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The market has been showing signs of cooling down since last year. The rising interest rates are causing huge concern for buyers as they are scrambling to qualify for the same amount banks were once willing to give them.
It’s no surprise that incomes have not increased to align with the new rates so, therefore, prices need to come down in order to move inventory. In their last announcement, The Bank of Canada (BOC) has indicated that they are finally hitting pause on further rate hikes for this cycle and we are starting to see activity go up, with buyers coming out of the woodwork.
This is still the buyer’s market that buyers have been hoping for! Long have they waited, and their prayers have been answered. However, the same buyers are struggling to qualify for a mortgage because their incomes are not high enough to contend with our raised interest rates. So, it’s like one step forward and two steps back! Some of these moves by the BOC have been too quick and too drastic and have pretty much brought the market to a grinding halt.
Sellers are holding on to valuations from the peak of the market! And it’s not going to happen, or at least not for a while longer. But who can blame them? Maybe they purchased a home at the height of the market and are not ready to eat a $200,000+ loss. For an individual homeowner, that’s a very tough pill to swallow and unfortunately, many are in a difficult place because they have purchased more home than they can chew.
This is shaping up to be a very interesting year. Being in the business for almost two decades, I have never experienced things to go this sideways this quickly. An important thing to remember is that this is all a cycle, and the expectation is that early next year, rates will start to drop again, and we’ll all be back in a bidding war frenzy! Enjoy the market today and get out there and take advantage of some of the deals to be had!!
Photo: Shannon Willis
Rizwan Malik, Senior Vice President of Sales at Sotheby's International Realty Canada; Real Estate Expert Cityline; Co-Star - HGTV Hot Market
Rizwan Malik is a qualified fount of knowledge regarding the Canadian real estate market. Rizwan keeps his finger on the pulse of today’s evolving markets. He breaks down its continuing complexities into easy-to-understand terms for all home buyers.