A further rise in the interest rate and the Bank of Canada’s forecast
Late last month the bank of Canada increased its key lending rate for the eighth straight month to 4.5%. Not surprisingly this increase was already priced into the market over the fall months as we saw a decline in housing prices between 14 to 15% from its peak in May 2022.
What is the most interesting is the direction that the bank of Canada has given consumers. The forecast for the back half of 2023 is a drastic decrease in inflation with lower energy cost, a stronger global supply chain and the effects on commuter demand due to higher interest rates.
This messaging of a stabilized interest rate has given buyers and sellers in the real estate market a new threshold for the upcoming months to year. Solidifying the new reality in the market and a new benchmark for pricing properties.
January has seen a return of the buyer. Now that we have a better idea on a medium term interest rate consumers are more confident to enter the market however very price point sensitive. We are seeing the numbers of transactions uptic. We forecast a surprisingly resilient spring season in the residential real estate market for greater Montreal.
However there will be winners and losers in this market. It is more important than ever for sellers to list the property at the current market value. We are dealing with buyers that are still fearful of the sticker shock and the perceived inflated value of the real estate market. Properties will still sell with multiple offers due to the overall lack of inventory however we will rarely see the 10% to 15% above asking price results as witnessed over the past two years. The market has gone up in value more than 30% in most of greater Montreal since the pandemic and we do not see an erosion in those gains upcoming.
For anybody entering the market as a buyer or thinking of selling 2023 will be a great opportunity with still low inventory but less buyers to compete with.
For more information we are always free to discuss your exact real estate needs, and guide you to the best possible outcome in.