The market is indeed showing some signs of cooling, at long last.
“Yes, the market is cooling,” says Trish Lewis, Sales Representative, GoWylde Team/ReMax, “but we are still in an extreme seller’s market and we are predicting that we’ll be in a seller’s market for the next several months.”
In March, the average sale price in Cambridge was $943,478. That may be down 10% from last month but it’s still up 23% from the same time last year. 96% of the houses that sold went to multiple offers, which is down 2% from February.
Houses are selling, on average, for 24% over their list price, which is down 5% from last month. This was likely caused by the 24% increase in new listings seen last month, as more and more properties came onto the market; more inventory is definitely good news for buyers as there are more choices out there.
April’s interest rate hike
“Interest rates just went up. Inflation continues to be very high and supply chain issues have gotten worse, not better,” she says.
On April 13th, the Bank of Canada hiked its benchmark interest rate to 1%. Many banks and analysts are predicting further increases throughout the year, in an attempt to reduce inflation. Many believe we could see a prime interest rate of 2.25 to 2.75 by the end of this year. “Although this would be a dramatic increase within a one-year period, these rates are still historically low,” says Lewis.
Budget 2022
On April 7, the Feds announced in their budget a number of initiatives to increase housing supply, help first-time buyers and slow down investors.
The budget had several changes, including $10 billion for new housing, $4 billion to municipalities to speed up the approval process and the extension of some existing initiatives.
First-time buyers could take advantage of the new Tax-Free First Home Savings Account, which allows first-time home buyers to save up to $40,000 tax-free to be used toward the purchase of a home, similar to how an RRSP works. They have also proposed doubling the first-time home buyers land transfer tax credit to $10,000. Rent-to-own initiatives have been proposed to help renters get into the market.
To slow investors, the government is proposing a 2-year ban on foreign buyers being able to purchase in Canada, though there are exceptions if you are a student planning to stay or if you are here on a work visa. They are also introducing an anti-flipping policy, which will tax those who buy and sell a house within a year, unless they have a valid reason. Another proposal? To get rid of blind bidding.
In the meantime, as the market changes, sellers will have to adjust their expectations regarding how much over list price their house will sell for.
There is also the possibility that they won’t get multiple offers. The days a home is on the market is slowly going up, but houses are selling fast, and people are still getting great prices for their homes. “For buyers, there is a bit of a silver lining: you can find houses where you don't have to compete,” says the agent.
We’re also slowly seeing the return of home inspection and financing conditions on offers that aren’t going to a competition. Having conditions in place can eliminate some of the risks for buyers.
Says Lewis, “If you want to buy this year, buy now as interest rates are the lowest you are probably going to see for a while.”
For more information, or to contact real estate agents Mary Wylde and Trish Lewis, visit the GoWylde Team or call 519-826-7109.