12 Jul 2022
Week 123: Interest rates to hit highs not seen since 2008. Here’s what that means to you.
Week 123: Interest rates to hit highs not seen since 2008. Here’s what that means to you.
Oh, the exciting tale of interest rates and how they’ve dominated the mind-space of every single human in Toronto.
Although the announcement is tomorrow, these seem to be the worst kept secret in town.
The consensus is that there will be a 0.75% increase, raising the Bank of Canada rate to 2.25%. The highest we’ve seen since just after the financial crisis of 2008.
As we head into a 2%++ rate environment, this puts us in almost a guaranteed recession. And during recessions, there’s usually downward pressure on rates.
So 2023 will likely tell a different tale.
But what does this mean to you as a borrower?
Urban Markets: Downtown & Surrounding Areas
House Average Price: $1,506,345
House Median Price: $1,345,000
592 Active Listings
43 Firm Sales This Week
Months of Inventory (MoI) ~ 1.77
Average Days on Market ~ 13.44
Condo Average Price: $805,412
Condo Median Price: $732,500
1835 Active Listings
92 Firm Sales This Week
MoI ~ 2.16
Average Days on Market (DOM) ~ 22.64
It means the bank’s prime rate will increase to 4.45%
With a prime rate of 4.45%, the best fixed rate for you would be prime minus 1%, so 3.45%.
According to sites like RateHub, the best available rates are 2.5% to 4.41% variable to fixed. So many options are available to borrowers.
Then in September, when they increase the rates again, we’ll be 0.5% to 0.75% higher than this.
Urban North: Rosedale, Deer Park, Moore Park, Forest Hill, & Lawrence Park
House Average Price: $2,553,231
House Median Price: $2,420,000
141 Active Listings
13 Firm Sales This Week
MoI ~ 2.30
Average Days on Market ~ 21.77
Condo Average Price: $791,667
Condo Median Price: $775,000
212 Active Listings
6 Firm Sales This Week
MoI ~ 2.43
Average Days on Market ~ 51.33
So the short-term future is relatively predictable. One way to protect yourself against SOME of these increases is to lock in a pre-approval. If you get that done today, you’ll be protected throughout the remainder of 2022.
There seems to be a little less nervous chatter these days, though. I believe once these rate increases become more predictable, buyers will again become comfortable with the market and jump back into the saddle.
With supply not piling on like many expected, once a handful of buyers activate, we should see sellers take hold of the steering wheel a little more firmly.
Perhaps this fall? Too soon to tell.
That’s one of the most reassuring things to see right now.
Leaside, Davisville, Yonge & Eglinton
House Average Price: $1,880,000
House Median Price: $1,710,000
48 Active Listings
5 Firm Sales This Week
Months of Inventory (MoI) ~ 1.46
Average Days on Market ~ 7.4
Condo Average Price: $742,767
Condo Median Price: $705,000
178 Active Listings
9 Firm Sales This Week
MoI ~ 2.53
Average Days on Market ~ 23.89
House and condo supply in our urban communities have pulled back or stayed flat over the past few weeks, which is excellent. It shows strength. We have strong owners who aren’t over-leveraged. They don’t panic. You should take this as a sign from the real estate gods. It’s a complete signal of how strong our urban markets are.
Our Buyer Clients are currently picking up many amazing deals on assignment. Last week’s email seems to activate a lot of you deal seekers! So many responses with requests to see the best assignment deals.
Birch Cliff
House Average Price: $1,655,000
House Median Price: $1,655,000
31 Active Listings
1 Firm Sales This Week
Months of Inventory (MoI) ~ 1.50
Average Days on Market ~ 18.66
Some of you were curious; some could take advantage of these deals.
We currently have three extraordinary assignment opportunities.
One of them is about $20K below the original purchase price.
You heard that right. So please reach out by emailing me at ara@thespringteam.ca or reaching out on one of our social channels.
If you’re unsure what an assignment is, you can read all about that here.
A ton of agents avoid assignments only because they don’t understand them. Although they take longer to complete, they’re pretty simple and require much less cash than you think. Anyway, enough about that, reach out if you want to discuss it.
Aside from assignments, there aren’t many amazing deals on freehold or resale condo land. Some places are a little less expensive than they would have been a couple of months ago, but desirable properties remain in demand and pricey overall.
So Buyers, get your pre-approvals locked in so you can shop with a protected rate ahead of the following hikes. And Sellers, don’t go to market unless you absolutely must. Otherwise, sit tight and see what the fall market brings.
I predict the fall market will be more robust for Sellers but not yet sure if that will push further into the Winter months.
Either way, maintain a long-term vision, and you’ll be fine.
Kingston Rd Corridor to Highland Creek
House Average Price: $1,150,111
House Median Price: $1,000,000
94 Active Listings
9 Firm Sales This Week
Months of Inventory (MoI) ~ 1.82
Average Days on Market ~ 17.67
Condo Average Price: $692,500
Condo Median Price: $650,000
60 Active Listings
4 Firm Sales This Week
MoI ~ 2.05
Average Days on Market ~ 21.75DoM
Have a terrific Tuesday, and I’ll see you next week 🙂
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That’s all for today; thanks so much for your energy and attention. If you want some clarity on the market and your specific situation, please DM, comment below or email Ara@thespringteam.ca.
