoon, Greater Vancouver, Victoria and Kelowna.
Doom and gloom reports coming from south of the border have yet to hinder overall momentum. First-time buyers are still leading the charge, taking advantage of every resource available to achieve homeownership. They’re determined to get into the market sooner rather than later. If suburban locations, smaller condominiums and town homes, or a little sweat equity is what it takes to get into the market, these purchasers are game.
Although average price is the barometer for housing values in most major centres, first-time buyers looking to achieve homeownership consider starting prices a more meaningful gauge of affordability. Starting prices can be substantially lower than the market average. For example, average price has surpassed the $600,000 benchmark in Greater Vancouver, while the starting price for a detached home can hover as low as $237,500 in the peripheral areas.
The best value for the dollar continues to be found in the suburbs. For those unwilling to sacrifice on location, small condominium units in new developments and condominium conversions of rental buildings offer up the next best alternative. Condominium conversions in some of the country’s major centres can be picked up as low as $150,000 to $175,000.
Kelowna Market
First-time buyers are adjusting their expectations, considering alternate locations, and opting for longer amortization periods to realize homeownership in Kelowna this year. With average price approaching the half million dollar mark, entry-level purchasers are finding it more and more difficult to enter the housing market without compromise. Just 213 units—29 per cent— have sold under the average price point so far this year. While inventory levels have improved overall, compared to one year ago, there is still a shortage of starter properties listed for sale. The city’s most affordable
neighbourhoods include Kelowna North, where starting prices for a three-bedroom home hover at $334,500, Springfield/Spall at $239,000, Rutland South at $307,750, Rutland North at $299,000, and Kelowna South at $369,900. Less expensive properties are available in these communities if purchasers are willing to consider two bedroom and semi-detached homes. Condominium popularity continues to surge due to affordability, with first-time buyers leading the charge for product. Demand has been so strong that a recent condominium conversion in Bridgewater, Lower Mission sold out before it went public. A one-bedroom condominium can be purchased for as low as $149,900 in Westbank, $155,000 in North Glenmore, $159,900 in Kelowna South, $172,900 in Rutland North, and $203,500 in Glenmore.
The least expensive MLS detached home sale year-todate was priced at $242,000 in Kelowna North, while a condo sale at $145,000 was the lowest so far this year in Rutland North.