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Navigating the Canadian Housing Market: Insights on Interest Rates and Home Buying Intentions

The past two years saw 51% of Canadians delaying their home buying plans, responding to the rise in borrowing costs. This surge led to a significant reassessment of intentions among millions of Canadians. Since March 2022, when the Bank of Canada began raising its key lending rate, over a quarter of the adult population (27%) actively participated in the housing market. However, more than half of them (56%) postponed their property search due to escalating interest rates, according to a recent survey by Royal LePage and Leger.

As inflation inches closer to the desired 2% target, expectations are high for the Bank of Canada to make its first cut to the overnight lending rate later this year. This anticipated reduction is poised to bring relief to variable-rate mortgage holders and those who deferred their home buying plans. Among those who delayed their purchase, 51% are ready to resume their search if interest rates drop. Specifically, 10% await a mere 25-basis-point drop, 18% anticipate a cut of 50 to 100 basis points, while 23% seek more than a 100-basis-point reduction before reconsidering their search.

Though 20% of sidelined buyers have abandoned their plans altogether, another 12% are poised to re-enter the market if the Bank of Canada's key lending rate remains steady. Among those aiming to re-enter once rates decrease, 44% prefer a four-year or five-year fixed-rate mortgage, the most favoured mortgage type and term in Canada. This number doubles the respondents intending to opt for a variable-rate mortgage (22%), while another 12% plan to secure a short-term fixed-rate mortgage.

Despite the challenges posed by rising interest rates, 65% of respondents remain actively engaged in the home buying process. This engagement spans from casual browsing of listings (39%) to continuing to save for a down payment (19%), applying for a mortgage pre-approval (12%), or already having obtained one (7%). However, 26% of respondents have temporarily disengaged from the home shopping process.

Ready to make your move in the housing market? Don't let rising interest rates hold you back! Whether you're ready to buy, actively browsing listings, or just considering your options, now is the time to stay informed and prepared. Let's take the next step together!

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Ottawa's Real Estate Market: Spring Surge and Shifting Dynamics

Early signs of a vibrant spring real estate market are evident in Ottawa's MLS® data. In March 2024, the Ottawa Real Estate Board recorded 1,165 home sales, marking a 10% increase from the same period last year. However, despite this surge, sales remained 21.5% below the five-year average and 15% below the ten-year average for March.

Year-to-date figures also depict a positive trend, with 2,678 homes sold in the first three months of 2024, reflecting a 13.1% increase from the corresponding period in 2023. Curtis Fillier, President of OREB, highlights the overall health of Ottawa's real estate market, anticipating an active spring and summer. Fillier notes the growing confidence among sellers, as indicated by the rise in new and active listings, coupled with increased showing activity. However, he observes a cautious approach from buyers, likely due to concerns regarding affordability and limited supply.

Fillier suggests a shift is imminent in the market dynamics, driven by post-pandemic adjustments in housing needs. This includes trends such as downsizing, urban migration, and seeking properties better suited to evolving requirements. Consequently, there's mounting pressure on the mid-range property market in Ottawa, which traditionally faces tight inventory levels. Fillier advises both buyers and sellers not to delay their decisions in this evolving market landscape.

In terms of pricing, the MLS® Home Price Index (HPI) reveals consistent growth. The composite benchmark price reached $636,700 in March 2024, reflecting a 2.7% increase year-over-year. Single-family homes saw a benchmark price rise of 2.6%, reaching $719,000, while townhouse/row units and apartments experienced modest gains as well.

The average price of homes sold in March 2024 was $682,078, up 5.1% from the previous year, with the year-to-date average price showing a 3.2% increase. Overall, the dollar volume of home sales in March 2024 surged by 15.6% compared to the same month in 2023.

In terms of inventory and new listings, March 2024 witnessed a 13.5% increase in new residential listings compared to March 2023, totalling 2,074 new listings. However, this figure remained slightly below the five-year average and significantly lower than the ten-year average for March. Active residential listings also rose by 18.3% year-over-year, with 2,543 units on the market by the end of March 2024. Despite this increase, months of inventory only saw a slight uptick, indicating a persistent imbalance between supply and demand in the Ottawa real estate market.

