July’s Numbers are in: The Canada Real Estate Market Update
The bad news: July’s numbers have slumped from this same time last year.
The Good news: Our sales are up overall, year over year, from 2016.
The market seems to have balanced itself out, which is a good thing. If you have been in Canada for a decade or more, you know the peaks and valleys the real estate market has been going through.
Balance is good.
There are certain segments of the market that are performing well, it seems that we have seen double digit gains in sales in the $600,000 to $1.5M price brackets.
Where we are seeing a slow down in sales numbers is in the $600,000 and below price brackets.
Why is that? This is entry level and move up price points, these segments almost always perform better than the higher end.
Why the Slowdown in Sales in the Middle
In one of our last articles, we talked about interest rates increasing, well that has come to fruition.
The BoC has increased their overnight rates by a quarter point or .25%.
As a result, all of the major lenders followed suit and increased their rates as well.
They have also tightened up the lending rules, one change has to do with people putting down 20% or more.
With 20% down, previous to August 1st 2017, you would have been able to qualify at the rate that the lender was offering you, let’s say that was 2.89%.
Now, the lenders require you to qualify at the Bank of Canada’s benchmark rate of 4.84%.
This is almost a 2% difference and drastically decreases your ability to purchase a home. (If you’d like more information on the effects of this, I suggest you reach out to one of our mortgage brokers at MortgageLine)
Both of these items can contribute to a slowdown in the market, particularly in those segments.
Higher interest rates will affect the entry level market where the rule change will affect the move up market.
Performance of Home Types
The apartment sector continues to get hammered as there is a massive oversupply in the market.
Non condo attached townhouse infills are outperforming their counterparts as there continues to be highs and lows in the attached condo market.
The bright shining star in all of this is that the detached market continues to be strong and stable.
So for sellers how does this matter to you?
Knowing that inventory is higher now, and sales activity has started its slow down for the year, it means a few things as buyers will have more time to make the selection because of less urgency in the market.
So if I was selling my home I would ensure all the little things are taken care of, don’t leave things undone, or incomplete.
Also – curb appeal is huge. With more on the market, and with the majority of places online using the front image of the home, make sure you are doing the little things to make your house stand out.
To watch the July Market report click play on the video below.