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Information for First Time Home and Condo Buyers
First Time Buyers Are Opting For Condominiums
First-time buyers will increasingly favour condominiums with the rate of condo purchases projected to double among this group in the next three years, according to a report released today by Royal LePage Real Estate Services. Of those who bought their first property in the past five years, 10 per cent bought condominiums, while 21 per cent of potential buyers(*) intend to purchase one. Detached homes are expected to account for a smaller proportion of sales among potential buyers than they have in the past five years.
The Royal LePage First-Time Homebuyers' Report 2005 comprises a national omnibus poll of recent first-time homeowner and buyer attitudes (conducted by Maritz Research) and a market analysis of trends and activity in major markets across Canada.
According to Scotiabank, who participated in the report, strong economic fundamentals, low interest rates and flexible finance programs have made home ownership an attractive prospect for a diverse group of entry-level buyers. First-time buyers tend to be well informed on most aspects of buying a home, however the survey found that they demonstrated a need to focus more on long term planning.
New homebuyers and potential buyers were asked: "If you have a $150,000 mortgage and the interest rate increases from 5% to 6%, approximately how much more would you pay over the next ten years?" The majority of respondents (39%) said they did not know how much they would pay. Only 18 per cent of respondents estimated correctly ($10,000 to $15,000).
"Today's first-time buyers have a large volume of information and educational tools available to them. They are an incredibly savvy demographic when it comes to using the Internet to research the real estate market, neighborhoods and properties," said Phil Soper president and CEO of Royal LePage Real Estate Services. "While they are more knowledgeable than first- time buyers in previous years, they are still largely inexperienced in the complexities of a real estate transaction."
Added Soper: "First-time buyers are well aware of the possibility of interest rate increases and factor them into their decision to buy, but their awareness on how an interest rate increase could affect their future finances is surprisingly low. We encourage first-time buyers to take both current and future financial needs into account."
"Despite the steady rise in home prices in recent years, Canadians' mortgage servicing costs have remained close to record low levels - thanks to low interest rates and healthy income gains," said Charles Lambert, Managing Director, Mortgages at Scotiabank. "Nonetheless, with interest rates expected to drift modestly higher over the coming year, it's important that first-time homebuyers have a strategy in place to properly structure their borrowing."
Lambert advises potential homeowners to "do your homework - crunch some numbers and know what you can afford when you go out shopping for that house or condominium."
(*) Potential buyers are renters who said they will potentially buy their first home in the next three years. New homebuyers are those who have purchased their first home within the past five years.