Another interest rate hike by the Bank of Canada has contributed to the recent cooling in house prices across the country. But in Cochrane, the market has gone from “crazy” to “a little less crazy” in recent weeks.
Another interest rate hike by the Bank of Canada has contributed to the recent cooling in house prices across the country.
But in Cochrane, the market has gone from “crazy” to “a little less crazy” in recent weeks.
According to local agent Kendra Watt of CIR Realty in Cochrane, a slight drop in demand and a slight drop in prices from an overheated market are nothing to worry about.
“The Cochrane market is still hot. Everyone is talking about it and things are slowing down, which is true, so it’s not as chaotic as it was six weeks ago. But housing prices are still high, and inventory is still very low, and there are still plenty of buyers. So it’s still a very active market,” she said.
Watt attributes the minor slowdown in Cochrane to two things – rising interest rates and the fact that sales in Cochrane and Calgary from February to April were fueled by buyers from Ontario and British Columbia.
When the Ontario market cooled, the number of buyers dwindled.
“It’s a noticeable drop, without as many Ontario buyers now,” Watt said.
That doesn’t mean market watchers or potential Cochrane home sellers need to start panicking, though.
“Cochrane is a great community to invest in,” Watt said. “Not only is it an ideal community to raise your family and have easy access to amenities and outdoor activities, but it also offers housing prices that remain below the national average.
“Even though prices have risen sharply, the desirability of this community and this market should keep these prices higher for the next few years.”
Overall house prices are still high in Cochrane compared to last year.
For the month of May, there were 101 sales of single-family homes (not condos), with an average sale price of $586,831. Comparatively, in May 2021, there were 102 sales with an average sale price of $461,361.
Echoing Watt, “less crazy” is the description used by Vivian Cox, of Century 21 in Cochrane.
“A house listed the other day, four days on the market, they left the property for $5,000 less than the listed price, which hasn’t been heard in the last year,” she said. declared. “Last year, if it hit the market, within days you had to pay for the full list. Now we’re seeing a bit of a bargain again.
She said she’s noticed a little calm over the past three weeks, but Cochrane still has advantages over other parts of the country, not the least of which is affordability.
The Calgary Real Estate Board (CREB) reports that sales in Cochrane remained strong in May, supporting a year-to-date year-to-date gain of nearly 7%.
One of the effects of interest rate hikes is that they make mortgage lending a little more difficult for those who are pushing the limits of what they can afford.
Anyone applying for a mortgage to buy a home must first pass a stress test to confirm whether or not they can withstand higher rates. Even the relatively small rate hikes that have been seen so far this year could mean that many potential buyers fail to reach the new higher bar, which could lead them to search for cheaper homes or delay the sale. purchase indefinitely.
Amid two straight months of rising interest rates and the Bank of Canada’s 0.5% hike last week, housing markets across the country have cooled.
The national average house price peaked in February, but has fallen for two straight months.
The Canadian Real Estate Association (CREA) reported that the country’s house price index fell 0.6% between March and April this year, the first time in more than two years.
RBC real estate experts predict prices will fall 2.2% in 2023.
Home resales fell 12.6%. CREA points to interest rate hikes by the Bank of Canada as the cause of the slowdown.
On its website, the Canada Mortgage and Housing Corporation (CMHC) says homebuyers may be reviewing their options as mortgage costs rise, and no one knows exactly when home prices will start to stabilize or to lower.
Lending rates at the start of the COVID-19 pandemic were cut in Canada, but these record lending rates contributed to rising inflation, prompting the central bank to change direction.
Food prices have risen 9.7% over the past year, while housing costs have risen 7.4%.
The Bank of Canada raised its benchmark interest rate to 0.5% in early March, then again to 1% in April. Then the central bank raised the interest rate to 1.5% on June 1 and signaled that further hikes were on the way.
In its June 1 statement, the Bank of Canada said rising global inflation “is occurring as the global economy slows. The Russian invasion of Ukraine, COVID-related lockdowns in China and ongoing supply disruptions are all weighing on activity and boosting inflation.
The central bank added that there was no relief in sight as inflation “is likely to pick up further in the near term before it starts to subside.”
Inflation reached 6.8% for the month of April – well above the Bank of Canada’s forecast, and the highest in 31 years.