With summer around the corner, we are taking a look at the factors at play in today’s shifting real estate market. The increased cost to borrow money, the seasonal ebbs and flows of the market, and the normalizing of real estate post-COVID, all play a part in our current market conditions.
The last interest rate increases were in 2018. In July of 2018 the Bank of Canada raised Prime from 3.45 to 3.7 and later to 3.95. As borrowing costs rose, real estate sales decreased. With the recent rise in rates, 2022 is on a similar trajectory as 2018 did for sales. Interestingly, sales numbers for the month of May in years 2018, 2019 and 2022 are similar, further demonstrating a return to pre-COVID market conditions.
While world events sent us scrambling to adjust our lifestyles in 2020, the unpredictability of the last two years is finally, almost behind us. As such, the real estate market will return to its seasonal ebbs and flows, barring any further unforeseen world events.