Canada, 27th Jul 2023, King NewsWire – The last few months in the Canadian housing market have indeed been a roller coaster ride. If you eagerly anticipated becoming a homeowner in 2023, these recent changes may have left you scratching your head. However, despite the ups and downs, The Canadian Home has analysed the data and crunched the numbers, and we are pleased to report that the situation may not be as dire as it appears. In fact, if you approach it strategically and play your cards right, you could potentially secure the biggest bang for your buck. Now is an excellent time for first-time home buyers to buy a house, and to understand why is, let’s dig a little deeper.
THE ONTARIO MARKET
In just a span of one month, from June 7th to July 12th, these two rate hikes caused a substantial $43,000 difference in home prices, and this downward trend is showing no signs of stopping for the next few months. As a result, it is expected that the declining home prices will inversely impact home sales in the near future. When interest rates go up, home prices go down, and when interest rates go down, home prices go up. This situation positions the Ontario real estate market as one of the upcoming hotspots in the coming months. As per The Canadian Home’s analysis, the Bank of Canada’s consecutive rate hikes has had a significant impact on home prices and sales in Ontario.
- Following the initial rate increase on June 7, the average home price in Ontario started to drop and eventually reached $910,000. By the last week of June, a total of 3,700 properties were sold at an average price of $910,000.
- According to the latest updated data, it is evident that the second rate hike had a significant impact on both the average price and the number of homes sold. Specifically, between July 10 and July 16, a total of 3,140 homes were sold, and the average selling price stood at $867,000
Source: The Canadian Home
WILL THE MARKET BOUNCE BACK?
On July 18, the CPI report was published, revealing that annual inflation had dropped to a 27-month low of 2.8% in June. This development signals potential changes in the monetary policy set by the Bank of Canada (BOC). As inflation nears the BOC’s target level of 2%, there is speculation that the BOC might consider lowering interest rates to stimulate economic growth and maintain price stability.
Source: The Canadian Home
Looking ahead, if inflation falls below the 2% target before September, we can anticipate the BOC to cease raising interest rates. This move by the central bank could lead to a market rebound as businesses and consumers may benefit from more favourable borrowing conditions.
AN OPPORTUNITY IN THE MAKING
In May 2023, average home sales in Ontario reached an all-time high, motivating many home sellers to list their properties, resulting in a surge of available properties in the market. However, the subsequent reduction in sales due to the rate hikes has left a high number of properties with lower price tags, making it the perfect time for first-time home buyers to make a move.
Most Canadians take out a mortgage for 30 years, and in those 30 years, the interest rates will go up and down again and again. Now you can always wait for the interest rates to go down, but then the property prices won’t be ideal, and you might just have to pay a lot more for that dream home.
With the added assurance that the Bank of Canada (BoC) is unlikely to raise interest rates any further, considering the inflation rate has already decreased to 2.8%, which was the intended goal behind the rate hikes, the opportunity for homeowners becomes even more enticing. Opting for a variable rate mortgage now means that when the interest rate falls in the future, as expected, homeowners will be well-positioned to reap significant benefits.
Source: Bank of Canada, Q2 Survey
SO, WHAT IS THE BEST WAY TO MAKE THE MOST OF CURRENT MARKET CONDITIONS?
Given the current market conditions, we strongly advise prospective first-time home buyers to act swiftly and reach out to a reputable realtor without delay. As awareness of this newfound opportunity grows in the coming months, competition in the real estate market will undoubtedly intensify. The window of opportunity is relatively narrow, and if you wish to maximise your benefits, seeking guidance from an expert is paramount. Who better to assist you than a qualified realtor? So, don’t hesitate; seize the advantage by connecting with a reliable real estate professional today.
Organization: The Canadian Home Realty Inc
Contact Person: Susheel Surendran
Release Id: 2707235036
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Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Finance Tailored journalist was involved in the writing and production of this article.