How could a Bank of Canada rate hike impact B.C.’s housing market?
Real estate experts say B.C.’s housing market is heating back after cooling off due to rising interest rates but the future is uncertain as several economists expect the Bank of Canada to hike rates again.
Home sales have rebounded and increased recently, while an overall lack of supply continues to keep prices and demand relatively high. The BC Real Estate Association's chief economist Brendon Ogmundson says he doesn’t think an incoming rate increase will stop the momentum significantly.
“We will see sales dip a little from where they are today,” he told CTV News. “But, that said, this market has been extraordinarily resilient even with rates as high as they are we’re seeing sales come back to normal levels, so it’s hard to say an extra 25 basis points is going to make that much of a difference.”
Ogmundson also says some changes are already happening in anticipation of a potential rate increase.
"?Five year fixed mortgage rates are already beginning to rise and we could see that temper some of the recovery that’s currently underway,” he said.
Two new surveys done by major banks show Canadians consider homeownership to be important, but report there are ongoing concerns aabout chieving it.
"Many Canadians recognize that homeownership could be out of reach for their children, unless they have help with a down payment," said Carissa Lucreziano, CIBC's vice-president of financial and investment advice, in a news release about its survey results.
"Being able to help your children save for a home is a great gift, however you need to be aware of how it can impact your own finances such as effectively managing your cashflow, paying down your own debt or saving for retirement."
According to BMO's survey, 72 per cent of Vancouverites feel a home is “is more out of reach compared to their parents” and 67 per cent are planning to wait until mortgage rates drop before buying.
But Ogmundson says the latest housing market stats show more buyers are back in the game.
“In April and May the market really picked up. I think there’s just a relentless amount of demand in this market and people were on the sidelines for a year and decided that was long enough.”
For those on the house hunt Ogmundson has this advice: “Don’t try to time the market. Find something that’s right for you and, crucially, that you can afford and that you are comfortable with affording long term.”
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