Dear Clients, Friends and Neighbours,
Since our last market update economic data in Canada has been mixed.
- Labor markets remain strong while restrictive policies continue to weigh on household spending.
- Business investment has weakened alongside slowing domestic and foreign demand.
- Inflation eased to 5.9% in January – reflecting lower price increases for energy, goods and some services – but price increases for food and shelter remain painfully high.
All this uncertainty has led to eight mortgage rate increases over the last year … essentially flattening all housing activity in the Fraser Valley.
However as expected, on March 8 the Bank of Canada held the overnight rate at 4.5%. With no change to the overnight rate, Prime Rate is will stay at 6.70%.
This is the first time in 12 months there has been no change which is surely welcomed by any Adjustable-Rate or Variable-Rate Mortgage holder as well as holders of other financial products based off Prime, like home equity lines of credit.
With weak economic growth expected for the next few quarters, the Bank of Canada predicts pressure on product and labour markets to ease. This should moderate wage growth and increase competitive pressures, making it more difficult for businesses to pass on higher costs to consumers. That would be nice.
Bank of Canada officials meet next on April 12. Most economists believe the Bank of Canada will hold the overnight rate at 4.5% for the remainder of this year and begin cutting interest rates in 2024. A few even think rate cuts will begin late this year … WOW.
If there are no more rate hikes as we move into the spring market, we are expecting improved stability and a serious uptick in supply and demand. This trend has already begun.
Detached homes in South Surrey and White Rock saw new listings spike 17.9% from January to February while sales jumped 71% in the same time frame. Similar numbers in the Surrey / Cloverdale sub area, new listings up 12.2%, sales up 73.3%.
If overall inventory is up, sellers can list their home confidently knowing they have options to consider for their next home. More inventory means softer price pressure and financial pressure on buyers who have had a hard time adjusting to the new rate environment.
With solid opportunities in the near future … speaking with a realtor is a good place to start putting together a game plan.
If you live in Surrey, White Rock or the surrounding areas, we can help.