Take Charge of Your Real Estate Journey Today!

Whether you're looking to buy or sell in Ottawa's dynamic market, now is the time to act. Don't wait on the sidelines as opportunities unfold and market conditions evolve. Reach out and we can guide you through every step of the process. Seize the moment and make your move in Ottawa's buzzing real estate scene!

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Unlocking Potential: Navigating the Pros and Cons of Buying and Transforming Fixer-Upper Homes

Contemplating the Purchase of a Property in Need of Repairs or Upgrades? You're certainly not alone in this aspiration. In this post, we aim to uncover the true allure of these potential-packed properties, dissecting the reasons many homebuyers are drawn to these projects. We'll explore the benefits, such as lower purchase prices and customization potential, while also shedding light on the drawbacks, including unexpected costs and the challenges of living amidst ongoing renovations. By the end, armed with our insightful tips, you'll be well-equipped to make an informed decision on whether a fixer-upper home aligns with your preferences.

Unveiling the Attraction of Fixer-Uppers

Let's start by delving into the enchantment surrounding fixer-upper homes. These properties act as a blank canvas for creative expression and pose a thrilling challenge for those eager to roll up their sleeves. Unearthing hidden potential is a stimulating endeavor, and some have turned these fixer-uppers into profitable ventures with the right tweaks and improvements.

Personalization stands out as a significant advantage, offering a level of satisfaction hard to replicate in a pre-designed house. Additionally, the prospect of acquiring a property in a desirable location, even if it requires some renovation, adds an extra layer of appeal. In summary, the allure of fixer-uppers is multi-faceted and captivating.

The Upsides and Downsides of Purchasing a Fixer-Upper Home

Pros of Investing in a Fixer-Upper Home

Moving forward, let's examine the advantages of investing in a fixer-upper home. Despite the potential need for elbow grease, these properties come with several key benefits.

  1. Lower Purchase Price: Opting for a fixer-upper translates to a lower initial investment. For instance, moving from a high-cost housing market like Toronto to a more affordable location such as Edmonton allows you to secure a larger property for the same price.

  2. Potential for Increased Profit: Beyond the initial savings, there's potential for substantial profit post-renovation. Enhancing the property's value can lead to a significant return on investment, a notable advantage for those willing to put in the effort.

  3. Personalization: The opportunity for personalization is equally crucial. Acquiring a fixer-upper enables you to tailor every aspect of the property to your taste, creating a home that uniquely reflects your personality.

  4. Reduced Competition: Lastly, these homes often face reduced competition in the market. With many buyers preferring move-in-ready options, fixer-uppers attract fewer bidders, offering a win for those willing to undertake renovations.

Consider engaging cross-province movers for a seamless transition when relocating from Toronto to Edmonton. Their expertise ensures a smooth settling process, not only by safely transporting your belongings but also by providing guidance on navigating your new neighborhood.

In summary, investing in a fixer-upper comes with various advantages, from cost-effectiveness to customization. It provides an opportunity to create a home that is uniquely yours, offering a smooth transition when moving cities, especially with the assistance of professional movers. Nevertheless, weighing these benefits against potential downsides is crucial, as we'll explore in the next section.

Cons of Purchasing a Fixer-Upper Home

While the benefits are abundant, buying a fixer-upper home poses its own set of challenges. Let's navigate through the potential downsides.

  1. Time and Effort: Acquiring a fixer-upper is a commitment of time and energy. Renovations, even minor ones, can stretch over months, demanding patience and a willingness to navigate unforeseen obstacles.

  2. Unexpected Costs: Financial uncertainties come into play, as unexpected costs can arise, potentially skewing your budget. From structural issues to hidden mold or outdated wiring, renovation expenses can escalate quickly, emphasizing the need for budgeting beforehand.

  3. Financing and Insurance Challenges: Securing financing can be a hurdle, as banks often view fixer-uppers as risky investments, making it challenging to secure a loan. Insurance companies may also charge higher premiums until renovations are complete.

  4. Living in a Construction Zone: Lastly, there's the practical aspect of living in a house under construction. It can be stressful, messy, and disrupt your daily routines, with dust, noise, and workers making your home less peaceful.

