The following is an update from Glynis MacLeod PREC* of the MacLeod Group.
On January 24th, the Bank of Canada held the overnight rate at 5%. The Bank now forecasts inflation rates in most advanced economies are expected to come slowly down, reaching central bank targets in 2025. This is good news for interest rates.
In Canada, the economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply. Inflation ended the year at 3.4%. Shelter costs remain the biggest contributor to the above-target inflation. The Bank expects inflation to remain close to 3% during the first half of this year before gradually easing, returning to the 2% target in 2025. The Bank’s next overnight rate target meeting is March 6, 2014.
The BC Real Estate Association is now calling for a Bank rate reduction in June, ultimately lowering to 4% by the end of the year. Banks are already anticipating this rate coming down later this year and some banks are now offering 5-year fixed rates at under 5%.
As the economy is finding balance, so is the real estate market where we are seeing a more balanced market. Sales in January were up 22.7% from a year ago with sales volume closer to 2019, the year before COVID. The benchmark value for a single-family home in the core was $1.244M last month, up from $1.224M in January 2023. Sotheby’s Canada produces a report on the metropolitan luxury market which we have attached for you to read. Read Full Report Here
Prior to the implementation of the foreign buyers ban implemented by the federal government in 2023, Victoria did not seen many foreign buyers however we did see Canadian buyers moving from Vancouver, Calgary and Toronto who had sold to foreign buyers. The federal government has chosen to extend the two-year ban on foreign buying of Canadian housing until January 2027. It bans foreign nationals and commercial enterprises from buying residential property in Canada, with exceptions for some international students, refuge claimants and temporary workers. There are some exemptions to the rule such as vacant land.
Despite rising interest rates and increased costs, capital region homebuilders set a new record for housing starts last year. Canada Mortgage and Housing Corporation show the region had 4,992 new homes started in 2023, breaking the record of 4,809 set in 2021. The previous record of 4,439 was set in 1976. According to CMHC, of the 4,992 housing starts in the region last year, 4,238 were condominium units or rental apartments. Only 385 were single-family homes. Casey Edge, executive director of the Victoria Residential Builders Association, said the “Missing middle, which is the more suitable home style – the townhomes and duplexes – for young families was down and that’s disappointing,” he said.
Our congrats go to Marigold Café on Lochside Drive for winning the Victoria Community Votes 2023 poll for Cafes and Coffee Shops. Brentwood Bay’s Saanich Emporium deserves cheers too for being voted Greater Victoria’s Favourite Coffee Shop in the 2023 Times Colonist Readers’ Choice Awards.
Be our guest! If you're considering a trip to New York, please note that clients of Sotheby's agents can enjoy a VIP tour of the galleries in the Auction House. Let us know if you're headed in that direction, and we would be happy to arrange this unique experience for you.