Benchmark interest rate hike not exactly a welcome sign to Chilliwack real estate board

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Although inventory of active listings continues to grow considerably, homes are taking longer to sell and prices are cooling off ever so slightly. Still, it’s not a great recipe for first-time homebuyers because of the higher cost of borrowing, but there is a silver lining, Moniz said.

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“It is still difficult for first-time homebuyers to get into the market because of qualifying rates, but prices have adjusted,” Moniz said. “If buyers are determined, they could find a home in a lower price range than what they would have paid just a few months ago.”

While home sales have transitioned from setting all-time records to merely average, and prices have fallen from the peaks of last winter in some regions, the supply crisis across the country has not gone away, the Canadian Real Estate Association says. Steep rate hikes have likely only shifted the pressure temporarily into the rental market where vacancy rates are typically in the single-digit range.

In the years leading up to the COVID-19 pandemic, low interest rates, record levels of international immigration and an increasingly middle-aged millennial cohort combined to fuel very strong household formation and housing demand in Canada, particularly from first-time buyers, CREA believes. This served to steadily draw down on available inventories and tighten market conditions. The pandemic only accelerated those trends, leading to the strongest seller’s market the country has ever seen. While many underlying fundamentals have not changed, the interest rate component has changed considerably. With inflation at its highest levels in three decades, the Bank of Canada, per its mandate, is acting aggressively, leaving the economy and housing markets caught in the crossfire, CREA contends.