The national average for home prices is expected to go down by 2.2 per cent in the coming months, according to RE/MAX Canada’s 2022 Fall Housing Market Outlook Report, released Wednesday Sept. 28th.
This easing in price is a result of increases in interest rates, inflation and economic uncertainty over a recession.
These rising rates have resulted in 44 per cent of Canadians holding off on their home-buying aspirations for the near future, says the report. In addition, the report shows that fears over a recession has caused 41 per cent of Canadians to put a pause on plans to either buy or sell a home in Fall of 2022. However, 34 per cent said that they wouldn’t hold on purchasing a home in the foreseeable future.
Tim Hill, a realtor from RE/MAX All Points Realty in Vancouver, says that while there is a lot of a “wait and see approach,” buyers who weren’t able to get into the market during the first quarter are making their move now.
“A lot of good families, good people, with good jobs, couldn't buy homes. Due to the multiple offer situations and the rising prices. And so right now, good people can afford to do it and they might look at it in the sense that in a few years, they might want to be doing something like a refinance, to take advantage of better rates,” he said.
According to a RE/MAX survey of brokers and agents, 25 out of 30 said rising interest rates have affected activity in their local residential market this year. In addition, some indicated that that this has been the biggest factor impacting homebuyer and seller confidence
They added that this is a trend that is likely to persist throughout the fall. This was echoed by Hill who said that in Greater Vancouver and the Fraser Valley region, sales have slowed.
“While we are still facing significant housing supply shortages across the country, many markets are experiencing softer sales activity given recent interest rate hikes. This provides some reprieve from the unprecedented demand and unsustainable price increases we’ve seen across Canada through 2021 and in early 2022,” says Christopher Alexander, president of RE/MAX Canada.
“However, the current lull in the market is only temporary. Until housing supply increases, these ‘boom’ and ‘bust’ cycles will likely be a recurring event.”
RE/MAX says that in western Canada and the prairies, increases in interest rates are resulting in a softer market with less consumer confidence, fewer multiple offers from buyers, and a shift toward more balanced conditions between buyers and sellers.
Hill says that his advice to buyers right now is to focus on micro-markets.
“Look at what you're buying, when you're buying and what is that area doing, not just what is the overall market doing,” he said.
“Master your market.”
