End of summer Halifax market update

We’re already approaching the end of the summer season. Before long, it’ll be time to start raking up the leaves and bundling up once again, whether that brings you joy or not. But before we get too excited about fall, it’s time for an end-of-summer Halifax market update, so we know where our city stands as we look at a new season. Summer was a busy season for market changes, which are having a big impact on real estate as a result. Here are the main details to know as we close out summer.

Interest rates

Everyone knows interest rates have been on the rise, and may continue going up this year. Today’s overnight rate of 2.5 per cent is certainly much higher than the record-low 0.25 per cent we had back at the beginning of the year, but relative to history it is still on the lower end. Of course, that might not comfort many people who have variable-rate mortgages and are experiencing increases to their monthly payments. Although our clients are stress tested to ensure they can handle rate hikes, we understand it can be a stressful time. Remember that rate increases will go down over time as inflation subsides. 

Housing supply and demand

Year-over-year sales in Nova Scotia decreased 7.3 per cent back in May, according to the Nova Scotia Association of Realtors, but sales in general are still up compared to pre-pandemic levels. However, this year-over-year trend indicates that demand is sinking back down. Lack of supply isn’t the reason fewer sales are happening, but rather lack of demand. The Nova Scotia government has been taking action to create more housing supply. By spring 2024, the province’s municipal affairs and housing minister plans to have more than 20,000 homes in process in the Halifax Regional Municipality. Demand is lower now thanks to continued rate hikes that make borrowing more expensive. Plus, a looming recession is causing would-be buyers to pause before making a big purchase.

Thinking about buying or selling?

Buyers and sellers are looking at a different market than one year ago. For sellers, the east coast hasn’t been immune to the market cooldown we’re seeing in other parts of the country. This means sellers may spend a longer time with their home on the market, and their home might sell for less than it would have previously. Plus, rate hikes and inflation mean demand is not as high, so there will likely be fewer buyers on the market. If you’re selling, it’s a good idea to prepare for lower offers, and longer periods on the market. 

For buyers, low demand is resulting in a slowdown in price increases, and also more supply on the market. For buyers who are able to enter the market, they will have less competition and more power to negotiate with sellers. That being said, higher rates mean mortgages will be more expensive each month than they have been in the past. This might not be affordable for some buyers who are on a stricter budget. If buyers have the finances to buy a home, however, they are likely to have a better experience than one year ago.

Do current home owners have options?

If you’re a home owner wondering if you should make any moves in this market, the answer will largely depend on your situation. Do you have a variable or fixed rate? Variable-rate borrowers may be feeling the urge to lock into a fixed rate to avoid further rate hikes, but as a possible recession looms and inflation is set to subside, that means rate hikes will level off as well. We don’t generally recommend locking into a fixed rate today, because variable rates will sink back down as well. 

For those with a fixed rate, fixed rates are actually lowering as well after hitting their peak earlier in the summer. As the bond market prepares for an economic downturn, fixed rates are going down as a result. Mortgage holders do have some options, but it’s important to speak to a mortgage broker if you have questions about making any changes to your terms.

Finally, what about that recession?

You’re probably well aware that a recession is likely in the cards for Canada within the next year or so. While a recession might be good for lowering rates and reducing inflation, it’s not so great for income and market stability. If you have concerns about your finances heading into a downturn, now is the time to start budgeting and saving as much as you can. Cutting out non essential spending right now can help you prepare for the future. As far as buying goes, it can be a risky investment to buy a home during a recession. If you have any interest in making this type of investment throughout a downturn, it’s essential to contact a mortgage professional first.

This newest Halifax market update shows the market is changing, shifting more in favour of buyers before we hit a potential recession. It also means rate hikes, while intense now, are bound to go back down in the coming year. While the fall season may be unpredictable, our commitment to finding you the best mortgage solution remains consistent. You can rely on our team to maintain our dedication to you during these times.

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can contact us at (902) 482-2770 or contact us here.