Here’s an update on our market and the impact of recent economic news.
Today I’ll go over all the drastic changes in our real estate market and how they’ll impact you moving forward. Recently, the federal government announced its 2022 budget, and there are several notable items that have to do with housing.
The first is a tax-free savings account that can only be used by first-time homebuyers. I won’t go into all the details, but you can contribute up to $8,000 per year for up to 5 years to create an additional registered savings plan for your first home purchase.
Another element in the budget is a ban on all foreign buyers for the next 24 months to avoid speculative investment and allow more resident purchases.
The third thing to note in the budget is a lot of money contributed to the housing supply, including a $4 billion contribution to the CMHC’s Housing Accelerator plan to create 100,000 new dwellings in the next few years. Another item that’s been in the real estate news lately is that the Bank of Canada has raised its overnight rate from 0.5% to 1%. This was done to combat inflation.
How might all of this impact you as a buyer or seller? I don’t think either measure will have an immediate effect on the housing market. The new savings plan will take five to six years to take hold. The ban on foreign homebuyers won’t have much of an impact here in Quebec based on my observations. Finally, the increase in the federal budget won’t have an immediate effect either, but we’ll keep a close eye on what happens over the next few years.
The increase in rates has many under the impression that we’re headed for another housing bubble. However, it’s important to know our country is financially structured completely differently than our neighbors to the south. Whenever we see a jump in interest rates, a lot of us think back to the 2008 housing crash in the U.S.
Canada has a lot of different protection mechanisms in place to avoid this kind of situation. Banks here in Canada vet their buyers well, and for the average homeowner with a $500,000 mortgage, this new interest rate will increase your monthly payment by a hundred dollars or so. This won’t cause the average homeowner to foreclose.
If you’re waiting for prices to go down, I think you’ll be waiting a while. You’re only going to get disappointed when prices rise further as I expect them to. If you’re a seller who wants to take advantage of the market conditions, you want to list sooner rather than later because the market may stabilize in the short to medium term.
If you have any questions for me about buying, selling, or real estate in general, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.