October Home Sales Were Up

According to an article published by the Canadian Real Estate Association (CREA) this month, home sales in Canada may be rebounding after falling since March, when the first interest rate hike from the Bank of Canada (BOC) was announced.

Jill Oudil, Chair of CREA said, “In October, sales across the country increased for the first time since before interest rates started to rise last winter.”

Robert Hogue, assistant chief economist with RBC was cautiously optimistic about this development. He wrote, “Canada’s housing market may be entering the latter stages of its cyclical downturn.”

Will Prices Rise Too?

Although Hogue thought the October statistics signalled reason for optimism, he cautioned that prices did fall in October, and this trend may continue. “Rising interest rates and the loss of affordability will keep market activity quiet into early-2023 and prices will bottom around spring,” he predicted.

In an interview with the Financial Post, Chris Alexander, president of Re/Max Canada, corroborated this. When asked if he believed this news signalled the end of the current price correction in the real estate market he said, “I think that it’s still really early to tell,” and noted that the October increase in sales was “marginal.”

Should Home Owners Be Concerned About Falling Prices?

The steadily falling home prices have been met with concern by homeowners, especially those who are thinking of selling their homes in the coming months.

The latest statistics can be alarming. For example, the CREA’s data show that, on average, home sale prices in Canada were 9.9% lower in October of this year than in 2021. However, Alexander explained that the real estate market in 2021 was inflated.  “The market was in runaway territory for almost 18 months,” he said, “And so this reprieve we’ve seen is welcomed.”

And the decline in prices seems to be slowing. Hogue noted, “Property values are still clearly coming down at this stage but last month’s drop was the smallest since May.”

Silver Linings For First-Time Homeowners

While people already in the market may be worried about falling prices, the cooled market could be good news for people looking to get into it for the first time.

Even though interest rates are high, lower prices could make owning a home within reach for some. In Ottawa, for example, the average price of a home was $624,003 in October. This represents a substantial change compared to the peak average price of $757,225 in March.

Also, a cooling market could mean fewer bidding wars, and the time to complete due diligence like home inspections before purchasing a property.

This time of year can also be advantageous. Since many people prefer to move in the spring or summer, buying in the winter can mean better value and less competition.

Thinking Of Buying?

If you are considering purchasing a new home, you probably have many questions. You may find the answers in our videos, blog posts for first-time buyers, or even better, get in touch with us today! Despite high interest rates, owning your own home may be within reach.