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Missed it by that much
Jan 16, 2014

 

In the 1960s television series, Get Smart, Don Adams in the role of Maxwell Smart, continually used the  expression, “Missed it by that much.” This expression also applied to MLS® sales in 2013, which just missed the 13,000  benchmark level. The 13,000 sales level was reached for the first time in 2007, and again in 2011 and 2012.  
The miss was less than one per cent, or 74 sales to be exact. While 2013 will go down as the fourth best MLS® sales year in the 110-year history of WinnipegREALTORS®, market analyst  Peter Squire knows it could have been better. 
“This year, and especially March,” he commented, “showed so clearly how affordable housing and just plain accessibility for first-time buyers to get into homeownership is an issue that the Manitoba government needs to understand.”
In an annual membership survey of REALTORS® in 2013, they were asked if it is becoming more difficult finding an affordable home for first-time buyers. The response was loud and clear with the vast majority of respondents either strongly agreeing or at least acknowledging that affordability for this key segment of the real estate housing market is becoming an issue in our local marketplace.  
March MLS® sales plummeted 26 per cent compared to March 2012. What was so evident in this poor result was the absence of first-time buyers from the market when compared to the higher move-up market price ranges. The drop off in first-time home buyer market activity in March was three times greater than the move-up market.  A normal and even more robust first-time buyer market would have easily made up 74 sales in that month alone.
The recovery that did take place throughout the remainder of the year was first-time buyers switching from more expensive single-family homes to more affordable condominiums.  
Condominium sales occur most frequently in the $150,000 to $199,000 price range, while single-family, or residential-detached, home sales are most prevalent in the $250,000 to $299,999 price range.
Despite condo year-end sales ending up 13 per cent above 2012 sales, the  all-time record level at 1,759 MLS® sales was not enough to offset the decrease in residential-detached sales which ended the year at 9,249 MLS® sales. Last year finished with 12,926 MLS® sales. 
One major difference in Manitoba compared to the other Western provinces and Ontario is how local first-time buyers are encumbered by an onerous land transfer tax. Both Alberta and Saskatchewan do not levy a full blown land transfer tax as is the case in B.C., Ontario and Manitoba.  
But there is a difference in the  way the provinces each levy a land transfer tax. Both B.C. and Ontario offer a generous first-time home buyer exemption from their land transfer tax. B.C. has gone even further by increasing their first-time home buyer exemption to $425,000 to reflect higher average sale prices.  It is important to note, however, that, unlike B.C. and Manitoba, which share the highest land transfer tax rate in the country at two per cent for any sale amount over $200,000, Ontario’s two per cent rate only applies to any sale over $400,000.
In Manitoba, the land transfer tax escalates when you buy a property over $200,000. Essentially, for every additional increment of $50,000 value above $200,000 you need to come up with another $1,000 in order to obtain title to your new property. There is also a registration fee of $70.
First-time home buyers also face tighter mortgage regulations, longer term rates, ever-increasing municipal and education property taxes, as well as home insurance costs and taxes on CMHC high-ratio mortgage insurance. The land transfer tax adds another burden that challenges the ability of first-time buyers to come up with a down payment on a home.
First-time buyers did get one break in 2013. The federal government recognized that first-time buyers had enough challenges to meet the necessary down payment and closing costs in order to become homeowners, so they were given a $750 credit on their federal income taxes. 
 In a 2013 survey conducted by Probe Research, 74 per cent of Manitobans support a first-time home buyer exemption from Manitoba’s land transfer tax. Eighteen to 34 year olds feel even stronger, as 81 per cent of them said absolutely yes to a first-time home buyer exemption.
Manitoba REALTORS® are making a request to Manitoba Finance Minister Jennifer Howard to address this important housing affordability issue in her spring budget. We hope she is listening to Manitobans and addresses this issue once and for all.