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First-time Home Buyers Drive Up Vancouver Market

According to the Province and Postmedia News April 6, 2011: First-time homebuyers scrambling to dodge higher interest rates down the road are driving up the real-estate market in such areas as Vancouver, a report issued Tuesday says.

“With an average price hike of close to 20 per cent year to date [February], Greater Vancouver continues to show unprecedented strength,” real-estate services firm Re/Max said. “[The]average price now hovers at a record $780,000.”

Sales in the region have jumped 12 per cent from the same period last year, the report said.

Despite the erosion in affordability, first-time and move-up buyers are leading the housing charge, especially in areas such as Richmond and Vancouver westside, the firm said.

“Many entry-level purchasers are compromising on their housing choices, scaling back on expectations, sacrificing quality or size to realize home ownership,” Re/Max said. “Some are moving further east or south of the city to communities that stretch the dollar a little further.”

In Langley, Surrey and Cloverdale, new or newer houses on smaller lots can be found for prices starting from $500,000 to $550,000, it said.

Re/Max said the prospect of higher mortgage rates has prompted many Canadians planning to get into the market to act in the early part of this year.

Another factor is Ottawa’s new rules for mortgages that reduce the maximum amortization period for government-insured mortgages to 30 from 35 years, and decrease the amount people can borrow when refinancing mortgages to 85 from 90 per cent of the value of their homes.