Housing market upswing helps shift
The recent uptick in the housing market the last few months has instilled a renewed sense of optimism amongst homeowners and prospective home buyers in the province, according to Ipsos Reid’s BC Home Buyers Report for the third quarter of 2009.
The report, based on a poll of 1,643 British Columbians, found that 76 per cent of people believe it’s currently a good time to buy a home, up five per cent from January 2009, the last time the poll was conducted.
Despite this largely positive view of today’s buying conditions, the number of people intending to purchase a home within the next two years declined slightly to 30 per cent compared to 33 per cent in January.
Of this prospective buyer segment, 30 per cent indicated it will be their first time buying a home, which is down from 38 per cent in January 2009 but is up from November 2008 when just 17 per cent of those looking to purchase were first timers.
The Greater Vancouver region has also seen a slightly lower percentage of first-time buyers comprise the total buyer population over the last few months.
“The high level of activity from first-time buyers we witnessed in the summer has helped move the chain of demand and provide a boost to the ‘move-up’ segment of our market,” Russell said.
Those looking to purchase in the next two years also indicated a clear preference toward resale properties. In fact, 96 per cent said they would give consideration to a re-sale house, this is up from 91 per cent in January, while consideration for new homes amongst would-be buyers declined 12 per cent over the same period to 45 per cent.
The report surmises that the proposed Harmonized Sales Tax (HST) charged to new homes above $400,000 come July 2010 may be partly to blame for this decline saying, “Clearly, the additional seven per cent in costs, despite rebates promised by the provincial government, are making resales more attractive to home buyers.”
When asked specifically about the HST, 40 per cent of prospective buyers said the tax will have an impact on their buying decision and 49 per cent said they are more likely to consider purchasing a resale home because of the HST, while the same proportion, 49 per cent, said they will delay their purchase to see how the tax affects the market.
The overall public perception about the future of home prices has also changed in the province, as a majority, 52 per cent, of British Columbians now project home values to rise in 2010. This is up considerably from the 20 per cent of respondents in January 2009 who believed home prices were going to rise in the next year.
Recent increases in home values are likely a driving motivator behind this change in perception. For example, since the beginning of the year, the MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver has increased 13 per cent to $547,092 from $484,211.
Additional buyer profile information found in the study:
- 43 is the average age of a home buyer in BC. The oldest demographic, age 55 and over, in the study is the age group looking to spend the least amount of money on their next home purchase, with 39 per cent expressing a want to spend less than $300,000.
- 34 per cent of buyers have an annual household income of less than $50,000, 22 per cent earn between $50,000 and $75,000, 15 per cent make between $75,000 and $100,000 per annum and 28 per cent have an annual household income exceeding $100,000.
- 46 per cent of prospective buyers in the survey plan to buy in the next 18 to 24 months, 25 per cent said they will purchase in the next 12 to 18 months and 17 per cent indicated a timeframe of six to 12 months.
- 43 per cent of prospective buyers are looking to spend between $300,000 and $500,000, up from 36 per cent in January 2009. Today 23 per cent of prospective buyers in the province plan to spend between $500,000 and $1 million, which is virtually unchanged from January 2009.