The dramatic rise in mortgage rates across Canada has led to a major shift in the province’s housing market.
According to the third-quarter forecast from the BC Real Estate Association, home sales in the north are expected to plunge by 25%.
They are projecting 41 hundred home sales this year – a substantial drop from the 5,495 unit sales recorded in 2021.
Chief Economist, Brendon Ogmundson told Vista Radio the spike in mortgage rates will make life a little more difficult for sellers.
“For sellers, it just means patience as this is not the 2021 market. Things are going to take longer, deals are going to take longer to happen and you might not have as many people at your open house. There are still sales happening it’s just going to be a little slower.”
“So far, we just haven’t seen as much interest rate sensitivity in the north as in less affordable regions like Vancouver or Victoria where sales are falling a little faster. Sales are still down but they are down from really high levels.”
He added the recent lending rate hikes by Canada’s five biggest banks will make it a tougher uphill climb for first-time homebuyers.
“You are going to have to qualify at just over 7% on a five-year fixed rate mortgage and that is going to be a real challenge for a lot of first-time home buyers who generally are just starting out in their careers and incomes might be lower. It’s easier in places like the north but it’s still a big challenge.”
“I think that is going to put a lot of pressure on the rental market. People have to live somewhere as we have a lot of people in their 30s and late twenties across the north and they have to go somewhere so that will put some pressure on rentals, which is lacking as well.”
Earlier this week, the Bank of Canada increased its benchmark interest rate from 2.5 to 3.25%.
In addition, Canada’s five biggest banks are raising their prime lending rates. Each of those banks will increase its prime rate by 3/4 of a percent going from
4.7 to 5.45.
The change went into place on Thursday.
The average house price in our region is expected to rise by 7% to just under 412 thousand dollars.
In PG, single-family prices are a little higher at over 500 grand.