How Canada’s Interest Rate Will Impact Edmonton's Real Estate Market
Steady interest rates have implications for Edmonton's home market. Discover how rates can affect buyers and sellers in Alberta’s capital city.
The Bank of Canada has recently made the announcement that its key interest rate is expected to hold at 5%. This decision has significant implications for Edmonton's real estate market, including potential consequences for both buyers and sellers. In this article, we’ll delve into the effects of this development on the local home market with a comprehensive analysis.
Related Read: How to Find a Real Estate Agent in Edmonton
Steady Interest Rates and Home Buyers
With the prime rate remaining unchanged at 7.2%, borrowers and those looking to renew their mortgages are unlikely to face additional shocks. Nevertheless, the days of historically low interest rates are behind us, and new homebuyers will need to adjust to this new reality. Some experts have suggested that rate drops are not expected until the following spring, and it may take until 2025 or even 2026 before the Bank of Canada policy rate falls below 4%.
This adjustment in interest rates poses challenges for potential buyers in Edmonton, particularly in the short term. Many first-time buyers may continue to delay their purchase, hoping for a decline in rates. However, with rates having already increased significantly since early 2022, this strategy may not be sustainable. It’s important for buyers to reconsider their expectations regarding affordability and the type of property they can access in the current market.
Related Read: Understanding the Mortgage Process in Edmonton
Impact on Sellers
Sellers in the Edmonton market may also face implications due to the steady interest rate environment. The higher rates have the potential to discourage potential buyers, even if sellers possess better purchasing power from the proceeds of their home sale. However, there is some positive news for sellers. The current increase in housing supply can potentially ease the challenges of finding a new home. With a larger pool of listings, sellers who plan to purchase another property immediately after selling will have more options available to them.
Outlook for 2024
While it is impossible to predict with absolute certainty what lies ahead for Edmonton's real estate market in 2024, experts provide some insights based on ongoing trends. While there may not be significant changes on the sales side in the coming year, an above-average rate of new listings could bring about a more balanced market. This balance would offer potential home buyers the opportunity to choose from a wider range of available inventory, which could potentially be the highest in recent years.
Furthermore, as this year draws to a close, the Bank of Canada is closely monitoring the mortgage renewal cycle. As more households renew their mortgages at higher rates, this puts downward pressure on spending, with potential ramifications for the overall economy.