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Bank of Canada reduces policy rate by 50 basis points to 3.25%

The Bank of Canada today reduced its target for the overnight rate to 3¼%, with the Bank Rate at 3¾% and the deposit rate at 3¼%. The Bank is continuing its policy of balance sheet normalization.

The global economy is evolving largely as expected in the Bank’s October Monetary Policy Report (MPR). In the United States, the economy continues to show broad-based strength, with robust consumption and a solid labour market. US inflation has been holding steady, with some price pressures persisting. In the euro area, recent indicators point to weaker growth. In China, recent policy actions combined with strong exports are supporting growth, but household spending remains subdued. Global financial conditions have eased and the Canadian dollar has depreciated in the face of broad-based strength in the US dollar.

In Canada, the economy grew by 1% in the third quarter, somewhat below the Bank’s October projection, and the fourth quarter also looks weaker than projected. Third-quarter GDP growth was pulled down by business investment, inventories and exports. In contrast, consumer spending and housing activity both picked up, suggesting lower interest rates are beginning to boost household spending. Historical revisions to the National Accounts have increased the level of GDP over the past three years, largely reflecting higher investment and consumption. The unemployment rate rose to 6.8% in November as employment continued to grow more slowly than the labour force. Wage growth showed some signs of easing, but remains elevated relative to productivity.

A number of policy measures have been announced that will affect the outlook for near-term growth and inflation in Canada. Reductions in targeted immigration levels suggest GDP growth next year will be below the Bank’s October forecast. The effects on inflation will likely be more muted, given that lower immigration dampens both demand and supply. Other federal and provincial policies—including a temporary suspension of the GST on some consumer products, one-time payments to individuals, and changes to mortgage rules—will affect the dynamics of demand and inflation. The Bank will look through effects that are temporary and focus on underlying trends to guide its policy decisions.

In addition, the possibility the incoming US administration will impose new tariffs on Canadian exports to the United States has increased uncertainty and clouded the economic outlook.

CPI inflation has been about 2% since the summer, and is expected to average close to the 2% target over the next couple of years. Since October, the upward pressure on inflation from shelter and the downward pressure from goods prices have both moderated as expected. Looking ahead, the GST holiday will temporarily lower inflation but that will be unwound once the GST break ends. Measures of core inflation will help us assess the trend in CPI inflation.

With inflation around 2%, the economy in excess supply, and recent indicators tilted towards softer growth than projected, Governing Council decided to reduce the policy rate by a further 50 basis points to support growth and keep inflation close to the middle of the 1-3% target range. Governing Council has reduced the policy rate substantially since June. Going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time. Our decisions will be guided by incoming information and our assessment of the implications for the inflation outlook. The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.

The next scheduled date for announcing the overnight rate target is January 29, 2025.

Source: bankofcanada.ca

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Bank of Canada Cuts Interest Rates Amid Optimistic Economic Outlook

Today, the Bank of Canada lowered its target for the overnight rate to 3.75%, with the Bank Rate set at 4% and the deposit rate at 3.75%. The Bank continues its balance sheet normalization efforts.

Globally, the economy is projected to grow at a steady 3% over the next two years. Growth in the U.S. is anticipated to be stronger than previously expected, while China’s outlook remains cautious. The euro area’s growth has been sluggish but is expected to improve modestly next year. Inflation in advanced economies has decreased recently, aligning with central bank targets. Since July, global financial conditions have eased, partly due to expectations of lower policy interest rates. Additionally, global oil prices are roughly $10 lower than projected in the July Monetary Policy Report (MPR).

In Canada, economic growth was around 2% in the first half of the year, with an anticipated 1.75% growth in the second half. While overall consumption has grown, it has decreased on a per-person basis. Exports have seen a boost from the opening of the Trans Mountain Expansion pipeline. The labor market remains subdued, with the unemployment rate at 6.5% as of September. Population growth continues to expand the labor force, but hiring has been moderate, impacting young people and newcomers the most. Wage growth remains high compared to productivity growth, indicating excess supply in the economy.

Looking ahead, GDP growth is expected to strengthen gradually as lower interest rates support economic activity. A modest increase in consumer spending per capita, along with slower population growth, is expected to drive this recovery. Residential investment is projected to rise, fueled by strong housing demand, while business investment should pick up as overall demand grows. Exports are likely to stay robust, supported by strong U.S. demand.

The Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026. As the economy gains momentum, the excess supply will gradually be absorbed.

Consumer Price Index (CPI) inflation has dropped notably from 2.7% in June to 1.6% in September. While inflation in shelter costs remains high, it has begun to ease. Excess supply in the broader economy has lowered the prices of many goods and services, and the recent drop in global oil prices has driven down gasoline costs. These factors have collectively brought inflation down. The Bank’s core inflation measures are now below 2.5%. With inflation pressures no longer widespread, expectations from businesses and consumers have largely stabilized.

The Bank anticipates that inflation will hover around its target range throughout the forecast period. The upward pressure from shelter and services costs is expected to diminish, while downward pressures should ease as the economy absorbs the current excess supply.

With inflation nearing the 2% target, the Governing Council has decided to reduce the policy rate by 50 basis points to bolster economic growth and maintain inflation around the mid-point of the 1% to 3% target range. If the economy aligns with the Bank's forecast, additional rate cuts are anticipated. However, the timing and pace of any future reductions will depend on economic data and its implications for inflation. Decisions will be made on a meeting-by-meeting basis. The Bank remains dedicated to maintaining price stability for Canadians, keeping inflation close to the 2% target.

Source: bankofcanada.ca

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Ottawa Home Sales See Steady Growth Amid Market Adjustments in September 2024

In September 2024, 1,047 homes were sold through the MLS® System of the Ottawa Real Estate Board (OREB), marking an 11.4% increase compared to September 2023. However, sales were 17.4% below the five-year average and 15.4% lower than the 10-year average for September.

Year-to-date, a total of 10,485 homes have been sold in 2024, reflecting a 6.4% rise from the same period in 2023.

"As the housing market adjusts, Ottawa’s fall outlook remains strong,” says OREB President Curtis Fillier. "Sales are picking up, and prices are steady. Both buyers and sellers are reevaluating their strategies amid expectations of further interest rate cuts, extended amortizations, and higher price caps for insured mortgages.”

Fillier adds, “While recent policy changes will boost demand, Ottawa’s market faces ongoing supply challenges. We’re not building enough homes, particularly the ‘missing middle’ type.” The Canada Mortgage and Housing Corporation (CMHC) recently reported that Ottawa's population-adjusted construction rate is at its lowest in nearly a decade. A City of Ottawa progress report shows the city has met only 22% of its annual housing target by the end of August.

By the Numbers – Prices:

  • The MLS® Home Price Index (HPI), which offers a more accurate picture of price trends than averages, shows the overall benchmark price for all homes was $642,800 in September 2024, a slight 0.2% increase from September 2023.

  • The benchmark price for single-family homes was $729,000, up 0.5% year-over-year.

  • Townhouses/row units had a benchmark price of $500,000, down 1.7% from the previous year.

  • Apartments saw a benchmark price of $414,200, a 1.3% decrease from September 2023.

  • The average price of homes sold in September 2024 was $685,551, up 1.4% from a year ago. The year-to-date average price was $679,082, a 0.9% increase from 2023.

  • The total value of home sales in September reached $717.7 million, a 12.9% jump from September 2023.

OREB notes that while average sale prices can reveal long-term trends, they shouldn’t be viewed as a measure of individual property value changes, as prices vary across different neighbourhoods.

By the Numbers – Inventory & New Listings:

  • There were 2,343 new residential listings in September 2024, up 3.9% from the previous year, and 4.7% above the five-year average and 11.6% higher than the 10-year average.

  • Active residential listings rose 16.9% to 3,529 units by the end of September 2024. This was 43.3% above the five-year average and 4.6% above the 10-year average.

  • Months of inventory stood at 3.4 in September 2024, slightly up from 3.2 in September 2023. This measure represents how long it would take to sell all current listings at the current rate of sales.

source: OREB

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Bank of Canada Lowers Interest Rate Amid Easing Inflation and Economic Uncertainty

The Bank of Canada today lowered its target for the overnight rate to 4.25%, with the Bank Rate set at 4.5% and the deposit rate at 4.25%. The Bank continues its policy of balance sheet normalization.

