FROM JOSEPHJust as the market is feeling more confident, here comes another rate hike. Bank of Canada is poised to raise the interest rate for the fifth time this year. As you are reading this report, the policy rate should already be out. Check it out here.
How will this affect the real estate market? Well, we've already seen it many times this year. Real estate is very sensitive to rate fluctuations, as it affects everything from developers' construction costs and end users' ability to afford them. The question is, to what extend?
Let's skim through some numbers (I promise I'll be brief!). In the month of August, sales came down 40% year-over-year, leaving us at a sales-to-active-listing ratio of 0.19 - a balanced market. To the surprise of some, the housing price is still up 7.4% YOY.
On the frontline of the market everyday, I am still seeing lots of buyers house-shopping. No, there are no more 20-metre long line-ups at the open houses (to my relief! It can be stressful!). But good quality homes are still getting picked up quickly.
Why? The red hot rental market makes renting less than appealing to many home buyers. It also pushes up the fair market value for investment properties. Then there's the issue with "real" interest rate. At 7.6% inflation rate and 2.5% policy rate (at the time of writing this article), we are left at a real interest rate of -5.1%. This means a strong demand for inflation-hedge assets. And when it comes to worldly real estate choices, where else but Vancouver Canada, where it's politically stable, has a conversative banking system, and is ranked on top in quality of life.
For the TL;DRers, the market remains stable. The September rate hike will likely deter some buyers, but is unlikely to tame home prices as long as the inflation monster is still overstaying its welcome.
Hope this has been informative to you. I have received some really positive feedbacks from my clients about this newletter. At a time where everyone is buried by torrents of information on a daily basis, I am really grateful for your attention. And I really mean it!
Have a great rest of summer. Until next time.
Your Favourite Realtor
Joseph Liang
9/7/2022
LINKS2022 AUGUST STATS PACKAGE
