Is it time to panic sell?! ABSOLUTELY NOT.
It’s no secret, home sales have slowed down recently, which is common for the summer months. The difference this year is we now have interest rates rising like a phoenix, and they haven’t reached their peak yet. As always, I’m going to touch on the usual sales & pricing stats, and give my predictions on where I see things going over the next months/years (I’ll be using my trusty crystal ball for predictions ;)).
Inventory levels have been increasing for months now, and I expect that to continue through to September. Many buyers are busy with summer holidays, or they’re just waiting on the sidelines to see how this market unfolds. Either way, July/August is moving slowly. We expect buyers to get back to their home shopping early to mid September (this is the usual cycle for Ottawa).
Will the fall market heat up the way it did last year? Short answer is no. I expect things to get moving again somewhat, but the Bank of Canada has indicated potentially 3 more rate hikes this year (info on BoC here). Many buyers will wait to see how this plays out before buying. In my opinion, the next few months will be a golden buying opportunity (see my market predictions below).
JULY SALES STATS:
SALES VOLUME: In July 2022, OREB sold 840 freehold homes through the board. This is a decrease of 36% compared to July of 2021. And we had 270 condo sales; a decrease of 34% over July 2021. This has been the slowest July we’ve seen in years. So many buyers are either scared and holding off, or they’re unable to qualify now that rates are up. .
AVERAGE HOME PRICES: the average sale price of a freehold residential home was up to $716,354, which is an 5% increase compared to last July. The average sale price of a condo was $425,694 (down 1%).
Before any panics, the average prices are still doing well on the larger spectrum. Looking at year-to-date average prices, we have $805,238 for residential freehold homes and $461,557 for condominiums (representing an 11% and a 9% increase over 2021, respectively).
From an interest rate perspective, the BoC has 3 more policy announcements coming up: September 7, October 26, December 7.
I foresee probably 2 more increases from BoC. Guessing around 0.75% in September, and then either 0.25 or 0.5% in October (and none in December). These are guesses, and I may be wrong. But this is my gut feeling based on what I’m hearing and reading.
For 2023, I see a different story. I expect the media/news will announce that the rate hikes have ‘succeeded in slowing inflation‘ and then we’ll see BoC gradually lower rates again. Not sure what it’ll look like exactly, but I suspect very gradual rate decreases and possibly the removal of the current mortgage ‘stress test’ (which would help tons of first-time buyers with financing approvals).
For 2024, I’m gonna throw it out there and say that the real estate market will be very hot again. Inflation will start to take off again, and we’ll be back in a bull cycle. And interest rates will increase again. And the cycle will continue…
These are my opinions/guesses/predictions. I welcome any feedback and discussion.
Firstly, I’m happy to say that the Claridge Icon is finally finished and owners have taken occupancy. And what an impressive building! Tons of amenities, incredible views from many units, all-glass units, 45 storeys (tallest in Ottawa), and the location is absolutely incredible. Over-looking Dows Lake, the arboretum, Preston Street, close to Lansdowne, Glebe, and the Civic Hospital. So many reasons to love this one. More info here:
Clardige Icon Unit for Rent
And secondly, since we have so much volatility with interest rates, I recommend you speak to your mortgage broker about potentially refinancing or locking into a fixed rate. Yes, I think interest rates will come back down somewhat in 2023, but it’s always good to chat with a broker to find out what the options are and what the long-term picture looks like.
That’s it for this now. Please contact me for an indepth analysis of the your market, cycles, financing, and general real estate.
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