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Report says local housing market among most affordable
Mar 23, 2007

Higher housing values, tight inventory levels and all-out bidding wars have yet to deter first-time buyers in their quest to realize homeownership in Winnipeg and major Canadian centres this year, according to a report released by RE/MAX.

“Despite a decade of year-over-year price increases, compounded by challenging market conditions this year, entry-level buyers continue to be a driving force in real estate,” said Michael Polzler, executive vice-president and regional director, RE/MAX Ontario-Atlantic Canada. “Their undaunted enthusiasm is expected to translate into sales at or ahead of last year’s record levels in the spring.”

The RE/MAX Affordability Report, which highlights first-time buying activity and trends in 13 housing markets across the country, found that substantial price increases have had little impact on buyer intentions. 

“Winnipeg remains one of the most affordable real estate markets in the country,” according to the report.

“First-time buyers continue to enter the market unabated, with a good portion buying homes priced above entry-level — from $150,000 to $200,000.

“While Winnipeg is one of a handful of markets across the country where compromise is not a factor, buyers still face a significant challenge from extremely tight inventory levels.”

WinnipegREALTORS® Association president Wes Schollenberg said 44 per cent of homes sold in February at or above the MLS® list price and another 10 per cent sold for the list price.

The greatest year-over-year price appreciation occurred in Edmonton, Calgary, Saskatoon and Kelowna, where averages rose 52, 29, 26, and 23 per cent, respectively. The average price in the country’s most expensive market —Greater Vancouver — has jumped 11 per cent, topping the half-million-dollar mark.

While prices in these markets may now seem costly, entry-level condominiums can start at half the average price.

“Buyers are finding the means necessary to enter the market, even in the western provinces, where double-digit price gains have been reported and sales-to-listings ratios hover above the 80 per cent mark,” said Elton Ash, regional executive vice-president, RE/MAX of Western Canada. 

“Purchasers simply refuse to be priced out of the market, even though household income has not kept pace with housing appreciation.”

Affordability and accessibility have made the condominium lifestyle a popular choice. Condominiums now represent just under one in every two sales in markets like Vancouver and Victoria. In Edmonton, Calgary and the Greater Toronto Area, close to one in every three sales involve a condominium apartment or town home. 

About nine per cent of all MLS® home sales in Winnipeg were condos in 2006. Schollenberg predicts that this percentage will increase by the end of 2007.

“Condos are going to take off,” he said. “We’re behind other Canadian centres in condo development, but there’s more developments coming on-stream to meet the growing demand.”

The latest Housing Affordability report released  by RBC Economics indicated the strongest local improvement in affordability was in the condo sector.  

“In retaining its title as the most affordable province to purchase a condo,” said Derek Holt, assistant chief economist for RBC. “Manitoba continues to remain an attractive market for potential new home buyers.”

The RBC affordability measure for Manitoba, which captures the proportion of pre-tax household income needed to service the costs of owning a home, improved for all housing types with a detached bungalow at 32.8 per cent and a standard condo at 18.1 per cent.

“Low interest rates and solid economic performance in most major Canadian centres have also played a substantial role in providing purchasers with the confidence to go out and buy their first home,” said Polzler. 

First-time buyers have found that innovative financing has allowed them to enter the marketplace. Unique new mortgage products with longer amortization periods are helping to make mortgage payments easier to carry.

“The off-loading of family wealth and inheritance are also factors influencing the up-swell in home-buying activity,” said Ash. 

“Some first-time buyers are digging into RRSPs and borrowing money from parents, while others are looking to offset carrying costs through in-law suites, now factored into debt service ratios by a growing number of lending institutions,” he added.