Time right for first-time homebuyers: experts

Apr 14, 2009 - Kristine Owram - THE CANADIAN PRESS

Low mortgage rates and more affordable homes in many markets are pushing first-time home buyers to enter the market in droves, Canadian real-estate experts say.

Phil Soper, president and chief executive of Brookfield Real Estate Services, said that when the Canadian housing market was hot, bidding wars forced many buyers to put in offers without conditions to increase their chances of being accepted.

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This, combined with unprecedented increases in home prices in many parts of the country, scared many first-time buyers out of the market, he said.

"When first-time buyers stop entering the market it's like sand in the gears of the housing market," said Soper, speaking Tuesday at a BMO conference on the current and future state of Canada's housing market.

But he said the economic downturn changed all that. As housing prices fell across the country and lenders lowered their mortgage rates to attract borrowers, the market became much more attractive to people looking to buy their first homes.

"The uptick in first-time home buyer purchases across the country is quite astonishing," Soper said. "Affordability in places like Vancouver has improved for the first time in a very long time."

BMO senior economist Sal Guatieri said the average mortgage payment has fallen by one-third or $600 a month from its peak, while average resale home prices have fallen 14 per cent from highs seen in mid-2007.