The flurry of news stories was quick after the BOC hiked rates by 50 basis points; with the narrative changing to a cooled market, prices going back down to normal, and rife with stories of people regretting buying homes at the top of the market right before the rate hikes. The psychology of more expensive mortgages has already started to set in. All of this despite the likelihood that more rate hikes are on the way. Average prices in Toronto fell from $1.33M in February to $1.25M in April, but to put things in perspective, that’s still 15% higher than April 2021 figures, a little bit of cooling still puts values at historical highs, this isn’t a big deal.
In British Columbia the BC Real Estate Association says that higher mortgage rates are pushing the province’s home sales down to a path toward ‘normalizing,’ although it also says that it will take more than a year before balance to the market returns. B.C. home sales in April showed 8,939 properties changed hands, down almost 35% from record highs set in April 2021. Even though sales went down in BC, prices still went up almost 13% from April 2021 to April 2022 figures. In other parts of the country, higher mortgage rates haven’t dulled demand and momentum in medium to smaller sized communities continues to build.
Narcity recently released a story outlining the extent to which prices in Kingston have risen in recent months. Even though the volume of sales was decreasing, the MLS Home Price Index shows that the average house price in the city spiked to $622,200 in April this year, which is up almost 25% compared to April 2021 figures. Volumes are declining across the country, but prices keep going up. OREA has recently reported that resale home prices in Ontario are up to $985K in April, up almost 14% from April 2021 figures.
We’re seeing a similar picture in the U.S. At the start of 2021, interest rates on a 30 year fixed rate mortgage hit a low of 2.8% (yes, they do those in the U.S.). Since then, interest rates have soared to over 5%. This increase is starting to affect sellers and is beginning to push prices down, but that’s a much broader canvass on average than Canada, with fewer housing hotspots.