Blogs & Comment

Hold off to buy a new house

Home prices are still rising, but a new report says the market should stabilize soon.

People walk past new homes that are for sale in Oakville, Ont., on April 14, 2009. (Photo: Nathan Denette/CP)

According to a new survey, more Canadians are planning to buy what will likely be their most significant investment in their lives this year: their first home.

A poll conducted by Genworth Financial Mortgage Insurance Company showed that 11% of Canadians are planning to buy their first abode this year, compared to 6% in 2010.

While the survey doesn’t say why the number has increased, it’s a good bet it has to do with low interest rates, which is making mortgage payments more affordable for Canadians.

But before these home buying wannabes jump into the market, they may want to take a look at the latest Royal LePage House Price Survey, which lists average home price changes every quarter.

To likely no one’s surprise, homes continue to get more expensive. Nationally, prices for detached bungalows increased 7.5% year-over-year in Q2 2011 to $356,625; the cost for a standard two story home jumped 6.1% to $390,163, while standard condominium prices climbed 3.5% to $238,064. It’s expected prices will end the year 7.7% higher than in 2010.

Some cities posted huge gains—Vancouver, always a hot market, saw it’s average price for a detached bungalow jump 14% to $1,033,000; Regina’s detached bungalow prices rose 11% to $313,000 in Q2.

New homebuyers might be better buying in some of the cities that saw prices decrease. (That’s right, I said decrease.) Victoria saw prices fall 4.8% for a detached bungalow, while Calgary saw its bungalow market drop by 2.8%. (See the chart below to find out how other Canadian cities performed.)

With growth in some market slowing down, Phil Soper, president and CEO of Royal LePage Real Estate Services, says prices may be softening. “We expect price gains to moderate considerably in the latter half of 2011, which should reduce the stress associated with purchasing a new home,” he said in a release.

Does this mean our housing bubble (if you believe there is one) is about to burst? Soper doesn’t go that far, but does say, “we are past the period of peak house price appreciation.”

So, to all those new homebuyers out there, relax. Wait until prices stabilize to buy your first house. Or move to Victoria.