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SOMBA K'E/YELLOWKNIFE
The national decline in first-time buyers is not necessarily extending to the Yellowknife market.

The cost-effective appeal for renters moving to homeownership has meant last year's changes to mortgage rules has not deterred many home sales in Yellowknife. - NNSL file photo

Changes to Canadian mortgages effective July 9, 2012 Only homes worth less than $1 million would be eligible for government-backed insured mortgages, which means a minimum 20-per-cent down payment is required for homes worth $1 million or more. * Amortization period reduced to 25 years from 30 years. The maximum amortization period had been reduced to 30 from 35 in 2011. Up to 80 per cent of the value of a home can be refinanced, down from 85 per cent. The maximum gross debt-service ratio was fixed at 39 per cent and the maximum total debt service ratio was fixed at 44 per cent. Government-backed insured mortgages are required for purchases with a down payment of less than 20 per cent. Source: Finance Canada

Seven months after the federal government changed rules related to government-backed insured mortgages, Yellowknife is still seeing strong resale numbers. The Canadian Mortgage and Housing Corporation attributes Yellowknife's situation to the high number of renters moving from rental units to homeownership.

"Because rents are higher here in Yellowknife, the difference between your mortgage payment and a two-bedroom apartment rent, which is the homeownership premium, this difference is much lower in Yellowknife," said Regine Durand, a market analyst for the Canadian Mortgage and Housing Corporation. "When you look at just (apartments and condos), the ownership premium is actually negative in Yellowknife whereas its positive in the rest of Canada."

For instance, the average carrying cost or monthly mortgage payment for a condo in Yellowknife is $1,400, whereas the average two-bedroom rent in Yellowknife is $1,641.

As a result, renters are motivated to become owners, which increases the city's high resale numbers.

Durand said Yellowknife's resale transactions increased by 31 per cent in 2012, as compared to a national growth of only 1.1 per cent.

She said the 31.1-per-cent hike in Yellowknife resales is largely due to residents making the switch from rental units to a purchased home.

Comparatively, a Re/Max report issued at the end of January states 70 per cent of those looking to buy were second-time or multi-time buyers, based on a survey of 1,109 prospective buyers from across Canada.

According to the report, first-time buyers consisted of only 30 per cent of people house-shopping.

Kate Monroe, media relations officer for the Canadian Mortgage Housing Corporation, stated many factors contribute to national and local trends, and the mortgage changes are just one of many factors.

In an e-mail to Yellowknifer, she identified net migration, employment conditions and expectations for mortgage rates as significant factors in strengthening and moderating housing demand.

Yellowknife housing starts dropped by 5 per cent in 2012, while Canada's housing starts increased by 2.1 per cent.

However, Durand said starts, which amounted to 137 in 2012, were following a particularly strong year in 2011, with 155 starts.

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