Real estate market buoyed by first-time homebuyers

One of the bright spots in the pull back in housing prices over the last 4 to 5 years has been the emergence of first-time homebuyers as a catalyst for activity in the real estate market.  This trend is a national one according to reports released by several major real estate companies, but is particularly significant in the Central Okanagan according to Patricia Livingstone of Re/max Kelowna.  “With the average house price dropping more than 20% and mortgage rates at historic lows, many first-time home buyers are seizing the opportunity to make the transition from renter to home owner.”  In fact, the average single-family house price in Kelowna has dropped from a high of almost $554,000 in 2008 to $441,000 last month.

        There are many different paths to home ownership.  In January this year, a 25-year-old single man found great value in a foreclosure property.  “Although the home needs a fair amount of work, it was a perfect fit for this buyer as he works in the construction industry,” explains Patricia.        A single mother, was looking at paying $900 per month to rent a basement suite.  She was thrilled to discover that with the same amount, plus a modest down payment, she could purchase a recently built one bedroom condo.  She decided to convert the den into a bedroom for her 6 year old son. Patricia also recently helped, an Asian couple in their late forties find and purchase their first home.         The inventory of condos has decreased over the last few years, but a good percentage are still sitting empty.  Combine this with low interest rates, dropping prices and special incentives that are available to first-time-homebuyers – exemption from Property Transfer Tax and a tax credit – all these factors create a ‘perfect storm’ environment for renters looking to buy.        So far this year, roughly one half of home sales have been under $400,000, and first-time homebuyers make up a large part of that market segment.  Over 20% of sales this first quarter were by first-time buyers. This activity is expected to help jump-start more activity at higher price levels.A lot of buyers have been waiting for the bottom of our market, that may have been in March as the monthly activity in April was the highest we have seen since the down turn in 2008.  Time to get off the fence!