Nearly everyone and their dog will be aware by this point that that Bank of Canada is likely going to be raising interest rates soon, but one thing that we all have seen over the past year is so many people saying that higher interest rates are going to work to cool the real estate market in Canada. That may still be true, but that cooling off is not manifesting itself in buyer and seller activity in the market. At least not yet. The standard logic is that higher rates may mean new buyers have overextended themselves with the purchase, but it seems that is not much of a discouragement at this time.
The vibrancy of the market doesn’t seem to be hindered at all as we move closer to the rate hikes which are expected to come as soon as the end of March. Buyers are apparently not discouraged at all right now, and how much of that can attributed to FOMO – fear of missing out – is debatable. The fact is the value in property ownership in many areas of Canada continues to be both desirable and attainable for a lot of people, and there are plenty of stats that support that reality.
A market that continues to have momentum to it is always going to be good if you look at it from the business end of things, and realtors in Canada are definitely in the business. More and more new realtors enter the profession all the time and for good reason as the commissions on home sales in Canada are considerable based on what houses are selling for. Our online real estate lead generation system here at Real Estate Leads is an excellent way to get a leg up for yourself if you are a realtor who is struggling to make a name for yourself.
Moving back to our topic for this entry, let’s look more at how homebuying activity isn’t really missing much of a beat at all here in the early part of 2022.
Full Steam Ahead
Optimism about the nation’s housing market is as high as it has ever been, and that is despite warnings from the Central bank and regulatory officials that borrowing costs are set to increase and higher interest rates could make some real estate purchases regrettable in the near future. The fact that most prospective buyers go ahead with home purchases can be connected to many points, but none is more relevant than the fact that people see the homes increasing in value in a big way with a short timeline.
A survey found that nearly 64% of Canadians expect increases in value for real estate in their neighborhoods to increase over the next six months. The number of qualified buyers has gone down with the mortgage stress test increases of 2020, but there are still plenty of Canadians who have the means of buying a home and aren’t hesitant to do so despite the cost of borrowing money going up.
This really isn’t a surprise to anyone who knows of all the many different factors that go into the housing market in Canada, but this level of continued willingness is at least a little surprising considering it comes a week after the Bank of Canada made clear its plans to start raising lending rates soon. What might actually be more noteworthy are efforts to quell speculative expectations in the nation’s housing market. One that has seen prices make up to 40% jumps since the start of the pandemic.
Faith in Rising Values
The 64% number for an average of the number of Canadians expecting real estate values to go up in their area is on that has only been that high for two years. Before that it never went much higher than 40% according to the pollsters who do this kind of research. Interesting to note as well that only less than 6% of respondents to the survey said they though prices would fall.
The one thing we do know is that the BoC has no choice but to raise rates to combat inflation in Canada, which everyone will know is very real right now. Higher rates DO present the possibility of a housing market correction, but we are all fairly certain that certain markets – Greater Vancouver and Greater Toronto most notably – will be by and large immune to any correction.
Another thing to consider is that the central bank’s decision to wait until March at the earliest to start its hiking cycle may actually be fueling the housing market. Something which has benefits or drawbacks whether you’re a homeowner looking to move or if you are someone who is looking to get into the housing market for the first time.
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