The Bank of Canada held its overnight rate at 1.25% at its May 30th meeting. Most believe Canada will raise it rates two more time this year. However, a lot depends on all the trade talks going on. If it wasn’t for that, the Bank of Canada might have already raised rates again.
In terms of the real estate market, the sales numbers are depressed again. Overall sales have dropped 35.1% when compared to last May and 19.3% below the 10-year May sales average.
The total number of properties listed on the MLS system is 38.2% higher than last May and 15% higher than April 2018. So, the inventory is building quickly.
When broken down by property type, detached properties continue to be the weakest. When compared to last May, there is a 40.2% reduction in sales volume but an increase of 5.8% in the price. The sales-to-active listing ratio is 14.7%. When this is below 12% for a sustained period, downward pressure on home prices occurs.
For condos, sales figures have dropped but there is no pressure to reduce prices. The sales volume dropped 29.3%, but prices increased 25.0% from last May. The sales-to-active listing ratio is 41.7%. Steady values above 20% shows upward pressure in price. Last month the price went up 0.4%. Annualized that is 4.8%, so the pace of increase seems to be slowing.
For townhouses, the sales volume dropped 39.8% while prices increased 17.6% over the last 12 month and 0.8% over the last month.
Unfortunately, no one is predicting a drop in prices for the condos and townhouses. And basically, these are the markets that most working Canadians are looking at. The implementation of the foreign buyer’s tax and increased stress testing have slowed down the sales to the point where detached house prices are dropping. The question is whether this will eventually force the prices of condos and townhouses to drop as well.
Alternative lending.ca help people by providing options beyond regular bank lending. We operate out of Vancouver, BC, but can assist people in all of BC and selected locations in Alberta, Manitoba, Saskatchewan and Ontario.