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(April 13, 2024)

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It’s that time of the year again – the real estate spring/summer market is upon us!

Is your market hot?

The answer to this question will vary across cities in Canada, and there will be further variance within the cities spanning their regions and communities. It is crucial to align yourself with an experienced realtor who specializes in your area. Market conditions have been deceiving and complex in the past few years, and many broad-based real estate economists have found themselves revising their predictions. Stay agile and well-informed by relying on a reliable source of intel. If you require a reference in your area, feel free to reach out, and I will likely have an established contact in your neighbourhood whom I can introduce you to. Meanwhile, here are some statistics on the markets I primarily deal with: Vancouver and Calgary.

VANCOUVER Real Estate Market: (as of March 2024)

The average price of a home in the GVA (Greater Vancouver area) stood at $1,318,687, marking a 4.1% increase annually (close to the benchmark of $1,196,800). The current benchmark price is 29% higher than in 2020 but 5.2% lower than the all-time high of $1,262,600. Essentially, Vancouver is nearing an all-time high, despite its sluggish market conditions and persistently high borrowing costs. The ongoing scarcity of supply and steady population growth will likely maintain prices at or near current levels. Unlike Calgary, Vancouver doesn’t develop new communities; instead, it repurposes older properties into luxurious $2.3M starter homes (yes, I’m serious!). Vancouver’s approach to affordability lacks some crucial variables. Although a new province-wide blanket zoning policy is set to take effect in the next couple of years, substantial market corrections shouldn’t be expected. While supply will inevitably increase, it won’t do so to an extent that significantly affects affordability. Therefore, success in Vancouver’s market hinges on staying adaptable and aligning yourself with industry experts who can provide high-quality information (such as real estate agents and mortgage brokers).

Other notable points about BC:

The province imposes a Property Transfer Tax (PTT), which is due upon completion of a real estate purchase. As of April 1, 2024, the ceiling exemption for first-time homebuyers has been raised to above $500,000. This means that first-time homebuyers can now qualify for a partial PTT exemption on homes valued up to $835,000, with a maximum rebate of $8,000. Previously, the exemption ceiling was $525,000. You can download my award-winning Mortgage Mobile App and utilize the Property Transfer Tax calculator to determine how much PTT you would pay on your property purchase in your area.

If you are a temporary resident or work permit holder, be mindful of the 20% Foreign Buyer Tax and the Prohibition on the Purchase of Residential Property by Non-Canadians Act. Click Here to be redirected to a previous blog post for more information on these two regulations.

CALGARY Real Estate Market: (as of March 2024)

Calgary seems to be on everyone’s radar these days, with Ontarians and British Columbians notably considering the move to Canada’s crown jewel of affordability. Sales in Calgary have surged by 9.5% since last year, and the benchmark price has risen by 10.9% to $597,000 for an average-priced home. Even if you’re experiencing FOMO (fear of missing out), there’s still ample affordable upside from $597,000. If you think you’ve missed out after hearing about many people moving to Calgary, think again (especially if you’re from Ontario or BC, where the move to Calgary offers significant relief in terms of price points)! For roughly $700,000, you can choose between a two-bedroom condo in Vancouver or a 3-bedroom home with an attached double garage and a large yard in Calgary (you can likely purchase the latter for less). What’s not to love about Calgary? It boasts the youngest working demographic in Canada, the sunniest days of any city in Canada, and the unique chinook phenomenon, an anti-winter event. Calgary is continuously expanding and seemingly always constructing new communities en masse. It’s a well-designed city, scalable for increasing population and development (such as the ring road).

Notably, the province of Alberta does not impose a Property Transfer Tax, resulting in significant savings when purchasing a home.

Additionally, the Foreign Buyer Tax doesn’t apply in Alberta. However, the Prohibition on the Purchase of Residential Property by Non-Canadians Act, a federally legislated policy, does apply.

Interest Rates Overview:

Currently, variable-rate mortgages are priced as high as 1.5% higher than fixed rates, and this spread isn’t expected to narrow until June or July. I don’t subscribe to the “higher-for-longer” argument; I believe the Prime rate will begin its descent in June and continue throughout the year. If I were the Bank of Canada, I would also withhold any indication of rate reductions until the actual announcement day. Since the rate hike commenced during COVID, consumer sentiment has been heavily influenced by post-announcement messaging from the Bank of Canada Governor rather than the scheduled announcement itself. The post-announcement press conference holds significant weight as it shapes and influences Canadians’ behavior leading up to the next scheduled announcement. Therefore, expect the hawkish messaging to persist, with the Bank of Canada avoiding overly optimistic post-announcement conferences (hinting at lower rates ahead) for fear of reversing any progress made in preceding months with inflation. The most recent announcement on April 10 has served its purpose; the Bank of Canada has left the overnight rate unchanged, avoiding any unwanted momentum in the spring housing market. However, Governor Macklem hinted at future adjustments, leading many economists and policymakers to anticipate a 0.25% rate cut in June. Not long ago, homebuyers favored variable-rate mortgages due to their qualification advantages; however, today, the opposite holds true. The default qualification method is now fixed-rate mortgages, as they offer higher qualification amounts. Variable rates currently range from 6.20% to 6.40%, while fixed rates can be as low as 4.89%. The end game with interest rates? I believe fixed rates are establishing a new standard as they hover in the high 4’s. Fixed rates are likely to stabilize in this range for the foreseeable future until the spread with variable rates diminishes more significantly. However, due to the intricate nature of interest rate pricing, you can still expect to find numerous rates in the low to mid 5’s. To qualify for special discounted rates, your mortgage typically needs to be large (over $500k), insured (less than a 20% down payment), or within 45 days of closing/completion.

Want to discuss further? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

Download my amazing Mortgage App…it’s loaded with calculators and tonnes of useful information!

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