Globally, the economy grew by approximately 2.5% in the second quarter, in line with forecasts from the Bank's July Monetary Policy Report (MPR). Economic growth in the United States exceeded expectations, driven by consumer spending, though the labor market has slowed. Growth in the euro area was supported by tourism and services, while manufacturing lagged. Inflation in both regions is easing. In China, weak domestic demand has hindered economic growth. Since July, global financial conditions have further relaxed, with bond yields decreasing. The Canadian dollar has seen a modest appreciation, largely due to a weaker US dollar. Oil prices are lower than projected in the July MPR.

In Canada, the economy expanded by 2.1% in the second quarter, primarily due to government spending and business investment. This growth was slightly above the July forecast, though early indicators suggest weaker economic activity through June and July. The labor market remains sluggish, with minimal employment changes in recent months, although wage growth continues to outpace productivity.

As expected, inflation fell to 2.5% in July. The Bank's preferred measures of core inflation averaged around 2.5%, and the percentage of consumer price index components rising above 3% is now close to historical levels. High shelter price inflation remains the largest contributor to overall inflation but is beginning to ease. Inflation in certain services also remains elevated.

Given the ongoing reduction in inflationary pressures, the Governing Council decided to lower the policy interest rate by another 25 basis points. Excess supply in the economy continues to push inflation downward, while rising prices in shelter and some services are keeping inflation elevated. The Governing Council is closely monitoring these opposing forces. Future monetary policy decisions will be based on incoming data and their impact on inflation forecasts. The Bank remains committed to restoring price stability for Canadians.

Source:www.BankofCanada.ca

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Ottawa’s Real Estate Market Gathers Momentum in July 2024

The Ottawa real estate market showed signs of growth in July 2024, with 1,241 homes sold through the MLS® System of the Ottawa Real Estate Board (OREB). This represents a 13.6% increase compared to July 2023.

However, home sales were still 7.1% below the five-year average and 8.8% below the 10-year average for July. Despite this, year-to-date sales figures were encouraging, with 8,349 units sold by July 2024, marking a 5.5% increase from the same period in 2023.

The market’s performance is a positive signal amidst the usual summer slowdown, reflecting growing buyer confidence and a steady stream of new listings. Recent policy changes, including interest rate cuts and extended mortgage amortization periods for first-time buyers, could further support the market, though supply challenges remain.

Price Trends

The MLS® Home Price Index (HPI) provides a detailed view of price trends:

The overall MLS® HPI composite benchmark price in July 2024 was $648,900, up slightly by 0.1% from July 2023.

Single-family homes had a benchmark price of $734,700, down 0.1% year-over-year.

Townhouse/row units saw a benchmark price of $506,100, an increase of 3.4% compared to last year.

The benchmark price for apartments was $422,800, a decrease of 0.9% from July 2023 levels.

The average price of homes sold in July 2024 stood at $679,610, reflecting a 2.1% decrease from July 2023. The year-to-date average price, however, showed a slight increase of 1.0%, reaching $681,082. The total dollar volume of home sales in July 2024 was $843.3 million, an 11.3% increase from July 2023.

Inventory and New Listings

New residential listings in July 2024 increased by 17.1% from the previous year, totaling 2,231 new listings. Active residential listings at the end of July 2024 numbered 3,480 units, a substantial 37.0% increase from July 2023. The months of inventory, which indicates how long it would take to sell current listings at the current sales pace, rose to 2.8 months, up from 2.3 months in July 2023.

These statistics reflect a market that is gaining momentum, with increasing buyer activity and a growing inventory, although challenges around supply and affordability persist.

