Real estate experts say many potential homebuyers are waiting for rate cuts before entering the real estate market following the Bank of Canada’s latest decision to hold rates, but demand remains high for some properties.
Victor Tran, mortgage and real estate expert at Ratesdotca, said in a statement to BNNBloomberg.ca Wednesday that the housing market “continues to be in a holding pattern” characterized by tight supply and “stiff competition for desirable properties.”
“While some consumers are willing to take on higher interest rates now to avoid the expected frothy market when rates drop, others are tired of waiting for rate drops and are losing faith that rates will decline as far and as fast as previously predicted and are stepping back from the search,” Tran said.
Tran’s comments come after the Bank of Canada elected to hold its policy rate at five per cent on Wednesday for the sixth consecutive meeting, while officials signalled rate cuts are near but more evidence is needed to show easing inflationary pressures. The hold was widely expected by economists tracked by Bloomberg.
However, others think the move could spur interest in certain markets amid widespread sentiment that Wednesday’s rate hold will be the last before the Bank of Canada pivots to bring rates lower.
“This rate hold may give more Canadian buyers the confidence to purchase a home now, believing that interest rates will either remain the same or decrease later in the year,” Leah Zlatkin, an expert with LowestRates.ca and licensed mortgage broker, said in a statement to BNNBloomberg.ca Wednesday.
She highlighted that housing inventory in the Greater Toronto Area remains low, as average sales prices rose 1.3 per cent in March. According to Zlatkin, the price rise is indicative of increased competition for homes in the region as buyers are prepared to accept mortgages with higher rates to get into the market.
John Lusink, the president of Right at Home Realty, said in a statement to BNNBloomberg.ca Wednesday that some Toronto neighbourhoods are continuing to see elevated demand ahead of a potential rate cut.
“Despite the central bank’s decision, buyers who are currently active are, for the most part, pre-approved and as a result are able to proceed with their purchases,” he said.
“Activity in the detached homes sector is showing higher activity in the 905 area, primarily due to affordability issues.”
While the country’s largest real estate market continues to see demand ahead of a potential rate cut, many would-be buyers indicate they are waiting to enter the market.
A survey from Royal LePage in February found 56 per cent of market participants said they paused their purchasing plans due to elevated interest rates. While 51 per cent of buyers on the sidelines said they would continue looking to purchase a home once interest rates go down.
James Laird, the co-CEO of Ratehub.ca and president of CanWise mortgage lender, said in a statement to BNNBloomberg.ca Wednesday that house prices will largely remain “unaffected” following the most recent interest rate decision.
Mortgages
Zlatkin said that in the current environment, fixed rates are still significantly lower than variable rates.
“When the gap between fixed and variable rates narrows, that will be a good time to consider moving into a low variable rate. However, that’s not currently the case with today’s rate hold,” she said.
Laird said that following the Bank of Canada’s announcement, “anyone with a variable rate or HELOC (home equity line of credit) will need to continue to be patient” until the central bank lowers rates.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
