7481 Woodbine Ave #203, Markham, ON L3R 2W1 (647) 806-8188
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Recent months have seen a substantial slowdown in the selling of homes as a direct result of increasing interest rates and 5-year fixed rates that are much higher than what the Bank of Canada is predicted to do later this year. Ottawa, ON, June 15, 2022— The Canadian Real Estate Association (CREA) has updated its forecast for the volume of house sales that will take place in 2022 and 2023 using the Multiple Listing Service® (MLS®) systems that are used by Canadian real estate boards and associations. Recent months have seen a substantial slowdown in the selling of homes as a direct result of increasing interest rates and 5-year fixed rates that are much higher than what the Bank of Canada is predicted to do later this year. Following a price surge that established a new record over the course of five months, from October 2021 to February 2022, prices have been frozen in their tracks.
It has become clear that the impact that reduced interest rates for 5-year fixed mortgages had on the stress test was an essential component of the story. Only during the month of April 2022 did the 5-year fixed discount rate rise from the low 3% range to the low 4% range. The contract rate plus two percent is added on top of that for the stress test, totaling 5.25 percent. The interest rate that must be reached in order to pass the stress test has increased for borrowers with fixed rates from 5.25 percent to the low 6.25 percent threshold, representing an increase of over 1 percent. For now, during the duration of 2022, variable interest rates will function as a catch-up mechanism. In 2022, it is predicted that Canadian MLS® Systems will be able to enable the sale of 568,288 properties, which will be a reduction of 14.7% from the record established in 2021 but will still be the second-highest annual total ever. This was a major downward revision from the projection made in March due to the rapidly changing conditions of the market. It is anticipated that only Alberta and Newfoundland and Labrador will be the only two provinces in 2022 to buck the trend of falling sales.
It is anticipated that the national average home price will climb by 10.8% per year until 2022, when it will reach $762,386. It is projected that the Maritime provinces will see the highest rate of price inflation, followed by Ontario and Quebec. In 2023, it is expected that the total number of homes sold throughout the country would fall by another 2.8%, coming in at 552 403 units. In 2023, the median price of a home in the United States is expected to reach $786,282, representing a year-over-year rise of 3.1%.
7481 Woodbine Ave #203, Markham, ON L3R 2W1 (647) 806-8188