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Avigail Aronoff, poses on St. Denis Street in the Plateau area of Montreal where she just bought her condo. (Christinne Muschi For The Globe and Mail)
Avigail Aronoff, poses on St. Denis Street in the Plateau area of Montreal where she just bought her condo. (Christinne Muschi For The Globe and Mail)

Will nervous first-time buyers make this spring housing market bloom? Add to ...

Mr. Charles at Canada Guaranty says he is now seeing more applications for mortgage insurance from buyers with a down payment of less than 20 per cent, suggesting the start of an uptick among first-time buyers.

David Resnick, who deals with financial institutions for Google Canada, said the number of searches for the word “mortgage” jumped by 50 per cent after Bank of Montreal cut the advertised price of its five-year fixed-rate mortgage from 3.09 per cent to 2.99 per cent. “That’s huge,” he said. “And home insurance searches spiked more than 80 per cent in the 24 hours following the announcement, suggesting that people are looking at actual purchases.”

Phil Soper, CEO of real estate agency Royal LePage, said the slowdown is a good thing, because the market was too hot, but he thinks that the changes that Mr. Flaherty made in July went too far. “It pushed things for young people, for first-time buyers, to a place it didn’t need to be,” he said.

Now, he says, the impact of the change has largely been felt. “Young people have had eight months to either save up a larger down payment or look farther afield for a home,” he says. “As long as the cost of mortgage financing remains very low, we’re going to attract financially stable young people, first-time buyers, into the housing market. The desire to own one’s home hasn’t changed one bit.”

VANCOUVER: STICKY PRICES DETER BUYERS

Alice Soo is developing a case of spring fever for real estate.

In 2011, five years after graduating from university, she made a final payment to erase $25,000 in student loans. At the same time, she has been a disciplined saver, with $30,000 now socked away. Ms. Soo, a clinical secretary at Vancouver General Hospital, is eager to use it for a down payment on a condominium in the suburb of Burnaby, and soon.

Why the urgency? Condo prices in Greater Vancouver have slipped 3 per cent over the past year, but Ms. Soo believes the softness in the market won’t last. “I’m worried about keeping pace. I’m worried that no matter how long I keep saving, the prices will keep climbing and I’m never going to be able to catch up. That is my main concern.”

Such is the psychology of the first-time buyer in Vancouver, the country’s most expensive property market. Prices here have soared 24 per cent since the summer of 2009, according to the Teranet-National Bank house price index, and the price of a typical detached home is still about $900,000. But prices have cooled and sales activity is way down – there were nearly 30 per cent fewer transactions this February than a year earlier – so Ms. Soo’s concern about missing out may be unwarranted.

Cameron Muir, chief economist at the B.C. Real Estate Association, forecasts housing prices will be flat in the Vancouver region this year, before a slight recovery emerges next year. February benchmark prices in Greater Vancouver for single-family homes, condos and townhouses were off a relatively mild 3.3 per cent to $590,400. Homes in some prime neighbourhoods have been harder hit: Prices for detached houses on Vancouver’s west side declined 9.2 per cent to $2-million.

For Ms. Soo, who is now renting the basement of her sister’s home, the first choice is to buy a Burnaby condo priced at roughly $300,000, preferably close to a SkyTrain rapid transit station. Given her modest annual pretax salary of $39,000, Ms. Soo is excited by the prospect of moving into her own place by the time she turns 30 this summer. But price remains the sticking point for buying a condo this spring. She and her agent, Eddy Shan of Homeland Realty, are finding that sellers aren’t budging much from their asking prices.

Will McKitka, a real estate agent with Macdonald Realty, said the spotlight has turned on the slump in property sales in February, but prices haven’t collapsed. “People use the B-word, in terms of a housing bubble. Vancouver isn’t in one,” Mr. McKitka said. Monthly sales volumes are being crimped by stalemates over pricing, he noted.

Two of his clients watched negotiations fall apart last month, even though the asking and offering prices were tantalizingly close. “Not close enough,” he said. But Mr. McKitka insists that buying into the Vancouver area’s cooled-off housing market makes sense. Gone are the days of huge jumps in home values, but for those able to save for a down payment in 2013, it will be a better financial decision to own than rent, he argues.

Brent Jang, Vancouver

CALGARY: A HOPE NEW PIPELINES WILL KICK-START MARKET

If there is a cloud on the horizon in the Calgary housing market this spring, it’s emanating from the oil patch.

The market is going through a relatively placid period, having suffered staggering year-over-year price hikes in the boom years of 2005, 2006 and 2007, and then saw less-dramatic price dips in 2008 and 2009 during the economic downturn.

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