"Armed with two incomes, historically low mortgage rates and often a down payment from the bank of mom and dad, the first-time homebuyer has returned to save the housing market.
They have provided the critical thrust that propelled the real-estate market out of a recessionary slump, and are expected to fuel sales in the future, industry experts say.
"We do a seminar for first-time homebuyers each spring and we thought it would wane this year because of the economy," says Peter Simpson, chief executive of the Greater Vancouver Home Buyers Association. "But instead of a drop-off of registrations, we actually set a record with more than 900 young people attending a seminar.
"Because they didn't have [a home] to sell, they weren't worried about that end, and they saw that interest rates were low and there were a lot of sweet deals out there because of the economy."
Mr. Simpson also said expectations were mixed for sales of condominiums at a planned tower in the suburb of Burnaby -- in the recession some banks pulled away from financing pre-sold units -- but on the first selling weekend this month people lined up overnight and the builder sold 135 of 180 suites in the first two days.
Banks are out in force offering tantalizing deals to prospective homebuyers, dangling the carrot of ultra-low interest rates. Recently, Bank of Montreal lowered its five-year variable-rate mortgage to its lowest posted level in more than 30 years.
Meanwhile, TD Canada Trust reported in its Generational Homeownership Study this week that Canadians aged 18 to 34 were more confident about buying a home than older Canadians were when they bought their first homes years ago.
When asked what prompted them to consider buying their first home, 51% of younger Canadians said they felt financially ready. Of those aged 55 and over, 37% said they felt financially ready when they were thinking of buying their first home.
The younger generation also seems to be getting more help than their older peers did; 36% of those aged 18 to 34 said they could not have afforded their first home without getting financial help from their family, compared with 16% of those over 55.
"The re-emergence of the first-time buyers brought life back to the market," said Ross Gurney, manager of business development at the B.C. Real Estate Group of TD Financial Group. "They are the start of the food chain: You have a first-time buyer buying in the $300,000-to-$350,000 range, and those who sold to him moved up to the $500,000-to-$600,000 range."
Current marketing and advertising from various sectors in the industry is targeting the entry-level properties that are seeing the most sales, he said, those priced under $400,000. "It is very rare that you see interest rates and housing prices down at the same time. They are marketing on affordability, now is the time to buy. Interest rates are low, prices are low and Canadian banks are still actively lending and putting mortgages up."
Prices of resale homes are on the rise again but newly built home prices were still down from the previous year's price levels as of July, according to Statistics Canada. The agency recently reported that the new housing price index (NHPI) was down 3.15% in July from the previous year. The market uptick began to register in new homes that month, however, registering a 0.3% rise, the first monthly increase since September 2008.
And first-time buyers have been taking advantage, according to figures from Canada Mortgage Housing Corp. CMHC said in a recent report that first-timers account for 57% of those who are buying or intend to buy this year, the highest level of first-time homebuyers in the past three years and close to double their figure of 33% in 2008.
"First-time buyers are definitely a target because the price realignment has created an opportunity there," said Stephen Dupuis, chief executive of the Toronto-based Building Industry & Land Development Association. "After all hell broke loose last fall the only way builders could attract a buyer was to get the price as low as possible. There are also a lot of move-up buyers in the low-rise single detached-home market."