Despite these drawbacks, dismissing the potential benefits of a fixer-upper would be premature. It's a matter of weighing your ability to handle these challenges against the potential rewards. For some, the chance to mold a house into a dream home or the prospect of a significant return on investment may outweigh these downsides. The key lies in understanding what you're getting into, meticulous planning, and maintaining a healthy tolerance for unpredictability. Buying a fixer-upper isn't for everyone, but for those willing to take the plunge, the rewards can be substantial.

Tips for Navigating the Fixer-Upper Journey

For a smoother journey into the world of fixer-uppers, consider the following tips:

  1. Enlist an Experienced Home Inspector: Identify potential cost pitfalls by having an experienced home inspector thoroughly examine the property.

  2. Consider Location: Even the best renovations won't compensate for a poor location, so evaluate the neighborhood before making a decision.

  3. Get a Renovation Estimate: Obtain a renovation estimate before purchasing to have a clearer idea of potential costs.

  4. Plan for Unexpected Expenses: Ensure you have a financial cushion to cover unexpected expenses that may arise during the renovation process.

  5. Live Elsewhere During Major Renovations: If possible, consider living elsewhere during significant renovations to maintain your sanity amidst the chaos.

Purchasing a fixer-upper home presents both exciting opportunities and significant challenges. From cost savings to personalization, the advantages can be considerable. In contrast, unexpected costs, effort, and potential financing hurdles are notable cons. Whether a fixer-upper aligns with your preferences depends on your financial situation, time commitment, and tolerance for uncertainty. Armed with this knowledge, carefully weigh your options. With thorough planning, the journey of transforming a fixer-upper into your dream home can be a rewarding one. Remember, every home has potential—it's all about seeing it. Best of luck on your home-buying journey!

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Bank of Canada Holds Steady: Balancing Inflation and Stability in Economic Policy

The Bank of Canada has opted to maintain its overnight lending rate at 5% for the fifth consecutive occasion, as announced in its scheduled interest rate declaration on March 6th. It affirmed its commitment to keep the policy rate steady at 5% and to continue the process of normalizing the Bank’s balance sheet.

Despite a drop in the annual inflation rate to 2.9% in January, the Bank cited underlying inflationary factors like shelter costs as grounds for maintaining the current interest rate level. It expressed the desire to witness further easing of inflation and the establishment of price stability before considering rate adjustments.

Economists anticipate potential rate reductions later in the year, possibly in the June announcement, should inflation continue to decrease toward the central bank’s target of 2%. The Bank of Canada's next announcement is scheduled for April 10th, 2024.

Today, the Bank maintained its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%, while also continuing its policy of quantitative tightening.

The global economic landscape saw a slowdown in growth in the fourth quarter, with the US experiencing a slight deceleration but maintaining robust and broad-based GDP growth. Meanwhile, the euro area's economic growth remained stagnant after a contraction in the third quarter. Inflation in both the US and the euro area continued to ease, while bond yields rose and corporate credit spreads narrowed. Equity markets showed strong gains, and global oil prices were slightly higher than previously projected.

In Canada, fourth-quarter GDP growth exceeded expectations, driven by exports, although overall economic growth remained below potential. Despite a modest increase in consumption, final domestic demand contracted, primarily due to a significant decline in business investment. Employment growth continued to lag behind population growth, and there were indications of easing wage pressures. Overall, the data suggest an economy operating with modest excess supply.

CPI inflation eased to 2.9% in January, mainly due to a moderation in goods price inflation. However, shelter price inflation remained elevated and remained the primary contributor to overall inflation. Underlying inflationary pressures persisted, with year-over-year and three-month measures of core inflation remaining in the 3% to 3.5% range. Although the proportion of CPI components growing above 3% declined, it remained above historical averages. The Bank anticipates inflation to stay close to 3% during the first half of the year before gradually easing.

The Governing Council's decision to maintain the policy rate at 5% and continue the normalization of the Bank’s balance sheet reflects concerns about inflation risks, particularly regarding the persistence of underlying inflation. The Council aims to witness further and sustained easing in core inflation while focusing on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behavior. The Bank remains steadfast in its commitment to restoring price stability for Canadians.

