Langstaff Gateway Condos buzzbuzz.Canada plunged 20% in half a year. It is true that people say that what can be more magical than 2021 can only be 2022.Please Visit: Langstaff Gateway Condos buzzbuzz to Get Your VVIP Registration Today!
It is not easy to think that the haze of the epidemic is finally over, the economy is finally getting better, oil prices are soaring and inflation is serious, and we are waiting for the Bank of Canada to raise interest rates one after another.
Among them, the issue of housing prices has always attracted the attention of countless homeowners, investors and future homeowners.
Recently, a group of data released by the Canadian Real Estate Association said that Canadian home sales fell 5.6% in June, down nearly 1/4 compared with the same period last year.
In addition, the Canadian property market continued to slow last month, with the national average selling price falling to C $665800, down nearly 20 per cent since February.
Jill Oudil, chairman of the Canadian Real Estate Association (CREA), which represents more than 100000 brokers, agents and salespeople across the country, said in a statement: “Economic activity continues to slow in the face of rising interest rates and many uncertainties.”
House prices remained rising for most of the epidemic until the rise in interest rates put the brakes on Canada’s real estate market this spring.
Average sales prices have been falling every month since February 2022, and the average house price is now 1.8% lower than it was a year ago.
Ksenia Bushmeneva, an analyst at TD TD Bank, said: “this is an inevitable drop in rising interest rates, and under heavy pressure, the Canadian housing market continued to cool in June.”
In many provinces and cities in Canada, Ontario, which used to have the fastest rise in house prices, has also become the “bellwether” of falling house prices.
“sales and prices have fallen even more in Ontario and BC provinces, and their affordability has declined significantly during the outbreak,” Bushmeneva said. Under further pressure from borrowing costs, house prices and sales will fall further. ”
It is worth noting that although we always say that the house price in Toronto is too high to afford. But the latest seasonally adjusted data show (seasonally adjusted basis, statistically, after eliminating the effects of predictable seasonal patterns):
In fact, the areas where house prices fell most obviously this time were the areas around Toronto that rose the most during the epidemic, such as Waterloo and Hamilton.
Average house prices declined after seasonally adjusted (seasonally adjusted) from February to June this year. Photo: screenshot from CBC news.
If you take a closer look at this chart, the decline in house prices in Ottawa is really not obvious in a large number of big cities. Perhaps it is also because of the favorable conditions and harmony of the capital, stable and stable, with a decline of only 5.9%.
With the exception of Ottawa, the Golden Horseshoe area of Ontario (such as Greater Toronto, Kitchener-Waterloo, Burlington-Hamilton), house prices have fallen by more than 10%!
Recently, there have even been news reports that because house prices in Ontario have fallen so much, some buyers would rather not buy a house or choose another source of housing without a deposit of tens of thousands of yuan.
He mentioned that in the current environment, “the number of days on the market is increasing, and price reductions are also common.”
Source: screenshot from The Globe and Mail.
In fact, in addition to economists and real estate operators, there are also many people who believe that the real estate market still has a long way to go before it hits bottom.
Waleed Hamed, the buyer, has been watching the Canadian real estate market for years, waiting for a suitable opportunity to buy, but he says he never seems to be able to justify buying a house.
His target area is in and around Courtice, Ontario, where he currently lives with his parents, but he has always wanted to own a house. Although house prices have fallen in recent months, the reason he is still reluctant to do it now is that he thinks prices will fall further.
In addition to waiting for house prices to fall rather than buying, there is another factor that has led to the current downturn in the real estate market.
While lower prices may benefit buyers, many people like Hamed find that home prices are not actually getting cheaper because the cost of mortgages has risen more than prices have fallen.
The Bank of Canada raised its benchmark interest rate by a full percentage point this week, the biggest one-off increase since 1998 and the fourth since the beginning of the year. There will be more rate increases in the future in the face of record inflation.
Higher interest rates not only increase the cost of any floating-rate mortgage borrower, but also make it harder for borrowers to qualify for mortgages. Floating-rate loans are hovering around 4%, up from less than 2% at the beginning of the year.
Because of the stress test rules imposed a few years ago, lenders must also pass the test at a higher interest rate than the term of the loan itself. At present, the stress test level of floating-rate loans is about 6%, which may not be met by many lenders.
Clay Jarvis of Nerdwallet, a financial technology company, said: “anyone who is unhappy that rising interest rates are hurting property values should remember that the role of the Bank of Canada is not to focus on the property market or homeowners.”
In this case, home buyers are still in a dilemma. Although the market is weak, as soon as interest rates rise, they will face more pressure if they want to buy a house.