Will Housing Slow in 2014?

The Canadian Real Estate Association (CREA) and the major banks predict that sales may slow because of the large number of transactions recorded during the past few months. They believe that people who wanted to move have already completed the process and that rising mortgage rates will eventually cool the marketplace.

RBC reports: “We believe that much of the strength in recent months reflected the unwinding of earlier restraint associated with the tightening of mortgage insurance rules last year and, in August, a likely rush to lock-in lower mortgage rates,” an RBC report stated. “We expect home re-sales to stabilize near the current levels, although some modest pullback may occur later this year or early next as payback for sales that may have been advanced during the rush to lock-in lower rates.”

The Canadian housing market recorded a hot summer, with many clients rushing the market to cash in on pre-approvals before rate hikes took effect.

“The recent increase in 5-year mortgage rates (of about 70 basis points) that began in June of this year will likely temper housing activity in the coming months,” a report issued by TD Bank stated. “In large part, some of the strength experienced over the summer months can likely be attributed to households jumping into the market to get ahead of interest rate increases and we anticipate some payback in the coming months.”

And the banks agree that homebuyers will still take advantage of low rates before the market cools once those pre-approvals dry up.

“Buyers continue to taking advantage of low borrowing costs, though recent increases in fixed mortgage rates are expected to slow the housing market’s momentum later this year and into 2014,” according to a report issued by ScotiaBank. “With posted rates having bottomed around late spring, the window of ultra-low preapproved mortgages is expiring.”

And while the days of historically low interest rates may be behind us, TD Bank believes rates will stay low enough to encourage slight growth through next year.

In the current environment of global uncertainty, real estate has become the place for Canadians to make long term financial commitments. Many people have been predicting a crash in Canadian real estate values for many years, but it has not materialized. The recent budget debates and fiscal cliff difficulties in the US has taken the froth off the US economy. Inflation is tame and there is now a belief that interest rates may soften a bit in Canada, as market forces adjust to the slowing US economy. No one has a crystal ball, but we do know that mortgage rates at all maturities remain historically low, which helps keep affordability in place. Low mortgage rates will support modest growth in both sales and prices. It may be the end of 2014 when the Bank of Canada begins to lift short term interest rates.

If a move is in your future, I can help. Whether you are buying or selling, or both, don’t take chances with an inexperienced agent. I’ve sold real estate full- time in Durham Region for over 20 years.

Contact me and discover why I am the top producing agent in my brokerage for 2013. Let me show you how my skills and experience can make your move rewarding and worry-free.

Over 20 years of full-time local service in Whitby, Brooklin, Ajax, Pickering, Oshawa, Courtice and Bowmanville. Check out my Website!

Randy Miller
Sales Representative
Re/Max Rouge River Realty Ltd., Brokerage
905-668-1800 or 905-427-1400
randy@randymiller.ca

www.randymiller.ca