By The A-Team | Jan 30, 2019 | Buyers
From Hong Kong to Paris, the housing market is facing a lot of changes on a global scale. Canadian real estate is certainly not an exception to these changes. Here's a look into some of the latest updates in the housing market in Canada to best understand where it is right now and where it might go.
This news talks about the cooling of the Canadian real estate sales last year, which obviously affected the economic activity in the country:
Sales in the housing market results in substantial economic activity, which generates new jobs. Thus, home sale declines tighten credit, weaken the economy, and increase unemployment.
Canada Experiences Over 11% Plummet in Real Estate Sales in 2018Canadian Real Estate Association (CREA) numbers show 2018’s sales were the slowest in years. In fact, Canadian home sales made one of the largest declines in a decade.
In terms of the growth trend, this was the biggest decline since the Great Recession. The 11.1% decline in 2018 is on top of a 4.64% decline in 2017. The declines are so far getting larger, and the most recent is the largest since 2008. Via betterdwelling.com
There is another relevant change involving the RBC in connection to the five-year fixed mortgage rate:
Industry watchers believe that the takeaway from this mortgage rate cut is that it could be an ideal time to shop around for potential homebuyers. These prospective buyers would do well to regularly check rate sites as well as mortgage providers to know where they are heading in the housing market.
Royal Bank of Canada Lowered 5-Year Fixed Mortgage RateLast week, Royal Bank of Canada lowered its posted five-year fixed rate from 3.89% to 3.74%. It was the first time since October 2017 that Canada’s biggest bank has lowered its mortgage rate. What’s interesting about the move is that it’s an about-face in terms of how rates have been trending – upward. The Bank of Canada has regularly increased its benchmark rate and mortgage rates have followed in lockstep. Via zoocasa.com
Finally, the Bank of Canada’s strategy is making major influences on the mortgage market:
Key players expect housing stabilization in the second quarter data, making the central bank more confident in resuming its normalization process along with its interest rates.
Wait-and-See Approach of BoC Deemed Best for the Economy and HomeownersThe Bank of Canada has stepped to the sidelines since it last hiked the overnight rate, which influences rates on the mortgage market, this past October.
Though the bank has not been as aggressive of late as market watchers might have predicted if asked last year, in a report published this week, TD economists Beata Caranci and James Orlando suggest this tempered approach is indeed the right one for the Canadian economy.
“Now we have a situation where both are going through what could be a prolonged adjustment period to a lower level of activity. This warrants a Bank of Canada pause,” reads their co-authored report titled “Patience is a Virtue.” Via livable.com
Check back for more relevant updates in the Canadian housing market in our next report.