Canadian Home Sales Dipped In July, New Listings Rose, And Prices Edged Up Modestly.
housing market sales dipped in july, spooked by rate hikes
According to Shaun Cathcart, the Canadian Real Estate Association’s Senior Economist, “Following a brief surge of activity in April, housing markets have settled down in recent months, with price growth now also moderating with its usual slight lag. Sales and price growth are already showing signs of tapering off further in August in response to the Bank of Canada’s mid-July rate hike and messaging regarding above-target inflation for longer than previously expected. We’re probably looking at another round of back to the sidelines for some buyers until there’s a higher level of certainty around interest rates going forward.”

The good news is that the July inflation data, released today, will likely keep the Bank of Canada on the sidelines as core inflation has finally begun to slow. A host of economic indicators also point to Q2 GDP growth–released September 1–slowing to around 1% following the stronger-than-expected 3.1% growth in the first quarter. Labour market tightening eased in July with the decline in employment, rise in unemployment and continued downtrend in job vacancies. The central bank also welcomes the slowdown in the housing market.

Home sales recorded over Canadian MLS® Systems posted a small 0.7% decline between June and July 2023. Activity has been showing signs of stabilizing since May. While sales increased in July in more than half of all local markets, a decline in the Greater Toronto Area (GTA) tipped the national figure slightly negative. Sales were also down in the Fraser Valley, which, together with the GTA, offset gains in Montreal, Edmonton and Calgary.

New Listings

The number of newly listed homes was up 5.6% monthly in July. Building on gains of 2.8% in April, 7.9% in May, and 5.9% in June, new listings have gone from a 20-year low in March to closer to (but still below) average levels by mid-summer.

With new listings outperforming sales in July, the sales-to-new listings ratio eased to 59.2% compared to 63% in June and a recent peak of 68% in April. That said, the measure remains above the long-term average of 55.2%.

There were 3.2 months of inventory nationally at the end of July 2023, up slightly from 3.1 months in May and June.

While this was the first month-over-month increase since January, this measure is still a full month below where it was at the beginning of 2023 and almost two months below the long-term average for this measure (about five months).

Home Prices

The Aggregate Composite MLS® Home Price Index (HPI) climbed 1.1% month-over-month in July 2023—a larger-than-normal increase for a single month but only about half as large as the gains recorded in April, May, and June. This aligns with sales having levelled off as new listings have been recovering.

Despite the smaller gain at the national level, a monthly price increase between June and July was still observed in most local markets, as has been the case since April.

The Aggregate Composite MLS® HPI now sits just 1.5% below year-ago levels, the smallest decline since October 2022. Year-over-year comparisons will likely tip back into positive territory in the months ahead because prices continued to decline through the second half of 2022.

Bottom Line

With interest stabilizing, housing activity will gradually increase as more supply comes onto the market. The Bank of Canada will likely cut rates in 25 bps increments by June next year. Without a doubt, that will be good news for the housing market.

There remains huge excess demand for housing due to the rapid population growth. While the federal and provincial governments are working hard to increase the supply of affordable housing, the process is painfully slow and is unlikely to come close to the demand for homes for purchase or rent for the foreseeable future.

Please Note: The source of this article is from SherryCooper.com/category/articles/ Continue reading →

When it comes time to renew your mortgage in Canada, there are several important factors to consider. Renewing your mortgage provides an opportunity to reassess your financial situation and make informed decisions for the future. Here are some key points to keep in mind:

Start Early: Begin the renewal process well in advance to allow sufficient time for research and evaluation. This will prevent any last-minute rush and ensure you have enough time to explore your options.

Review Your Current Mortgage: Take a close look at your existing mortgage terms, including the interest rate, repayment schedule, and remaining balance. Understand the type of mortgage you currently have (fixed or variable) and assess whether it aligns with your current financial goals and circumstances.

Shop Around for Rates: Don’t automatically renew with your existing lender without exploring other options. Take the opportunity to shop around and compare rates and offerings from different lenders. Consider consulting with a mortgage broker who can help you navigate the market and find the best rates and terms available.

Consider Your Financial Goals: Evaluate your long-term financial goals and how they align with your mortgage renewal. Are you planning to pay off your mortgage faster? Are you looking for flexibility in your repayment terms? Assess your financial objectives and discuss them with your lender or mortgage broker to ensure your renewal meets your needs.

Evaluate Your Budget: Assess your current budget and determine whether you can handle potential increases in mortgage payments. Interest rates may have changed since you first obtained your mortgage, so calculate how a rate increase could impact your monthly payments. Ensure that your renewed mortgage remains affordable within your budget.

Review Mortgage Terms and Conditions: Carefully read and understand the terms and conditions of the new mortgage agreement. Pay attention to prepayment penalties, refinancing options, and any potential fees associated with the renewal. Clarify any doubts or concerns with your lender or mortgage broker.

Seek Professional Advice: Consider consulting a mortgage professional, such as a mortgage broker or financial advisor, who can provide expert guidance tailored to your specific situation. They can offer valuable insights, help you navigate through the renewal process, and ensure you make informed decisions.

Negotiate and Renegotiate: Don’t be afraid to negotiate with your lender. If you have a good credit history and a solid repayment record, you may be able to negotiate better terms, rates, or incentives. Alternatively, if you find a more attractive offer from another lender, you can use it as leverage to negotiate with your current lender for a better deal.

Renewing your mortgage is an important financial decision. By being proactive, researching the market, and considering your long-term goals, you can secure a renewal that aligns with your needs and helps you achieve financial stability and homeownership success.