As written by Sean Rankin, Mortgage Agent
With 2023 underway, and the latest Bank of Canada rate increase to 4.5%, combined with the stress of the increased cost of living on Canadian households, the questions that are on everyone’s minds are… where will rates go from here, and what does this mean for the housing market?
While no one has a crystal ball, the good news is that most economic forecasts are projecting this to be the last rate hike for some time and that the predicted recession later this year will be a relatively quick one – expected to end in 2024. Although the latest rate increase in January wasn’t welcome news, this projection does mean some positive things as we go through 2023.
First of all, if you plan on selling or buying a home, this forecast may suggest some stability in the housing market. This means it’ll be easier to price and negotiate if you’re selling, and if you’re buying, it’ll mean that you can shop the market with confidence that you’re purchasing at what is most likely as close to the dip in the market as economists are forecasting.
If you are planning on sitting tight in your current home, 2023 really is about finding ways to adjust for a lot of Canadian families. If we assume the forecasts are correct, we now know what we’ll have as a budget for the next 12 months. The relative short timeframe of the predicted recession means that no matter your situation, there is probably a short-term solution we can work towards to help with cashflow over the next year.
If you’re looking at making a move once the recession is over, which is expected to be in early 2024, it’s important we touch base to review your options. It is widely expected that The Bank of Canada will lower overnight rates to spur the general economy post-recession, and this will have a tangible effect on the real estate market due to pent-up demand, which will be exacerbated by an undersupply of housing stock. As a result, you’ll want to make sure you’ve got everything you need in place and know exactly what you will be able to buy.
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