Canada Home prices in Canada fell for the first time in two years. This is because of the rapid rise in interest rates. Data from the Canadian Real Estate Association states that the average price of homes fell to $746,000 in April from March’s average of $796,000.
The house pricing went up by 24% over 12 months during the pandemic. This was because of the emergency-low rates that helped the economy through the COVID-19 crisis.
However, the house prices dropped by 0.6% in April from the month before. Also, the number of sales increased by 12.6%. This is because the Bank of Canada has increased the interest rates to fight inflation. Markets believe that the interest rates will rise to 3% over the next year. Also, the rates began at 0.25% this year.
Currently, Canada has only 2.2 months of inventory available right now compared to the longer-term average of five months. However, this metric has been moving up as the ratio of sales to new listings fell to 66.5% in April. The Real Estate Board said that the market is shifting to buyers from sellers.
Shaun Cathcart, the real estate board’s senior economist, said in a press release- “After 12 years of ‘higher interest rates are just around the corner,’ here they are. But it’s less about what the Bank of Canada has done so far. It’s about a pretty steep pace of continued tightening than markets expect to play out over the balance of the year.”
What Should You Do as a Buyer?
With the current market rates, you as a buyer should keep these points in mind if you want to bid on a house-
Analyzing the list price—As a buyer when you see a house listed for $1 million, it’s difficult to know its worth. It can be worth 900,000 or $1.1 million or actually just worth what it says on the listing. The best way to know the price is to understand the deadline.
When it says ‘offer at any time, the house is expected to go somewhere around that price. However. If there is a bidding-war situation on an offer date, chances are that it is underpriced. Also, the expectation is that all the offers will be above that particular price.”
Finally, you will be surprised to know that in current market condition, it is possible to negotiate down.
Conditional offers are back in the market— In today’s market, buyers have the freedom to add conditions to their offers. You can add conditions like inspection, financing, and also escape clauses. Escape clauses are conditions that allow buyers or sellers to back out of a deal.
So, it is safe to say that the current market conditions are definitely in favour of buyers. Having said that, make sure you do your research thoroughly before making any decision.
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