When analyzing the May 2021 real estate statistics as well as some other factors, it is possible that the market could cool in the summer months.
Dexter Realty notes that lumber prices are up 300% in the past year, copper prices hit a record high in May,global oil prices are 80% higher than a year ago and the Canadian dollar is at a six-year high. These could signal inflationary pressure. There was also concern of a potential rise in the Bank of Canada rate leading to advising clients to lock in a pre-qualified mortgage rate for 90 days.
On June 9, the Bank of Canada held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Bank’s quantitative easing (QE) program, which continues at a target pace of $3 billion per week.
On the same day in a press release the Bank of Canada stated:
“With vaccinations proceeding at a faster pace, and provincial containment restrictions on an easing path over the summer, the Canadian economy is expected to rebound strongly, led by consumer spending.
Housing market activity is expected to moderate but remain elevated. Strong growth in foreign demand and higher commodity prices should also lead to a solid recovery in exports and business investment. Despite progress on vaccinations, there continues to be uncertainty about the evolution of new COVID-19 variants. More broadly, the risks to the inflation outlook identified in the April MPR remain relevant.”
While all this is happening, it is more important than ever to keep up with market statistics.
I would still recommend that those individuals looking to purchase a home to lock in their rates but more importantly, hire an experienced real estate agent that can understand and respond quickly to a changing and dynamic market.
If you are interesting in purchasing or selling a home – or just want to chat about real estate, please call me. I welcome your call!