Source: Ottawa Real Estate Board

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Where was the Spring Market?
Despite strong sales in the first quarter, Canada’s spring housing market was subdued across many regions in Q2 of 2024. The Bank of Canada's first overnight lending rate cut in June sparked significant interest, but did not lead to a noticeable resurgence of homebuyers. This cautious stance contrasts with rising inventory levels, resulting in more balanced market conditions.Royal LePage® forecasts a 9.0% increase in the aggregate price of a home in Canada in Q4 2024 compared to the same quarter last year. Nationally, home prices are expected to see continued moderate appreciation throughout the year's second half.“Canada’s housing market is struggling to find a consistent rhythm, as the last three months clearly demonstrated,” said Phil Soper, president and CEO of Royal LePage. “Nationally, home prices rose while the number of properties bought and sold sagged; an unusual dynamic. The silver lining: inventory levels in many regions have climbed materially. This is the closest we’ve been to a balanced market in several years.”“This trend dominates activity in two of the country’s largest and most expensive markets, the greater regions of Toronto and Vancouver, where sales are down yet prices remain sticky,” Soper continued. “There are exceptions. In the prairie provinces and Quebec, low supply and tight competition persist.”


Q2 Reports Modest Uptick in Home Prices

According to the Royal LePage House Price Survey, the aggregate price of a home in Canada increased by 1.9% year-over-year to $824,300 in Q2 2024. On a quarter-over-quarter basis, the national aggregate home price increased by 1.5%, despite a slowdown in activity in the country’s most expensive markets.By housing type, the national median price of a single-family detached home increased by 2.2% year-over-year to $860,600, while the median price of a condominium increased by 1.6% year-over-year to $596,500. Quarter-over-quarter, the median price of a single-family detached home increased by 1.8%, while the median price of a condominium increased by 0.8%.


Sustained High Interest Rates Run Risk of Buyer Rush

Over the last two years, the national housing market has experienced fluctuations in home prices, with some regional exceptions, due to the impacts of higher interest rates. As the Bank of Canada balances lowering the key lending rate and controlling inflation, some housing market segments have stalled.“Canada’s housing market faces pent-up demand after two stifling years of high borrowing costs. While inflation control is crucial, persistently high rates are increasing the risk of a surge in demand when buyers inevitably return. New household formation and immigration keep fueling the need for housing, and a sudden release could create much market instability. This highlights the need for a more nuanced approach that balances inflation control with economic vitality,” added Soper.


Increased Borrowing Costs Hamper New Supply Creation

Elevated borrowing rates are not only dampening housing market activity but also stifling new home construction. Builders, heavily reliant on lending, are finding it increasingly difficult to finance new projects, exacerbating the housing shortage as the population grows.“Canada’s housing market faces complex challenges. While raising interest rates was crucial to fighting inflation, it has unintentionally choked off the essential flow of new housing supply. Higher borrowing costs, coupled with labor shortages in the construction trades and rising material prices, have made it economically unsustainable for developers to launch new projects. This creates a perfect storm – our population is growing steadily, yet we’re building far fewer homes than needed to meet demand. This situation urgently needs innovative solutions to ensure Canadians have access to affordable housing options,” concluded Soper.


Second Quarter Press Release Highlights:

  • Toronto and Vancouver report slower-than-usual market activity this spring as inventory builds, while demand continues to outpace supply in the prairie provinces and Quebec.
  • Quebec City records the highest year-over-year aggregate price increase (10.4%) in Q2 among the report’s major regions.
  • Royal LePage maintains its national year-end forecast, with prices expected to increase by 9.0% in Q4 2024 over the same period last year.
  • According to a Royal LePage survey conducted by Leger earlier this year, 51% of sidelined homebuyers said they would resume their search if interest rates reversed.
 
 

Source: Royal LePage Team Realty

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Navigating Mortgage Renewal: Key Considerations for Canadian Homeowners

More than half of Canadian mortgages are set to renew before the end of 2026. With the Bank of Canada reducing its key interest rate from 5.0% to 4.75% on June 5th, many homeowners are now contemplating whether to choose a fixed or variable rate upon renewal. Understanding the available options and anticipating changes is crucial to effectively managing today's dynamic mortgage landscape.

Current Situation

During the pandemic real estate boom, variable rates were historically lower, but this trend has reversed recently. Currently, the average five-year variable interest rate offered by mortgage lenders is around 6.7%, while fixed rates are typically at 5.6%. Variable mortgage rates depend on various economic factors, including the key overnight lending rate set by the Bank of Canada. Although the central bank recently cut its key rate for the first time in four years, it could change course if inflation rises in the coming months. Economists expect further cuts by the end of 2024, continuing into 2025 unless economic conditions shift significantly. Despite declining rates, the historically low rates of the past two decades are no longer expected.

