As economic signs point to further strife, falling consumer confidence dampens prospects for a real estate rebound in Canada.
Economist Rishi Sondhi downgraded his projections for Canadian home sales at Toronto-Dominion Bank while raising his forecast for the Bank of Canada’s benchmark interest rate.
According to Mr. Sondhi, the central bank will raise interest rates by another 75 basis points by the end of the year, bringing the policy rate to 4%. That revised forecast comes with upside risk, given that inflation is still high.
According to Mr. Sondhi, higher borrowing costs will further erode housing affordability and slow economic growth, thereby reducing real estate demand. Sales will bottom out about 20 percent below pre-pandemic levels early in 2023 and remain subdued.
According to Statistics Canada, consumers spent less than expected in July. Despite high inflation and rising interest rates, households are trimming their spending.
This fall, sales and listings will remain low. Despite the fact that there are few suitable listings available, some homeowners choose to stay where they are. This prevents them from listing their current home, thereby adding to the supply.
“Based on the data, it’s going to be challenging for the next eight months.”
Prices in Barrie, Ottawa, and Burlington soared during the pandemic but are now adjusting quickly in 2021: Prices soared in Barrie, Ottawa, and Burlington during the pandemic but are now adjusting rapidly.
In order for sellers to provide accurate pricing and buyers to understand what they can afford, a strong grasp of the current market is essential. As a result, we get into a lot less trouble.”
Several people have run into problems with financing. Others experience buyer’s remorse and try to walk away.
In the spring, as the market drastically shifted and prices began to fall, some agreements crumbled. There were many buyers and sellers who were caught off guard. As of now, buyers and sellers have mostly adjusted to the transition.
News Source: The Globe and Mail