Winnipeg Free Press - PRINT EDITION
Posted: 05/8/2014 1:00 AM | Comments: 0
This year's spring homebuying season began with more of a pop than a bang.
Although sales of existing homes last month through the local Multiple Listing Service (MLS) were on par with the 10-year average for April, they were still down two per cent from April of last year -- 1,227 properties versus 1,245 -- and down 8.8 per cent from April 2012's total of 1,346, Winnipeg Realtors Association (WRA) data show.
Lack of supply wasn't the problem. There were 3,740 active listings to choose from at the end of April, which was an 11 per cent improvement from the same time in 2013.
WRA officials said Wednesday it likely had more to do with ongoing affordability issues for some first-time buyers.
After more than a decade of steady price increases, some first-timers are finding single-detached homes are beyond their reach. Last month, for example, the average selling price for a single-family home in Winnipeg was $297,050. That's up from $289,304 in April 2013.
Compounding the problem are tougher federal mortgage-insurance rules and higher closing costs due to such things as the provincial land transfer tax (LTT), which is based on a percentage of the selling price of a property, said Peter Squire, the association's residential market analyst.
The higher selling prices climb, the more LTT homebuyers pay. On a $300,000 transaction, for example, the LTT is $3,650, Squire noted.
"So we're not getting some of these first-time buyers that the market needs to help trigger a good spring."
He also noted having fewer first-time buyers has a domino effect, because move-up buyers often need a first-time buyer to purchase their home before they can move up to a bigger or more expensive property.
"So the first-time buyer is critical to any housing market."
Squire and WRA president David Powell said one obvious way to ease the burden on first-time buyers would be to exempt them from having to pay the LTT -- something some other provinces have already done and something the WRA and the Manitoba Real Estate Association have been urging for a number of years.
Powell said even reducing the tax they pay by half would be better than nothing.
Squire noted one of the national real estate firms -- Re/Max -- raised the LTT issue and the negative impact it's having on first-time buyers in its most recent report on the Winnipeg housing market.
With detached homes beyond the reach of some first-time buyers, Powell said a growing number of them are opting for more affordable options, such as a condominium or townhouse.
WRA data show condo sales in April were up 4.8 per cent from a year earlier -- 197 units versus 188 -- while sales of single-family homes were down two per cent from 871.
For the first four months of 2014, condo sales were up by 14.8 per cent, while sales of single-family homes were essentially unchanged at 2,382 versus 2,377.
Powell said while affordability continues to be an issue for some first-time buyers, it's encouraging that listings are up and the market is more balanced.
"May will now be a true test of how our MLS market behaves this year, as this is the month where sales usually reach the highest monthly total of the year and push dollar volume up another notch," he said. "We are in great shape with supply, so demand will be the determining factor."
Republished from the Winnipeg Free Press print edition May 8, 2014 B5
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