Real Estate Agents Across Canada Share Their 2024 Predictions – HGTV Canada

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Everyone is freaking out about interest rates. But here’s the interesting thing: interest rates are actually just a “Market Influencer”, which has a drastic, but temporary, effect on the market. They are not, however, an “Economic Fundamental”, which fundamentally underpins the long-term strength and resiliency of a market. Of course, rising interest rates starting March 2022 immediately resulted in lower prices, but ultimately they don’t have the type of impact that everyone thinks they do.

In Spring 2023 after the Bank of Canada held interest rates steady, we saw buyer confidence resume and the market take off again – so absolutely, interest rates can correlate with prices. But taking a closer look at the small 0.25 per cent rate hikes in Summer 2023, followed by the subsequent rate holds in Fall 2023, you’ll see that this last round of rate holds didn’t have that same market recovery impact as previous rate holds. Why?

Buy/sell, rent/lease residential &
commercials real estate properties.

The reasoning is more about market psychology than anything else. Conventional wisdom states that increased mortgage payments was the reason buyers weren’t buying. This is only partially true. They missed this very important fact: buyers didn’t want to be buying in an environment of uncertainty – and the rising interest rate environment was anything but certain. Buyers had mistakenly thought that the first rate hold signaled the end of the rising interest rates, and so weren’t about to fall into the same trap again upon the second rate hold… hence the real estate market remained slow in Fall 2023.

Currently, the major macroeconomic factors seem to be under control. The inflation numbers are on a downward trajectory coming close to BOC’s target inflation of 2-3 per cent, and the Chief Economists at the Big 6 banks are betting on almost a 1 per cent rate decrease by the end of 2024, with cuts starting as early as Q1 2024. The worst is finally behind us, and buyers are slowly regaining confidence, particularly buyers like Volition Properties‘ clients who are primarily investors who understand that the Economic Fundamentals of the Toronto Real Estate Market remain solid. With the recent BOC Dec 6 rate hold announcement and the US Fed announcing three rate 0.25 per cent cuts in 2024, we are finally starting to see stability and a revival of the market, including multiple offer situations again (at least in Toronto)!

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