PierCondos.com

AOL Canada attended a recent BMO panel on First Time Home Buyers. BMO senior economist Sal Guatieri sat down with celebrity realtor Brad Lamb, of the HGTV show Big City Broker, Donald E. Lawby, CEO of Century 21 Canada, and Phil Soper, CEO of Brookfield Real Estate Services to discuss the current housing situation in Canada. Here's what they had to say about the current real estate environment and why first-time home buyers should be out looking right now.

MODERATOR: Talk a bit about the current climate for first-time home buyers.
PHIL SOPER: First-time home buyers are coming back in to the market. In California there's been a 200% increase in first-time home buyers. And here we're seeing an amazing uptick across the country. The housing market was stalled; there was sand in the gears. If first-time buyers aren't getting into the market, entry level buyers can't move up, and middle level homeowners can't get into luxury homes. Which is why public policy is focussed on first-time buyers. Public policy in Canada favours first-time buyers, because if they come back into the market, the entire market improves. So, first-time home buyers are making use of these tools: accessing the RRSP transfer, land transfer tax rebates, and taking advantage of improved affordability in places like Vancouver.
BRAD LAMB: There are pressures on first-time buyers that do not help the situation. The city of Toronto made a really bone-headed move when they added a second land transfer tax. And Ontario's harmonization of PST and GST was also really dumb. First-time home buyers are getting stung. I had a sale recently of a 700 square foot condo to a dentist in Yorkville, with 10% down. It was a $600,000 sale, so she was hit hard by the tax, which kicks in at $400,000+ properties.

MODERATOR: Is there a good time to buy?
PHIL SOPER: It depends. Where are you? Do you have a job? What's your personal situation? For speculators, it's not a good time. For those hoping to move up, you might lose 20% on your existing property, but if you're moving up to a more expensive home, that 20% discount will outweigh whatever you lost on your current property's sale. It's simple math. It makes sense to move up. And for first-time buyers, as we already discussed, it's a great time.
BRAD LAMB: Consumers are terrified that they'll lose money. But they can be confident that the market has bottomed out. Over the past five months we've gotten rid of all the sellers that had to sell because of divorces, job losses etc. Most of these cases are gone - they've sold. There are virtually no power of sales in the city. No pressure for prices to fall.
PHIL SOPER: Interest rates will not go any lower, or if they do, it'll be so incremental as to not have much impact. And home prices will rise very slowly as well - probably around the rate of inflation. There are always exceptions - in St. John's NF, home prices rose 15% in the first quarter of this year. But real estate is a neighbourhood business. It's all about conditions in your region of the country.
DONALD E. LAWBY: It's a great time to buy, depending on where you live. What's going to provide buyers with a level of comfort is based on their community. First timers need to find a patient realtor, and a great lender. With interest rates where they are today, and the economy looking like it's stabilizing a bit, the Toronto market might be getting back to where it was at this time last year. But it's a very local decision.
SAL GUATIERI: If you're confident you'll keep your job, or you're looking in an area that isn't inflated, you should look. But you don't need to rush into the market. Be patient and find the best deal you can.
BRAD LAMB: People who are buying real estate are buying a home to have a life. The big mistake is not to buy. It's a home: you shouldn't be constantly checking your net worth. The average sale price numbers are not a good guide to prices, because there isn't a lot on the market.

MODERATOR: Can you talk a bit about buyer/seller behaviour in this market?
DONALD E. LAWBY: Consumers come to market truly informed and engaged with significant knowledge they've gotten by looking at inventory on the Net. Sometimes they know more about a specific product than the agent, but what they don't know about is the market. And they want to know about all the products out there. Agents have to provide them with as much information as they want, and when it comes to recommending a lawyer for example, they don't want the names of three lawyers, they want you to recommend one. Agents have to justify their worth to clients, who come prepared to play, not just observe.
PHIL SOPER: What we know about the first-time homebuyers is that they're Gen X - in their 20's to early 40's - and the kids of baby boomers. That's the first thing to remember: their parents moved an average of every 5-7 years so they grew up thinking of investing in real estate as a normal part of life. Secondly, they are skeptical by nature, and constantly question authority; and thirdly they are highly skilled researchers. They want realtors to back up everything they tell them, and come armed with lots of information. Realtors need to marshall all that info into a manageable package.
BRAD LAMB: I got my first website - www.torontocondos.com - back in 1995, and started using it in 1998, and homebuyers still come to us just as misinformed as they did back in '98. They're as intimidated as they always have been, and we tell them it's no time to try something new.

MODERATOR: Any predictions as to where the market is going in the next while?
PHIL SOPER: We have to be careful in this correction. The end of the third quarter of 2007 was the market peak. Now we're coming up to the 7th quarter of the correction which will tie as the longest period of correction in contemporary real estate history. It's already lasted a long time.
BRAD LAMB: Investor presence is no longer strong in the condo market. Construction starts are based on multi-unit condo sales and there hasn't been a successful condo sale since August 2008, and there won't be another until spring 2010. There'll be very few new condo sales in Toronto in 2010-2011, because there will be very little building in the next 18 months. We haven't seen the impact yet on the construction industry, but it's coming. The inventory is still being well absorbed so I don't see any catastrophic event for condo owners. In fact, I forsee a shortage of condos in Toronto by 2011. DONALD E. LAWBY: Housing corrections in the past have involved high interest rates and unemployment. There's an absence of these two things in this recession. There's only been a single digit decline in house prices in most markets, so far. Governments have stomped on inflation rates ad kept them down. So the ups and downs will be less severe than in the past.

MODERATOR: Any last words of advice for first-time homebuyers?
BRAD LAMB: Conquer your fear!
PHIL SOPER: It's easy to get carried away when we are no longer supply-strapped. But remember it's not fun to be cash-strapped, or house-poor. Shop below your limit, because with real estate, emotion takes over and people can and will spend more than they should.
SAL GUATIERI: Don't buy more house than you can afford. Don't rush into things. If your situation is uncertain, wait until we know what the economy is doing.
DONALD E. LAWBY: Get experts to help you. And after asking all your questions, ask the most important one: is there anything else I should be asking?