HOW INFLATION AND INTEREST RATES ARE SHAPING CANADA’S REAL ESTATE MARKET

In recent developments, Canada’s inflation rate dropped to 1.6% in September 2024, mainly driven by declining gas prices. This easing inflation is increasing the likelihood that the Bank of Canada will reduce its key interest rate by 0.5% in its upcoming decision on October 23. Lower interest rates would translate into reduced borrowing costs, potentially making mortgages more affordable and increasing buyer activity in the real estate market.

For homeowners and investors, these changes highlight a favourable time to refinance or explore new property opportunities. With borrowing becoming cheaper, market activity could pick up, driving demand and possibly stabilizing housing prices after a period of cooling. However, prospective buyers should remain cautious and stay informed, as the Bank’s future decisions will depend on inflation trends and economic stability.

These shifts present both opportunities and challenges, making it essential to keep a close eye on market trends and adjust strategies accordingly.

Does this affect Sellers in areas like Fairwinds, Qualicum Beach, and other lifestyle retirement type communities? Interest rates may not directly affect the lion’s share of buyers for these communities. Many buyers come to Vancouver Island cash in hand however the home they are selling or the home their purchaser sells may be affected by these variables. I have this conversation with colleagues who are seasoned real estate investors and we all agree that if you are going to sell, and buy, execute both as soon as possible as one cannot expect to sell high and buy low under similar market conditions.

Have a wonderful fall season!