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April 2012: Mixed Messages
Posted May 9th, 2012 under market updates.
The Bank of Canada has been sending mixed messages that are putting buyers and sellers alike in a tough position. At the beginning of 2012, we were told there would be no change to interest rates until 2013. Now the Bank of Canada has said that it will “likely” raise interest rates in June. So, a contradiction, and not even a definite contradiction!
This has had a visible effect on our local market. In the latter part of March and the beginning of April, sales appeared to be steadying, allowing the market to stabilize. However, in the last two weeks of April, sales spiked again, and as of the time of writing our sales-to-listing ratio, normally in the mid-50's, is up to 73%!
This is in spite of the fact that our stock of listings is 15% larger than last year's. In other words, even with greater supply, the demand is so high that sales numbers are inflated. No doubt this is a result of the Bank of Canada's announcement: people are attempting to buy now and lock their mortgages in at a lower rate.
As a result of all this activity, prices have not levelled o[29], but continue to rise.
It's impossible to predict what might happen this summer. To begin with, we don't know whether the Bank of Canada will follow through with its “likely” rate increase, and if it does, we don't know if it will happen in June as expected.
Assuming there is a rate increase in June, how much will it chill the market? Or, if there is not an increase, will we see a slowdown anyway due to large numbers of people having already bought in April and May?
Time will tell, but despite the coming uncertainty, now is still the best time to make a move if you want to take advantage of the high prices and low interest rates. We may never see rates this low again, so as long as you do not over-commit on your mortgage, you can reap the benefits while they last.
Want to know more about the state of the market? Just ask me, I'll be happy to help.
