Ain’t no party yet
Bank of Canada’s interest rate cut unlikely to provide immediate relief for housing market
THE BANK OF Canada finally reduced the bank rate by a quarter point last week, and the question every real estate industry professional has been asking is: Will that get the party started?
That cut, and the possibility of continued cuts in the future, really depend on inflationary pressures continuing to fall. It’s likely they will fall because the economy lags and we feel recessionary pressures in Canada. Jobs numbers will worsen and confidence in the future will diminish. The cure for lower interest rates is a bad flu ― and hopefully not pneumonia.
Regarding the real estate market, a drop in the bank rate may see marginal downward costs of open or floating rate mortgages. But fixed rate mortgages are influenced by the bond market, and that is almost entirely a factor of the economy in the U.S. The American economic outlook continues to be very strong, thus keeping bond rates high and Canadian long-term mortgage rates high. There’s little the Bank of Canada can do to influence U.S. bond rates.
“At least in the short term, the status quo of a buyer’s market with high inventory will persist”
Canadian household debt is approaching $3 trillion. Some short-term psychological stimuli from a bank rate cut may bring a little more confidence to sellers that good times are coming, but that will likely mean they hold prices a little too high for a little too long, thus missing out on the limited buyer enthusiasm the cut might create. At least in the short term, the status quo of a buyer’s market with high inventory will persist.
As sellers, be careful to price your home effectively ― it’s worth what someone is willing to pay for it. For buyers, protect yourselves, work with an experienced agent who has your back and, if financing, make sure the property you buy will survive the appraisal process.
I’m old so excuse my 1980’s reference: As they used to say on Hill Street Blues, “Let’s be careful out there.”
Market analysis provided by Marcus Plowright, Sales Representative, A Team London. Marcus can be reached at 519-872-8326 or [email protected].
High- and low-priced real estate listings around town this week
London East
Low
Address: 168 Hale street
MLS number: X8415670
List price: $249,000
Days on market: 1
Size: 2 bedroom, 2 bathroom, 700-1100 square feet
Listing agent: Kalen Findlay, Salesperson, Re/Max Centre City Realty Inc.
High
Address: 1745 Kilally Road
MLS number: X8337350
List price: $2,499,900
Days on market: 25
Size: 3 bedrooms, 4 bathrooms, 3,500-5,000 square feet
Listing agent: James Smith, Sales Representative, Sutton Group – Select Realty
London North
Low
Address: 67 Adelaide Street
MLS number: X8381178
List price: $375,000
Days on market: 33
Size: 3 bedroom, 2 bathroom, 683 square feet
Listing agent: Alex A G Gurchin, Salesperson, Real Broker Ontario Ltd.
High
Address: 1597 Gloucester Road
MLS number: 40592875
List price: $4,250,000
Days on market: 7
Size: 5 bedrooms, 5 bathrooms, 6,701 square feet
Listing agent: Kim Mullan, Broker Sutton Group – Select Realty Inc.
London South & West
Low
Address: 39.5 Ada Street
MLS number: X8295636
List price: $299,900
Days on market: 38
Size: 2 bedroom, 1 bathroom, 700-1,100 square feet
Listing agent: Phil Bailey, Salesperson, Housesigma Inc.
High
Address: 1845 Woodhull Road
MLS number: X8411436
List price: $3,500,000
Days on market: 2
Size: 4 bedrooms, 5 bathrooms, 5000-plus square feet
Listing agent: Raeanne Muir, Broker, Century 21 First Canadian Corp.
Disclaimer: London Inc. does not guarantee the accuracy of the statistical data on this page. The data does not represent the listings of any one agent or agency but represents the activity of the real estate community in the area. Any real estate agent’s ad appearing is separate from the statistical data provided, which is in no way a part of their advertisement.