Spring housing market predictions and what SVB’s collapse means for rates: This week’s top real estate stories
Here are The Globe and Mail’s top housing and real estate stories this week, with the lowest mortgage rates available in Canada today, commentary from our mortgage expert and one home worth a look.
What housing crash? What Canadian markets look like for the spring
Prospective home buyers held their breath in anticipation last year as real estate prices declined across the country, hoping to enter the market as prices would plunge. But the housing crash didn’t happen. A year after the Bank of Canada started raising interest rates, houses remain unaffordable, mortgages cost more, and homeowners are holding on to their properties, making real estate listings scarce. Erica Alini and Rachelle Younglai look at what to expect from the market this spring.
The collapse of Silicon Valley Bank could reverse interest rate hike trends
The U.S. Federal Reserve was widely expected to raise interest rates at its next meeting on March 22, but the sudden failure of Silicon Valley Bank (SVB) – the largest collapse of a U.S. bank since the 2008 crisis – has investors slashing their bets, Mark Rendell reports.
The bank’s failure is sharpening the tensions between fighting inflation and managing risks of financial instability, leading markets to believe the Fed will hold off on further interest rate increases to stabilize the economy.
Why the SVB collapse is the best news for mortgage renewals and homebuyers
The failure of SVB could ripple through the economy, but for now, fear is manifesting itself through a rush of money into government bonds. The rush to the market is raising prices and bringing down interest rates on bonds.
The cost of fixed-rate mortgages is heavily influenced by interest rates in the bond market, which makes this the best news in a while for anyone renewing their mortgage or buying a house, writes Rob Carrick. Plus, the fear of economic instability triggered by the bank’s failure could push central banks to lower interest rates sooner than anticipated.
Mortgage specials start arriving, just in time for spring
This week’s market news could lead mortgage rates to go on sale, writes Robert McLister.
Canadian home sales are up slightly as prices continue to fall in February
Home prices in Canada fell in February for the 12th month, but sales volume is rising slightly in a potential sign that buyers are adjusting to higher interest rates, reports Rachelle Younglai.
The Home Price Index, which adjusts for pricing volatility, reached $704,300 last month, a 1.1-per-cent fall from January and a 16-per-cent loss from last February, when values hit their record high, according to the monthly report from the Canadian Real Estate Association (CREA.)
Decoder: The hit to Canadian house prices is deeper than it seems
While February’s housing report contained signs that the market may be stabilizing, it also cemented this as the steepest house price correction at the national level in decades, reports Jason Kirby.
According to CREA data, the typical home price in Canada has fallen by $132,000 since February 2022, and the drop is actually worse once inflation is factored in. In real, or inflation-adjusted terms, national house prices have fallen nearly $168,000, a more-than-19-per-cent decline.
Home of the week: A Calgary home for the tech lover
The Crescent area of Calgary, just a 15-minute walk to downtown, offers stunning vistas and a mix of more traditional and newly built homes. The lot size is 28.9-by-120 feet, and the entire house is oriented toward the view: a modernist building with 13-feet high windows – made in Belgium – and outdoor spaces with built-in fireplaces.
On the very back of the house is a screened-in back deck and an office workspace. Sitting in the office, you can turn around and look straight through to the front terrace and beyond. “The idea was, wherever you are, you have a view to the downtown,” the owner said.
What do you think is the asking price for this house?
a. The asking price is $3,550,000.
House prices fell last month, an industry survey showed on Monday, as sellers rushed to secure deals against a backdrop of mounting financial uncertainty.
According to the latest Rightmove House Price Index, house prices fell 1.1% in November, taking the average asking price to £366,999. That compares to a 0.9% rise the month before.
Year-on-year, house prices grew by 7.2%, compared to annual growth of 7.8% in October.
November traditionally sees buyers price more competitively, as they look to offload properties ahead of Christmas. Rightmove said this year’s fall was in line with the average November declines seen during the pre-pandemic years of 2015 to 2019.
A total of 8% of unsold properties cut prices in October, double the amount in October 2021 yet largely in line with the 7.5% in the same month in 2019.
But Rightmove also acknowledged the market was facing considerable “financial uncertainty”. Tim Bannister, director of property science, said: “The plethora of predictions about might what happen to prices next year comes at a time when much is still uncertain. But what is certain is that the exceptional price growth of the last two years is unsustainable against economic headwinds and growing affordability constraints.”
New buyer demand rose 4% on 2019, but was down 20% on October 2021, while demand among first-time buyers tumbled 26% year-on-year.
Bannister said: “The now largely superseded mini-budget sped up the slowing of market activity that we had been seeing since the summer, and we’re now in another state of limbo as we wait for any surprises or help in Jeremy Hunt’s autumn statement on Thursday.
“The frenzied market of the past two years has turned into a more normal market more abruptly and less smoothly that we were expecting.”