Canadian Real Estate Is Still A Seller’s Market
One of the key factors that determines price levels in virtually any real estate market are mortgage interest rates. Typically if mortgage rates are high and real estate prices tend to remain low. This is because for the most part buyers do not pay cash for their homes. They need to arrange for financing entity right for their mortgage determines how much their monthly payments will be. So apart from the purchase price buyers are looking at their monthly expenses to determine whether or not they can afford the house.
On the other side, if interest rates are low, prices tend to start climbing. Buyers who calculator mortgage based on a low interest rate find that the monthly payments are much more affordable so they are not as averse to paying a little more for the property. As more buyers into the market because of affordability crisis again start to rise.
This is basically what is happening in the real estate market for number of years. Prices have remained high because interest rates have remained low in order to try to stimulate growth in the economy. However in the near future, as the interest rates slowly begin to climb again, we might see a slowing in the real estate market but in the meantime we might see another spike in prices. All this as buyers raced to try to get into the market before rates climb and before new taxes to come into effect. This means that for the next seven months it is definitely going to be a seller’s market.
