There is no question that the real estate market in BC has been white hot over the last year. With the economy reopening what does that mean to the market place.
Here are some observations, and some things to consider:
1 – The Impact of Rising Interest Rates
When the pandemic began the Bank of Canada brought interest rates to all- time lows to soften the impact of job losses and a slowing economy. With the economy recovering could interest rates be on the rise? If they are then it is expected that the era of dramatically rising home prices may be starting to slow.
2 – Easing Sales Numbers
Sales volumes are running at record highs right now shattering records throughout all genres of residential real estate. It is hard to predict the future but the Canadian Real Estate Association (CREA) is forecasting housing sales to decrease over the second half of 2021 and into 2022. Obviously, that is a blanket statement and there are always segments of the market that buck the trends.
3 – The Implications of the Revised Mortgage Stress Test
To cool things off a bit new rules have been introduced to “protect” the consumer from getting in over their financial heads. As of June 1, 2021, the minimum qualifying rate for both insured and uninsured mortgages is the rate offered by your lender plus 2%. Will it work? Only time will tell.
4 – Sales to Active Listings
The only true way to watch the market is to follow the sales to active MLS listings. Currently this indicator shows sales ratios at an all time high. Currently there is very little “fall off” but it is there. Sales to listing ratios in Victoria have fallen off by about 5 % but they would have to fall off by a further 70% to get back to pre-pandemic ratios. We don’t see that happening any time soon but keep watching this statistic for an early indication of market trends.