Dear Clients, Neighbours and Friends,
As you know the Bank of Canada raised its overnight policy rate again, this time by 50 basis points, bringing it to 4.25 per cent, its highest level since 2008. In the statement accompanying the decision, the Bank noted that the Canadian economy continues to operate in excess demand with tight labor markets and as a result inflation remains elevated. The Bank continues to expect economic growth to stall through the end of 2022 and into the first half of 2023. Inflation is expected to ease over the next year, falling to 3 per cent in 2023 and returning to the 2 per cent inflation target in 2024. The next rate announcement is on January 25th, 2023.
After a year of aggressive tightening that now appears to be at or close to an end, the Bank may reverse course in the second half of 2023 as the economy slows significantly or even tips into recession. Crucially, any loosening of monetary policy will only occur if we see a sustained decline in inflation. Given weakening economic growth, falling gasoline and other commodity prices, and fading effects from pandemic driven supply chain problems, we could see a significant downward trajectory for inflation in 2023, which would provide the Bank with the necessary support to begin lowering its policy rate.
Click HERE to read the official press release.
Regarding housing, the trends we have seen over the past several months will likely continue to year end. With the recent rate hike sellers will be facing additional uncertainty regarding making a move and potential buyers are being forced to the sidelines by high qualifying rates. As a result, home sales are trending below average and prices in many markets are down from the peak levels reached early this year.
The average price of a detached home in Surrey/Cloverdale is now sitting at $1,397 down -10.5% since last year. Townhouses average at $783k down -5.6% and apartments at $620k up 12.3% (likely reflecting a softer contraction in sales).
The South Surrey / White Rock average detached home price now at $1,837 down -15.4% from this time last year, townhouses less so with an average sale price of $964k down -0.8%, apartments $615k, down -5.9%.
Also important to note are several changes coming to Real Estate near you …
Strata Bylaws: As of November 24, strata’s are no longer able to levy rental or age restrictions (excluding 55 plus) against owners or require tenancy screening or approval practices.
Cooling Off Period: Effective January 3 home buyers have a 3 day period that allows them to rescind their offer for any reason. If a buyer chooses to exercise this right 0.25% of the agreed upon purchase price will be due and payable to the seller.
Foreign Buyer Ban: Foreign buyers or their corporations are banned from purchasing Canadian Real Estate from January 1, 2023 – December 31, 2024 … some exceptions apply to temporary residents and spouses of residents.
Anti-Flipping Rule: As of January 1 any property sold within 12 months of being purchased will be assumed to be a flip by the Canadian Revenue Agency and capital gain taxes will apply. There may be some exceptions to this rule.
New Ownership Transparency: As of November 30, 2022 land owner through a corporation, trust or partnership must file a report including a list of the individuals who have a meaningful relationship with the ownership.
In summary, with the real estate landscape shifting so rapidly it’s more important that ever to seek advice and guidance from an experienced realtor to help mitigate any potential risks to your 2023 Real Estate goals.
We can help. Its what we do.
Jenn & Colin