Price
Filters
RSS

Posted on by
Market Update August 2024

If you have a moment, I would like to take the time and explain how weak retail sales in Canada might influence the Bank of Canada’s decision on interest rates, September 4th. Recent retail sales data shows Canadians are struggling because of high interest rates. People are hoping that future rate cuts will make mortgages cheaper and cost of living more affordable. For now, spending is low, but it might get better in 2025 if rates go down.


The Canadian Dollar is now worth $0.74 US, a little stronger than before. This could give the Bank of Canada some flexibility. Consumer spending is very important, making up 60% of Canada’s economy. Even though our population is growing quickly, retail sales are not. In June, retail sales went up by just 0.2%, which is much lower than the usual growth rate of 4.69%. This shows Canadians are buying less.


There are also over 1 million mortgages coming up for renewal in 2024, and higher rates mean higher costs for homeowners. This is causing people to cut back on spending, which affects the economy.

Consumer spending continues to show signs of stress as many wait for the impact of the Bank of Canada (BoC) rate cuts to filter through to mortgage interest costs. Interest rates are still high. Canadians renewing fixed-rate mortgages in 2024 still face significantly higher rates, which will cut into broader purchasing power.

However, as the BoC continues its path to lower rates, mortgage holders will feel some relief and at least partially restored purchasing power upon renewal. We expect consumption will remain soft (relative to still-strong population growth) over the second half of the year before picking up in 2025 as the BoC continues to ease monetary policy

September 4th  Will we see a cut of 0.25% or a cut of 0.50% or nothing? We’ll have to wait and see. 

The Canadian Dollar is $.74 US. Bloomberg graph below. June 5th (prior to first Bank of Canada cut) was $.73. After two decreases and zero Federal decreases, it’s stronger; 1 penny, but still stronger.

The next Bank of Canada rate announcement is next Wednesday September 4

Debra Carlson

Mortgage Connection

TEL: 40324536363

FAX: 

EMAIL: debra@mortgageconnection.ca

debracarlson.com

Read

Posted on by
It’s 2024 and here is what you need to know!

It is the beginning of another year and as we prepare for the coming months, it is a privilege to keep you all “in the know”. We expect the interest rates to hold steady or even lower over the next 6 months or so. With this said, be prepared for a staggering amount of activity and competition amongst buyers should the rate lower even slightly.

  1. Price increases are not over. We are expecting an 8% increase over the next 12 months.

  2. We hope to see a New Year surge of new listings come on the MLS over the next few weeks.

  3. The great Calgary Migration continues!

As December wrapped up, we were left with about 45 days’ worth of inventory with the average listing in Calgary being on the market about 33 days. Our sales again exceeded our new listings so our inventory continues to struggle. With the new year and the holidays behind us we expect new listings to finally hit the market. This is good news for those that have been seeking and hoping to find a home under the current conditions.

Do I buy now or wait for an interest drop?

There are a couple of things to consider here. First of all, with continued migration to Calgary and ongoing low inventory levels we are expecting an 8% increase in home prices over the next 12 months. With just that consideration alone it would be prudent to get in quickly. The other consideration is that as soon as there is a drop in Canada’s prime rate, there will be a flurry of offers on that exact property that you are hoping for. This type of activity is what is going to drive prices up this year. So, the short answer is no, do not sit on the fence. In 2024 the early bird gets the worm.

What if I have a home to sell?

What’s important to remember here is if you are buying in the same market that you will be selling in, you want to be in the market when there are other homes available for you to purchase whether you are moving up to a larger home or downsizing. It is the entire picture that is important. Yes, we want to optimize your net sales proceeds, but you will also want to consider the market environment you will be negotiating your purchase in.

“Sales in 2023 did ease relative to last year’s peak, but with 27,416 sales, levels were still far higher than long-term trends and activity reported before the pandemic.” -CREB

Our benchmark Price $570,100

We finished our 2023 with a 10.7% price increase over 2022. Our current inventory rests at around 2200 homes available in the city of Calgary. That is a 44% decline over the 10 year average. Translation? Very low!

