We are now starting to get a handle on how home buyers and sellers are responding to rising interest and mortgage rates.
The economists at RBC focus on affordability of residential real estate and they are seeing big changes in the heated Ontario and BC markets but virtually no change here in Saskatchewan.
It is clear that we have regional markets in this sector so you have to drill down a bit to see what is happening in different parts of the country. RBC was forecasting a decline of 14 per cent in home values in Ontario and BC. In Saskatchewan, they expect any decline would be under three per cent.
Last week’s one full percentage point increase in the bank rate is going to have a chilling effect.
Many buyers will see their plans or dreams of home ownership delayed or dissolved as debt service costs will put them out of the market.
The bank sees resale activity falling by 35 per cent as a result, triggering even steeper price declines than we’ve already seen in many Ontario cities, Vancouver and BC’s interior.