{"id":1040,"date":"2023-07-24T00:09:00","date_gmt":"2023-07-24T00:09:00","guid":{"rendered":"https:\/\/www.realestateleads.ca\/blog\/?p=1040"},"modified":"2023-09-25T20:35:57","modified_gmt":"2023-09-25T20:35:57","slug":"crea-cuts-homes-sales-forecast-due-to-tight-inventory-and-boc-rate-hikes","status":"publish","type":"post","link":"https:\/\/www.realestateleads.ca\/blog\/crea-cuts-homes-sales-forecast-due-to-tight-inventory-and-boc-rate-hikes\/","title":{"rendered":"CREA Cuts Homes Sales Forecast Due to Tight Inventory and BoC Rate Hikes"},"content":{"rendered":"
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Explaining the nuts and bolts of why federal interest rate hikes put a chill on real estate sales isn\u2019t really necessary. Most prospective buyers will know when they\u2019re at risk of overextending themselves with financing on a home that they may love just fine, but they know they can\u2019t afford. With the latest 5-basis point rise in the BoC\u2019s standard interest rate there are going to be even more dissuaded would-be buyers who choose to stay on the sideline.<\/p>\r\n\r\n\r\n\r\n

But what isn\u2019t so straightforward is how this contributes to the other end of what\u2019s something of a double whammy. Insufficient inventory is always going to push prices up, as it always equates to even more demand than supply. And having demand infinitely higher than supply has been at the very core of overinflated home prices in Canada for well more than 20 years now. The part that\u2019s not complicated is how fewer homes on the market means the ones there are selling for more than they probably should. <\/p>\r\n\r\n\r\n\r\n

However, with the Canadian Real Estate Association\u2019s announcement this past week that homes sales are likely to decline considerably over the course of the year because of those two factors \u2013 supply constraints and the higher cost of borrowing money \u2013 it\u2019s a little more challenging to make the connection between the cost part of the equation. Logic might suggest that the number of qualified buyers who can absorb those higher costs would still exist in numbers needed to buy the homes that ARE for sale.<\/p>\r\n\r\n\r\n\r\n

Definitely a topic worthy of digging into, and our online real estate lead generation system<\/a> is ideal for realtors who are struggling to generate new clientele even at the best of time. But what\u2019s to be made of the here and now, and what can we expect as summer and fall come to a close and we\u2019re back into winter. Which is the season when the fewest number of homes are sold in Canada any year and no matter the economic climate.<\/p>\r\n\r\n\r\n\r\n

Tighter & Tighter<\/strong><\/h3>\r\n\r\n\r\n\r\n

As mentioned, this cut to the forecast for home sales is occurring as tightening home inventory and the Bank of Canada\u2019s recent rate hikes have definitely pulled the housing market off balance. Alright, we\u2019ve gone on long enough here without talking turkey. How much of a decrease is being foreseen, and what can a realtor in Canada expect because of that.<\/p>\r\n\r\n\r\n\r\n

The CREA is currently foreseeing that sales for 2023 will be down 6.8% from 2022, and that\u2019s quite a bit more pronounced drop from the 1.1% dip forecast in April. This past June 2023 was when sales really started to be pinched, with the number of transactions up just 1.5% from May. That increase was smaller than the ones for April and May, according to seasonally adjusted data released Friday.<\/p>\r\n\r\n\r\n\r\n

The more influential of the two factors has definitely been the rate hike though. The BoC raised its benchmark rate for a second straight meeting in July and made it clear that if the financial environment remains the same then successive rate hikes may be coming in the future too. All of this means a major source of uncertainty has returned to the housing market.<\/p>\r\n\r\n\r\n\r\n

Increasing Buyer Trepidation<\/strong><\/h3>\r\n\r\n\r\n\r\n

And buyer trepidation based on home prices is most certainly a part of that too, as housing prices have climbed higher in recent months, although that aspect of it isn\u2019t going to be a surprise to anyone. Housing prices did climb higher over the last few months, and yes the sheer lack of homes for sale is a factor in that the same way the benchmark price for a house in climbing 2% per cent in June from May\u2019s $749,100 average is a major factor too.<\/p>\r\n\r\n\r\n\r\n

The fact that total active listings jumped in most major Canadian cities last month would seem to counter the first part of this argument though. But let\u2019s keep in mind that the number of listed homes has remained historically low for nearly half a decade now. There were just 3.1 months of inventory nationally at the end of June, down more than a full month from the most recent January \u201923 peak at and an average that\u2019s still far below the long-term average for the number of homes sold nationwide each month all through the year.<\/p>\r\n\r\n\r\n\r\n

__<\/p>\r\n\r\n\r\n\r\n

Sign up for Real Estate Leads<\/a> here<\/a> and receive a monthly quota of qualified, online-generated buyer and seller leads. The opportunity to be first-in-touch with prospective homebuyers or people looking to sell their home is joined by the appealing fact that you will be the ONLY realtor who will receive these leads. You get them from us exclusively, and of course they will be for people who are either living in the area where you work as a realtor or are intending to relocate there once they\u2019ve purchased a home. This is such an excellent way to fuel the growth of your real estate business, and you can get started with it right now.<\/p>\r\n","protected":false},"excerpt":{"rendered":"

Explaining the nuts and bolts of why federal interest rate hikes put a chill on real estate sales isn\u2019t really necessary. Most prospective buyers will know when they\u2019re at risk of overextending themselves with financing on a home that they may love just fine, but they know they can\u2019t afford. With the latest 5-basis point […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1040","post","type-post","status-publish","format-standard","hentry","category-general-topics"],"yoast_head":"\nCREA Cuts Homes Sales Forecast Due to Tight Inventory and BoC Rate Hikes - Real Estate Leads Blog<\/title>\n<meta name=\"description\" content=\"CREA Cuts Homes Sales Forecast Due to Tight Inventory and BoC Rate Hikes - Real Estate Leads Blog\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.realestateleads.ca\/blog\/crea-cuts-homes-sales-forecast-due-to-tight-inventory-and-boc-rate-hikes\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CREA Cuts Homes Sales Forecast Due to Tight Inventory and BoC Rate Hikes - 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