April witnessed a fall in home sales as mortgage rates increase
April witnessed a fall in home sales as mortgage rates increase The Canadian Real Estate Association reported on Monday that rising mortgage rates caused a slowdown in the pace of home sales in April compared to the frenetic pace they started the year at. According to the findings of the association, the number of homes sold in May 2022 fell to 54,894 from 73,907 in April 2021, which was the month that the nation set a record for the number of sales in the month. Compared month-over-month, sales in April were down 12.6% when compared with sales in March; however, April still ranked as the third-highest sales figure ever recorded for the month of April, just behind 2021 and 2016. “The demand fever in Canadian housing has broken and, who would have thought, all it took was a nudge in interest rates by the Bank of Canada to change sentiment,” said BMO Capital Markets senior analyst Robert Kavcic, in a note to investors. According to CREA, a significant portion of the slowdown can be attributed to rising fixed mortgage rates, which have been on the rise since 2021 but have had a more significant impact in the most recent months. Over the course of one month, the association noted that the typical discounted five-year fixed rates increased by approximately three to four percent from their previous levels. The rate also has an impact on how well buyers perform on the mortgage stress test. This test used to require buyers with uninsured mortgages — borrowers who had made a down payment of at least 20 percent — to carry a mortgage rate that was either two percentage points above the contract rate or 5.25 percent, whichever was greater. The rate currently has an impact on how well buyers perform on this test. According to CREA, the stress test for fixed borrowers has recently moved from 5.25 percent to the low 6 percent range, which represents another increase of approximately one percent in just one month. “People are nervous. They are thinking, ‘if I take on this mortgage when mortgage rates are going up and the price to (live) is more, what is going to happen?” said Anita Springate-Renaud, a Toronto broker with Engel & Völkers. She observed that many homes were still receiving multiple offers during the previous month, but the typical number of offers was now between two and three rather than twenty. “For buyers, this slowdown could mean more time to consider options in the market,” said Jill Oudil, CREA’s chair, in a news release. It is possible that for sellers, this will necessitate a return to marketing strategies that are more traditional. This shift in sentiment was reflected in the number of newly listed homes, which fell by 2.2 percent to 70,957 last month from 72,557 in March. On a seasonally adjusted basis, this decrease was due to a decrease in the number of newly listed homes. The number of newly listed properties fell to 91,559 in the most recent month, which is a decrease of 10.5% compared to April 2022’s total of 102,294 listings. Despite the fact that the CREA reported a slowdown in sales and a reduction in the number of listings, Canadians spent even more money on homes than they did in 2021. In April, the average price of a home across the nation was just over $746,000. This represents a 7.4 percent increase from the average price of about $695,000 in April of the previous year. The Greater Toronto and Vancouver areas were not included in this calculation, which resulted in a $138,000 decrease in the national average price, according to CREA. On the other hand, when taking into account seasonal factors, the national average home price dropped by 3.8 percent from $771,125 in March to $741,517 in the most recent month. In the most recent month, the home price index benchmark price reached $866,700. This represents a decrease of 0.6% from the previous month, but an increase of 23.76% from one year ago and 63.96% from five years ago. The benchmark price was the least expensive in Saskatchewan, where it amounted to $271,100, and it was the most expensive in the Lower Mainland of British Columbia, where it was greater than $1.3 million. The housing markets in Ontario’s suburbs are the “shakiest” because of the way prices have dropped since their peaks in February, but he said that single-detached homes and townhomes appear to be cooling off the quickest. Related posts. Expert’s Reaction to the increasing rates by the Bank of Canada by admin123 Living in Main Floors- A Great matter of importance for Aging Canadians who want a Pleasant Life Ahead by admin123 National home prices historically higher, listings terribly low by admin123 Housing prices kicks off, stuck historically high, but trended lower in January by admin123 Soleil Condominiums by Mattamay to beam in Milton by admin123 As home prices rise, Ford wants to approve developments as soon as possible by admin123
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