The Canadian housing market experienced a rebound throughout the spring season. However, after two consecutive interest rate hikes by the Bank of Canada, the pace of this rebound has begun to moderate. Economists have observed a tempering off in the flurry of activity seen throughout the spring.
Factors affecting the housing market
Desormeaux, an economist, singles out new multiple listings as a vibrant indicator. Whilst being small and subtle details. Additionally, there are multiple reasons to believe that small and pressuring market conditions would have produced the same inflated home prices and elevated mortgage payments, leading to the same reduction in affordability for first-time buyers, regardless of rate hikes.
According to the latest statistics from the Canadian Real Estate Association (CREA), had a new message. Stating that the national home resales rose a shocking 1.5% month-over-month in June, a sharp drop from the 16.3% increase that we’ve seen from April to May. It’s excepted for either prices to continue to rise just as they did in May or drop.
Effects of interest rate hikes
It’s no surprise the hike had impacts, however, compared to other ones this one has been interesting. As whilst the hikes have helped to cool down the housing market and curb household debt, they additionally led to a reduction in affordability for first-time homebuyers of all types.
The reduced affordability has led to a spike decrease in demand for homes, resulting in a moderation of the housing market rebound. This is as simple as supply & demand. This significantly makes the environment better for home buyers.
Next half of the year predictions
Professional experts after countless hours of work and research have gone to the likely conclusion of quieter sales throughout the second half of the year due to challenging affordability conditions and an expected upcoming recession.
The shortage of new listings and seller’s market conditions will continue on a national level. They may cause prices to continue to rise in the near term. However, it’s important to do your own research in whatever area you’re in.
The Canadian housing market may have experienced a rebound throughout the spring, but the pace of this rebound has begun to moderate after two consecutive interest rate hikes.
With a scarcity of new listings and seller’s market conditions on a national level, prices may continue to rise in the near term. However, experts predict quieter sales throughout the second half of the year due to challenging affordability conditions and an expected recession. Within the new and upcoming months, people should pay more attention than normal for these updates and subtle details.