GTA real estate market keeps softening amid growing interest rates
Home buyers in Toronto keep noticing lower prices and sales as the central bank follows the path of raising its key lending rate in attempt to curb the inflation.
“Interest rates are tapping on the brakes (not pushing it sharply), which is necessary in case real estate prices get out of control,” – explained Royal LePage president and CEO Phil Soper.
In his opinion, today, the market is facing “a real estate correction because prices were extremely high.”
The Toronto Regional Real Estate Board will soon release its data on May sales.
According to buyers, they have already seen a difference.
Soper and other housing and mortgage specialists say the Bank of Canada’s overnight rate hasn’t reached the pre-pandemic level yet.
“Although this change may be a challenge amid other higher costs of living these days, it’s important to remember that before the pandemic started, the overnight rate was at 1.75%, so we’re not back yet.”
The BoC has warned about further rate increases. Another half per cent hike is expected on July 13.
The Bank noted it “is ready to act more forcefully in case it’s necessary to fulfil its commitment to reach the 2% inflation target.”
On the way to this result, Soper recommends home buyers to be prepared for an easier market.
“Buyers should be ready for not having to be in mad bidding wars,” – he pointed.