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Today’s real estate market is changing rapidly. Interest rate hikes and inflation are turning the market on its head, and it seems that what is the trend one month is completely different the next. With that in mind, is today’s market more beneficial to buyers or sellers? We were firmly in a seller’s market for a long time, but are things changing to favor buyers? Here’s what you need to know.
Halifax was a bit of a unique city earlier this year. While many regions in Canada were seeing price decreases, Halifax’s market was still fairly hot with many buyers making offers over asking. However, the Nova Scotia Association of Realtors (NSAR) shows that Halifax housing prices are starting to cool off, and price increases are slowing down. Year-over-year, we’re still seeing huge increases in prices, but monthly data shows declines.
In June 2022, the average Halifax home cost $567,671, which was 22 per cent higher than the June 2021 average of $442,783. Month-over-month, though, we’re seeing some cooling. Nova Scotia-wide, April 2022 prices were hovering around $460,000, but by May were closer to $450,000, according to the Canadian Real Estate Association (CREA). In the short-term, we’re witnessing a decline in prices as the east coast finally starts to match trends in the rest of Canada. Lower prices are a welcome sign for buyers, with sellers likely to get lower offers.
Listings are on the rise in Nova Scotia, and homes are sitting on the market much longer. In June 2022, 2,271 listings came out; a 4.3 per cent increase from June 2021, according to the NSAR. Existing inventory is slowly increasing as a result. In June 2021 there were 2.1 months of inventory in Nova Scotia, which has ticked up to 2.3 months by this past June. This is still a low amount, but it shows increases in listings and time spent on the market. Now, buyers have more time to make decisions about their next move.
Supply and demand
Are supply and demand trends better for buyers or sellers today? The bottom line here is supply is rising and demand is falling. There are several factors that contribute to this trend. Until quite recently, we were firmly in a seller’s market, so what happened? Rate hikes and inflation are taking their toll, which we will discuss more below. As we mentioned above, supply is increasing as more listings hit the market and sit there for longer, and this is largely because demand has dropped off. Home sales are going down in Halifax, as well as province-wide. In June, 760 homes sold in Halifax, compared to 801 in June 2021, according to the NSAR. In Nova Scotia, the 1,476 sales in June was a drop from 1,584 in June 2021. Again, this is leaving buyers with more choice and time to make decisions.
Rate hikes and inflation
Here’s where things have been changing and impacting everything else in the market! Inflation has been hitting record highs for months now, reaching 7.7 per cent back in May and climbing since then. As a result, you likely know the Bank of Canada has been aggressively raising interest rates to persuade Canadians to stop spending and bring inflation levels back down to earth. The overnight rate sits at 2.5 per cent, a low number historically but a big jump from the 0.25 per cent we saw in January.
As a result, demand for homes has dropped significantly, with fewer buyers entering the market as interest rates rise and the cost of everyday goods stretches many budgets thin. In short, it’s not the best time to buy for a lot of Canadians. For those who are in the market, buyers have a much better selection and price variance than in the past, but they will have to work with higher rates.
Long story short, buyers are gaining traction and slowly getting the upper hand in today’s market. With housing prices on the decline and more supply coming in, buyers have more selection, and a better ability to negotiate prices. However, buyers have to contend with interest rate hikes and inflation, so it’s not all smooth sailing. Potential buyers should be sure their budget can accommodate a home purchase right now. Otherwise, they risk becoming house-poor, or falling into debt with their other financial obligations. It’s important to plan carefully!
Buyers looking to enter the market should contact a mortgage broker to help them get started on their journey. Times are changing, and the market is shifting rapidly. We can help buyers stay on their feet and not get knocked off course by unexpected rate hikes or budget concerns. We’re here to guide you.
If you have questions about your mortgage or buying a home, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.