, coming in on the heels of the Bank of Canada’s latest rate hike, are proving those predictions true, at least in the short term.As expected, the Bank of Canada increased rates another 25bps, bringing the overnight rate to 5% – its highest level since 2001. Despite falling inflation numbers, the job is not done, and we can expect the BOC to stay on the same course.
CREA reported that national home sales were up by 1.5% month-over-month in June, while actual activity came in at 4.7% more than June 2022. The national average sale price showed a 6.7% year-over-year increase in June, continuing to confound policy makers. While CREA is reporting that the number of new listings increased by 5.9% month-over-month, the number of homes available for sale on MLS sits at its lowest levels in 20 years .
We anticipate deal volume to remain fairly steady, but more rate hikes will have a downward effect. Prices will remain high, given the lack of inventory, plus the fact that new home starts are down and will remain well below what is really needed.Many first-timers simply aren’t qualifying for mortgages at these higher rates, especially with the stress test. People looking to move up into a larger home are having trouble finding what they want, so many are opting to stay put and renovate instead.
There are certain price brackets that have stayed busy. Properties under $700K are, obviously, more accessible to those with limited budgets. But once you get into the million-plus range, things get a lot tighter. With fewer qualified buyers, properties sit longer.May's 6.8% increase in inventory and June’s 5.9% bump are taking us towards a more buyer-friendly market. There are more properties on the market right now, which is giving buyers a little breathing room.
The rising inventory numbers may not actually mean that more sellers are putting their homes on the market, however. Our realtors have commented that days on market have been increasing, and they are needing to resort to price reductions as well. Properties simply aren’t moving as fast, and are staying on the market longer, which is what’s impacting inventory numbers most significantly.
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