Read

Posted on by
"Understanding Interest Rates: A Guide for Prospective Buyers"

October 25th the Bank of Canada released their highly anticipated announcement about interest rates and, as anticipated, they decided to hold their target for the overnight rate at 5%. Although this is disappointing for some buyers looking for lower interest rates, it isn't shocking. When will interest rates start to come down? Well, hopefully the rates will begin to drop starting in 2024. Randall Bartlett, senior director of Canadian economics at Desjardins recently shared his thoughts as follows.

“It seems that the Bank is confident it has done enough to gradually bring the Canadian economy back to balance. And we agree.
 For now, the Bank of Canada is in a waiting game to see the impact of past hikes on economic activity, he added.
 “Once the Bank’s satisfied that the economy has slowed enough to support a gradual return of inflation to its two per cent target, we expect it to begin cutting interest rates. This may happen as early as the first quarter of 2024,” Bartlett wrote.

What does that mean for the real estate world?  For realtors like me, knowing spring/summer is always the busiest time of the year, it means that with interest rates starting to drop, we are going to be working overtime in 2024.
The moment interest rates start to fall, all the buyers who have been waiting to make that move, will start shopping.  There is no forecast that shows increased supply (more homes coming to market).  In fact, more out of province buyers are still moving in, while home owners are staying put. With continued low supply, prices will start to go up yet again.

We complain in Calgary about our prices here in the city but we are still considered one of the most affordable cities to invest in and move to. 

Check out these stats:

Calgary has the second most affordable housing market – behind Edmonton – of all major Canadian cities (Demographia International Housing Affordability, 2023 Edition).
Calgary has the lowest cost of living of the five Canadian cities – Ottawa, Montreal, Toronto and Vancouver – included in Mercer’s 2023 Cost of Living Index.
Calgary is among the world’s top 25 most affordable cities for housing, compared to 94 cities in Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom and the United States (Demographia International Housing Affordability, 2023 Edition).

Crazy, right?

That is why we are seeing so much migration to our beautiful city. Buyers who are cashing out on their major gains in other provinces are coming to invest here, often buying with cash, pushing many buyers to feel they need to cut corners in order to get a home. (Not recommended but that's another blog about how to stand out in a crazy market and score a home even with conditions.)
What's another problem we are facing in this city that is causing people to start saving for that downpayment? Major rental rate increases. Rents rose 18.4% this year.
That's insane.
We have seen an incredible shift in a market that many people have now found themselves stuck in. Rent has gone up for a couple reasons. Mortgages are more expensive, low supply, higher demand, and opportunity. Period. 

So what should you do? If you are stuck in the rental rat race, I would suggest a couple things. Get in touch with an incredible mortgage broker and figure out exactly where you stand and what you need to do to be ready to buy your first home. Make that plan. Set the goal.
Manage your expectations for your very first home.  We are no longer seeing as many buyers start out with a stand alone home. In fact, you may start with a one or two bedroom condo. But whatever you do, stay within your budget, put your monthly cash flow into your own investment and remember, this is a step forward to where you want to be.  If you can make your investment this winter, do it. The market is quiet(er) right now. Discuss variable mortgages, or shorter mortgage commitments so that when rates drop, you can reap the benefits immediately as well as enjoy the equity you will build as the market takes yet another upturn.

If you want to discuss your situation more specifically, give me a call. Professionals are here waiting to help guide you to every resource you need. Take control of your money. Get informed. The biggest moves of your life always start out with a conversation.

Lindsay Winship
Winship&Associates
403-831-3303
lwinship@royallepage.ca

 
Read
Data is supplied by Pillar 9™ MLS® System. Pillar 9™ is the owner of the copyright in its MLS®System. Data is deemed reliable but is not guaranteed accurate by Pillar 9™.
The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.