Today’s YXE Market Explained
Rising interest rates, low housing supply, homes selling at over-asking price… what is even going on? Your questions are answered here.
Have interest rate increases hit the selling market hard? According to recorded sales price data from the Saskatchewan Realtor’s Association, the average price of home sales in March 2022 was $319,814, with a total 1,930 sales in May 2022. Currently, the average home price is a wee bit little lower at $315,145, but we still saw 1,858 sales this past May. Between these two time frames, there have been nine interest rate increases by the Bank of Canada, bringing Prime from 2.45% in March 2022 up to 6.95% currently. Although interest rates have heightened significantly, this does not appear to be immediately impacting sales rates and prices immensely.
Why are sales remaining strong? Despite interest rates rising recently, we are still seeing rates that are, in actuality, historically quite low. The trends indicate that although this increase is indeed irritating and frustrating for buyers, it is not necessarily enough on its own to exclude large hoards of buyers from the market. In addition, inventory of homes for sale on the market remains very low. As basic supply and demand principles teach us, as long as there are enough purchasers to support the sale of a product, sale prices can remain high.
How many homes are selling over-asking price? And why? Not all homes are selling over-asking, but some sales of houses in highly desirable areas at highly desirable price points are accurate to expect multiple offers. It really depends on the type of home and the recent sold activity surrounding it!
Is this a good time to sell? This is an excellent time to sell. The buyer market and sale prices remain strong for homes of all types.
Is this a good time to buy? If you’ve been thinking about buying and feel ready to start your search, the answer is yes, it is a good time to buy. Any time you can get into a market as an owner and stop paying rent money that you’ll never see again, is a good time to get in.
Yeah, but what about these sky-high interest rates?? Although our interest rates are higher than we have been used to in the past several years, they are still historically low overall. It is likely we will need to say farewell to the days of the 2-3% rates for a little while, as we wait for the Bank of Canada to balance our inflation and provide us some financial relief in other areas of life (ahem, groceries 😳.) It is also true that at some point (or maybe multiple points) within a 20-30 year mortgage, you will be re-financing at a lower rate and even have the ability to tap into variable payments at some time, which can save you a lot of money.
Questions about buying, selling, or exploring if either of these options are right for you? Reach out any time. I’d love to meet you and I’m always open for a chat. Until next time, take care!