Considerations for Variable Rates

For variable-rate mortgages, an increase in the prime rate, influenced by the Bank of Canada's overnight lending rate, leads to higher mortgage payments. However, variable loans with fixed-payment options keep monthly payments unchanged, adjusting the mortgage amortization period instead. This results in a smaller proportion of each payment going towards repaying the principal.

Understanding Your Needs

Choosing between a fixed- and variable-rate mortgage depends largely on the borrower's risk tolerance and personal situation. Variable rates fluctuate, so consider if your lifestyle can accommodate these changes. Even if interest rates begin to fall, numerous economic factors influence their direction throughout your mortgage term. The right mortgage product depends on your short- and medium-term situation. If you're in a period of transition (career change, separation, etc.), a fixed rate might offer more stability.

Strategic Options for Borrowers

  • Fixed-Rate Mortgage with a Shorter Term: Amid economic uncertainty, many borrowers are opting for shorter-term fixed-rate mortgages (one, two, or three years). This approach allows borrowers to lock in predictable monthly payments without committing to the same rate long-term.
  • Hybrid-Rate Mortgage: This option combines features of both variable and fixed rates — part of the mortgage has a fixed interest rate, and the other has a variable rate. This allows borrowers to benefit from both stability and potential rate decreases.
  • Convertible Mortgage: This loan allows borrowers to convert a variable interest rate into a fixed-rate mortgage, or vice versa, before maturity. This flexibility helps adapt mortgage strategies to changing market conditions.

Consult a Professional

Ready to navigate your mortgage renewal with confidence? Contact us today! We can connect you with one of our trusted and experienced mortgage professionals who are ready to help you explore your options and find the best solution tailored to your needs. Whether you're considering a fixed or variable rate, they will provide personalized guidance to ensure you make an informed decision. 


Source: CBD

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Your Exclusive Real Estate Market Update

In May 2024, the Ottawa Real Estate Board (OREB) reported a total of 1,545 homes sold through the MLS® System, marking a 9.2% decrease compared to May 2023. This figure was 3.7% lower than the five-year average and 13.2% below the ten-year average for May. Year-to-date, home sales reached 5,673 units over the first five months of the year, reflecting a 5.2% increase from the same period in 2023.

OREB President Curtis Fillier noted that Ottawa's early spring market remained steady, with an increase in new listings indicating growing seller confidence. However, some sellers may have awaited the Bank of Canada's interest rate announcement before making decisions, as the first interest rate cut in four years occurred. Nevertheless, supply issues and high home prices persist as challenges despite positive economic indicators.

By the Numbers – Prices:

The MLS® Home Price Index (HPI) tracks price trends far more accurately than is possible using average or median price measures.

  • The overall MLS® HPI composite benchmark price was $651,300 in May 2024, a marginal gain of 1.2% from May 2023.

    • The benchmark price for single-family homes was $736,000, up 1.1% on a year-over-year basis in May.

    • By comparison, the benchmark price for a townhouse/row unit was $517,500, up 2.1% compared to a year earlier.

    • The benchmark apartment price was $425,000, up 2.0% from year-ago levels.

  • The average price of homes sold in May 2024 was $690,683 increasing 0.8% from May 2023. The more comprehensive year-to-date average price was $679,862, increasing by 1.8% from the first five months of 2023.

  • The dollar volume of all home sales in May 2024 was $1.06 billion, down 8.5% from the same month in 2023.

OREB cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Prices will vary from neighbourhood to neighbourhood.

By the Numbers – Inventory & New Listings

  • The number of new listings saw an increase of 26.2% from May 2023. There were 3,034 new residential listings in May 2024. New listings were 23.2% above the five-year average and 10.2% above the 10-year average for the month of May.

  • Active residential listings numbered 3,552 units on the market at the end of May 2024, a gain of 59.4% from May 2023. Active listings were 72.2% above the five-year average and 2.9% below the 10-year average for the month of May.

  • Months of inventory numbered 2.3 at the end of May 2024, up from 1.3 in May 2023. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity. 

