Tighter mortgages rule out first-timers

One of the biggest drivers behind Winnipeg's robust resale-homes market -- the first-time buyer -- appears to be retreating to the sidelines in the wake of the recent tightening of federal mortgage insurance rules.

Preliminary data on September Multiple Listing Service (MLS) sales show a sharp drop in sales in two of the price ranges most popular with first-time buyers. One is the $150,000-to-$199,999 bracket, where unit sales were down 20.7 per cent from a year earlier -- 123 properties versus 155. The other is the $200,000-to-$249,999 bracket, where the decline was 30.1 per cent -- 156 versus 224.

Winnipeg Realtors president Shirley Przybyl and Royal LePage Prime Real Estate broker John Froese said there's no question the July rule changes, which included reducing the maximum amortization period on Canada Mortgage and Housing Corp.-insured mortgages to 25 years from 30 years, have forced some first-time buyers out of the market by requiring a bigger down payment. They admitted the impact has been worse than they expected.

But they also noted it's part of a country-wide trend that has seen sales fall in most major cities, and that the declines have been much worse in some other overheated markets, such as Vancouver and Toronto.

MLS sales figures released Tuesday show sales were down 32.5 per cent from a year earlier last month in Vancouver. The local real estate board blamed it in large part on the mortgage rule changes.

Przybyl and Froese maintained that while sales have softened here, it's temporary.

"They (first-time buyers) are still going to be buying, but maybe its six months later," Froese said. "It's not like we're losing these buyers for life."

"I don't think the dream of buying a home has been lost for them," Przybyl said. "I think they'll just save up a little bit more of a nest egg and then they'll jump back into it (the market)."

Winnipeggers will likely get a better idea of the short-term impact of the changes when Winnipeg Realtors releases September sales figures later this week.

MLS sales have been declining in Winnipeg in recent months, but at a much more modest pace than in some markets -- by two per cent in July and four per cent in August.

Przybyl said she expects they'll be down again in September, "but it's not going to be anywhere close to what Vancouver has seen."

She said it's important to remember that while sales are down from a year ago, 2011 was one of the best years on record for MLS sales in Winnipeg.

"So overall, I think we're still pretty strong in Winnipeg."

Froese agreed, saying, "The foot is off the gas pedal, but it's not on the brake."

He predicted sales will continue to decline at a modest pace in the final quarter of the year, but that's usually what happens when the weather turns colder.

Although unit sales may be weakening, a new Royal LePage Real Estate Services report Wednesday shows average selling prices are still climbing at a strong pace in Winnipeg.

In its latest quarterly House Price Survey, the firm said a strengthening local economy and strong consumer confidence continued to fuel demand for all types of resale homes in the third quarter of 2012. And that has driven up average selling prices by 6.5 per cent to 8.3 per cent over the past year, depending on the type of home.

Condominiums saw the biggest price hikes, rising 8.3 per cent to $188,714. The price of a detached bungalow climbed 6.6 per cent to $294,625, while a two-storey home increased 6.5 per cent to $319,250.

Nationally, Royal LePage said the average standard two-storey home in Canada increased four per cent year-over-year to $403,747, while detached bungalows rose 4.8 per cent to $366,773 and standard condominiums by 1.8 per cent to $243,607.

It said most cities experienced modest price appreciation in the quarter, but fewer homes were sold compared to the same period in 2011.

murray.mcneill@freepress.mb.ca

House prices in city still on upswing

Average selling prices are still climbing in Winnipeg despite slowing sales in recent months, according to the latest house-price survey by Royal LePage. Here is a breakdown of average selling prices in the third quarter this year, with the percentage increase over a year ago in brackets:

NeighbourhoodBungalowTwo-storeyCondominium

Charleswood$291,000 (5.1)$308,000 (5.5)$172,000 (8.2)

River Heights$300,000 (5.3)$345,000 (12.4)$181,000 (10.4)

Southdale$280,000 (3.7)$289,000 (4.3)n/a

Westwood$295,000 (12.2)$313,000 (9.1)$170,000 (9.0)

North West$286,000 (7.1)$326,000 (2,2)$214,000 (3.9)

North East$285,000 (6.3)$310,000 (6.9)$174,000 (13.0)

South St. Vital$310,000 (6.9)$345,000 (6.2)$212,000 (7.6)

Ft. Richmond$310,000 (6.2)$318,000 (5.3)$198,000 (7.6)

Republished from the Winnipeg Free Press print edition October 4, 2012 B5