Hope you had a wonderful Labour Day long weekend. The real estate market in Metro Vancouver for the month of August slowed down as the higher rates weighed on the market. This is reflected in the decreasing sales numbers. For August, it was 13.8% below the 10-year average. But remember for July, it was 8.6% below, and for June, it was 1.4% below the 10-year average. As a result, townhomes and apartments gave up some of the recent price gains of the last 6 months.
Last Friday, some surprisingly weak economic data for Canada came out, and now most pundits are predicting that there will be no rate increase tomorrow when the Bank of Canada makes its rate announcement. Currently, a lot of the rate predictions call for some rate decrease in 2024. The graph below represents the current view from Oxford Economics. Unfortunately, most of the pundits have been wrong for the last 18 months. While their arguments seem economically sound, it seems like they cannot factor in the effects of the government’s economic stimulus and the psychology of the markets and market participants. So take these predictions with a large grain of salt. Because of the errors made by the central bankers in the ’70s ended up pushing mortgage rates into the 20% range, I feel it is possible that they would rather make a new mistake than make the same mistake twice.
This would mean they might hold the rate longer than what the pundits are predicting now. Only time will tell.
Have a great month!
