Real Estate prices continue to drop due to The Bank of Canada’s increase of its target for the overnight rate to 1½%, with the Bank Rate at 1¾% and the deposit rate at 1½%. The Bank is also continuing its policy of quantitative tightening (QT).
From my experience, most Buyer’s are hesitant due to market uncertainty and the value of the property dropping after their purchase. Mortgage agents are reporting that majority of homes are appraised lower than the purchase price causing transactions to not close or Buyers would have to come up with extra cash to cover the difference.
Based on mortgage calculations a 50 basis points increase in interest rate could potentially drop prices by another 5% – 8%.
I continue to observe that properties that are in good condition & location and have been marketed well are getting multiple offers. Homes that have been listed as is and by a discount agent sit on the market and sell for less bringing the average sale price down. If you are thinking of Selling in the current market or Buying and want a safe closing, make sure you do your due diligence and pick your Realtor wisely.