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Bank of Canada Cuts Rates: Impact on Housing Market

After maintaining the overnight lending rate at a two-decade high of 5% for 11 months, the Bank of Canada has now reduced its policy rate. In its scheduled June announcement, Canada’s central bank lowered the target for the overnight rate by 25 basis points to 4.75%.


Despite inflation remaining slightly above the BoC’s target of 2%, the overall consumer price index has decreased over the past year, indicating a slowdown in core inflation which is expected to continue.


“Governing Council decided monetary policy no longer needs to be as restrictive and lowered the policy interest rate by 25 basis points to 4.75%,” said Tiff Macklem, Governor of the Bank of Canada, in a statement to reporters following the announcement. “We’ve come a long way in the fight against inflation. And our confidence that inflation will continue to move closer to the 2% target has increased over recent months. The considerable progress we’ve made to restore price stability is welcome news for Canadians.”

Impact on Canada’s Housing Market: With the anticipated interest rate cut now in effect, many rate-sensitive homebuyers are likely to see this as a cue to re-enter the housing market.


A recent Royal LePage survey conducted by Leger found that 51% of Canadians who had postponed their home buying plans in the past two years would return to the market once the Bank of Canada reduced its key lending rate. Specifically, 10% of respondents said a 25-basis-point drop would prompt them to re-enter the market, 18% would wait for a cut of 50 to 100 basis points, and 23% would need to see a cut of more than 100 basis points before resuming their search.


“The long-awaited cut to the overnight lending rate has arrived. The Bank of Canada held its key lending rate at 5% for the past 11 months, and it has been more than four years since the rate was last reduced,” commented Phil Soper, president and CEO of Royal LePage. “Our research shows that half of sidelined homebuyers in Canada plan to resume their home search once the bank rate starts to decline. This will likely spark activity and put upward pressure on home prices in the latter half of the year.”


The Bank of Canada will make its next announcement on Wednesday, July 24th.

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Building for Tomorrow: Key Housing Policies Unveiled in Canada's 2024 Budget

The Canadian federal government revealed its 2024 budget on Tuesday, April 16th, unveiling a range of initiatives aimed at bolstering housing affordability for Canadians. Here's a breakdown of eight housing policies outlined in this year’s budget:

  1. Canadian Renters’ Bill of Rights: With more Canadians renting for extended periods, measures were introduced to safeguard tenants and facilitate their transition to homeownership. This includes the creation of a national standard lease agreement and incentivizing landlords to disclose rental price history. Additionally, a Tenant Protection Fund with $15 million allocated over five years will offer legal support to tenants.

  2. Funding for New Home Construction: Significant investment was pledged towards constructing new housing units. The Canada Builds initiative, alongside increased funding for the Apartment Construction Loan Program, aims to facilitate the creation of 30,000 new homes by 2031. Additional financial support was allocated to the Housing Accelerator Fund and the Canada Housing Infrastructure Fund.

  3. Extended Mortgage Amortizations: First-time buyers of newly-constructed homes will have access to 30-year mortgage amortizations, effective August 1st. This move is expected to reduce monthly payments and ease the financial burden on homebuyers.

  4. Amendments to the Home Buyers’ Plan: The RRSP withdrawal limit on the Home Buyers’ Plan was raised from $35,000 to $60,000, offering aspiring homeowners greater flexibility in accessing funds for down payments, for those first time buyers who have been able to afford RRSP savings.

  5. Support for Single-Family Home Suites: A $409.6 million investment over four years was earmarked for the Canada Secondary Suite Loan Program, enabling homeowners to borrow up to $40,000 for the construction of secondary housing units.

  6. Funding for Post-War Housing Catalog: The modernization of the post-war home design catalogue received $11.6 million in funding, facilitating the development of standardized blueprints for various housing types.

  7. Conversion of Public Lands into Housing: To address land scarcity, plans were announced to utilize public lands for housing development. The Public Lands for Homes Plan aims to build 250,000 new homes by 2031, with measures to reduce capital costs and repurpose federal office buildings for residential use.

These policies are the Federal Government's attempt to address housing affordability challenges and fostering sustainable housing development across Canada. While the efficacy of these changes remains to be seen, it appears that this is only the beginning based on the policies introduced over the last several months.

Interested in learning more about the 2024 federal budget? Access the complete budget announcement for further details. Click here.
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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!

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