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Ottawa's real estate market is on fire!

In February 2024, the Ottawa Real Estate Board reported a total of 886 homes sold through the MLS® System, marking a notable 15.2% increase compared to the same month in 2023. However, these sales figures fell 13.8% below the five-year average and 5.7% below the 10-year average for February.

OREB President Curtis Fillier emphasized the robust and active nature of the Ottawa real estate market despite higher prices and stable interest rates. Metrics across various indicators showed positive growth from the previous year, indicating significant activity among both buyers and sellers. Fillier, however, acknowledged the ongoing affordability challenges, with many individuals still unable to participate in the market.

The recent report from the Municipal Property Assessment Corporation (MPAC) revealed a scarcity of communities with homes under $500,000. A decade ago, 74% of Ontario residential properties had a value estimate below $500,000, but this has dwindled to only 19% today. Fillier advocated for impactful measures, such as allowing four residential units on property lots and eliminating exclusionary zoning, to address the lack of affordable housing.

Examining price trends, the MLS® Home Price Index (HPI) showcased a 2.8% increase in the overall composite benchmark price to $628,500 in February 2024 compared to the previous year. The benchmark prices for single-family homes, townhouses/row units, and apartments also exhibited varying gains. The average home price for February 2024 was $651,340, showing a 2% uptick from the same month in 2023. The dollar volume of all home sales surged by 17.5%, reaching $577 million in February 2024.

OREB cautioned against relying solely on the average sale price as an indicator of specific property value changes, emphasizing the variability across different neighbourhoods.

In terms of inventory and new listings, February 2024 witnessed a substantial 29.5% increase in new residential listings, totalling 1,539. Although these new listings were 10.3% above the five-year average, they remained 3.3% below the 10-year average for February. Active residential listings at the end of February 2024 numbered 2,158, marking a 16.3% gain from the same month in 2023. However, they were 59.6% above the five-year average and 17.7% below the 10-year average for February. The months of inventory stood at 2.4, remaining unchanged from February 2023, indicating the time it would take to sell current inventories at the existing rate of sales activity.

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Buy First or Sell First in Real Estate?

Navigating the real estate market often involves the crucial decision of whether to buy a new property before selling the current one or vice versa. This choice holds substantial financial and logistical implications and lacks a universal solution, depending heavily on individual circumstances, financial stability, and risk tolerance.

Opting to buy first and then sell has its advantages. It reduces stress, allowing for a more deliberate search for the right property without the urgency of finding immediate housing. This method facilitates a seamless transition, enabling individuals to move belongings at their own pace and eliminating the inconvenience of temporary housing or storage.

However, this approach comes with its challenges. Carrying two mortgages simultaneously can be financially burdensome, requiring preparedness to manage both payments if the current property doesn't sell quickly. Additionally, making contingent offers on a new home while the current one is still unsold may render the offer less appealing to sellers.

Conversely, choosing to sell first and then buy provides financial security by determining the exact amount available for the next property, reducing the financial risk associated with two mortgages. This strategy also offers a stronger negotiating position when making offers on new homes, as sellers are more likely to take seriously offers not contingent on selling the current property.

Yet, selling first has its drawbacks. It might necessitate finding temporary accommodations, such as renting or staying with family or friends, during the search for a new home, adding an element of inconvenience. Additionally, once a home is sold, there's time pressure to secure a new one, potentially leading to rushed decisions.

Seeking guidance from professionals like ourselves is crucial in making informed decisions about real estate transactions. Consulting with a real estate agent or financial advisor, such as Beth & Andrew, proves beneficial in these scenarios, as these experts can provide valuable insights to help individuals align their choices with their goals and financial capabilities. The absence of a one-size-fits-all answer emphasizes the importance of considering unique situations and priorities.

In conclusion, the nuanced decision of whether to buy or sell first in real estate requires careful consideration of personal circumstances. Whether individuals are leaning towards reduced stress and a seamless transition or prioritizing financial security and negotiation strength, contacting experts like the Beth & Andrew | Home Team to discuss their options is advisable. Weighing the pros and cons and seeking expert advice ensures decisions that align with unique goals and situations

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Ottawa Real Estate Sees 16.5% Surge in January Home Sales!

In January 2024, the Ottawa Real Estate Board reported a total of 629 homes sold through the MLS® System, marking a 16.5% increase compared to January 2023. Despite this positive trend, home sales were 10.7% below the five-year average and 3.9% below the 10-year average for the month.

OREB President Curtis Fillier noted that while there is increased showing activity, the market remains relatively quiet compared to pre-pandemic standards. Buyers are cautiously approaching the market, taking advantage of the slower pace to find their ideal property. Fillier advised sellers to adjust their expectations and carefully consider pricing and timing strategies with guidance from their REALTOR®.

Brandon Reay, OREB’s policy and external relations manager, emphasized the impact of low supply on market conditions. He advocated for meaningful policy changes, including streamlining processes at the Ontario Land Tribunal, eliminating exclusionary zoning, and permitting four units on residential lots to address the housing crisis.

On the pricing front, the MLS® Home Price Index (HPI) showed a 3.2% year-over-year gain in the overall composite benchmark price, reaching $621,600 in January 2024. Single-family homes saw a 3.7% increase to $703,500, while townhouse/row unit prices decreased by 2.1% to $462,200. The benchmark apartment price rose by 3.7% to $418,500. The average price of homes sold in January 2024 was $631,722, a 1.8% increase from the previous year.

The dollar volume of home sales in January 2024 amounted to $397.3 million, representing an 18.6% increase compared to the same month in 2023. OREB cautioned that while the average sale price is useful for tracking trends, it may not accurately reflect specific property values, which vary across neighborhoods.

Regarding inventory and new listings, there was a 7.3% increase in new residential listings in January 2024, totaling 1,271. Active residential listings at the end of the month numbered 1,961, reflecting a 4.5% increase from January 2023. Despite being 57.4% above the five-year average, active listings were 16.6% below the 10-year average for January. The months of inventory decreased from 3.5 in January 2023 to 3.1 in January 2024, indicating a measure of the time it would take to sell existing inventories at the current sales rate.

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Decoding High-Priced Home Listings: Are They Worth a Second Look?

Imagine scrolling through real estate listings and stumbling upon a dream home in a sought-after neighbourhood. Excitement builds, but there's a catch – the property is listed well above comparable sales in the area. Is it still worth considering? The answer may surprise you.

While a lofty price tag might initially raise eyebrows, there are various reasons why sellers choose to list their homes above market value. One possibility is that the property boasts unique and highly desirable features that justify a premium, such as a spacious backyard, a state-of-the-art kitchen, or a fully finished basement. In these cases, the extra cost might be justified by the added value these features bring to the table.

Another common reason for a high listing price is the seller's belief that aiming high will attract higher-priced offers. While this strategy doesn't always pan out, it highlights the subjective nature of home valuation. In such instances, the property is still worth a closer look, especially if it aligns with most or all of the criteria on your wish list.

The key lies in understanding why a home is priced the way it is. If additional features or amenities drive up the cost, and these align with your priorities, the premium might be justifiable. Perhaps the sprawling garden, the custom-designed kitchen, or the fully renovated bathroom are crucial elements that make the investment worthwhile for you.

On the flip side, what if the inflated price is artificial? If the seller has miscalculated the market or is overly optimistic, chances are the home will eventually sell close to its actual market value. In such cases, if you make an offer reflective of the real value, you might find yourself in a winning position.

The bottom line is that these seemingly overpriced listings are usually worth investigating further. It's essential to schedule that viewing appointment and delve deeper into the intricacies of the property. By doing so, you can assess whether the premium is justified by unique features or if it's a result of an optimistic seller.

Navigating high-priced listings requires a strategic approach. It's about evaluating the property beyond its price tag and understanding the nuances that contribute to its perceived value. So, if you come across a home that seems to break the bank, don't dismiss it outright – it might just be the home of your dreams, waiting to be uncovered.

Ready to explore homes that may surpass your expectations? Schedule those viewings with us, and let the journey to finding your dream home begin! Don't let a seemingly high price deter you; sometimes, the perfect home is just waiting for the right buyer to recognize its true value.

Let’s start your house hunting journey today!

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The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are member’s of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by CREA and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.