The Bank of Canada cut interest rates by 25 basis points on June 5. However, this was not enough to kick up Fraser Valley real estate sales last month. The overnight lending rate is now at 4.5% compared to 5% this time last year. There still seems to be a need for further rate cuts before Buyers are ready to jump back into the market.
Rates are expected to continue to fall over the next year. There are three more meetings in 2024.
What’s Next for Fraser Valley Real Estate?
The market has priced in a 95% chance of another rate cut this week, which I think are correct odds. Additionally, there are two more cuts currently expected. One in September, one in December, with a hold in October. I think we will get cuts at each meeting. By the fall, we may hear calls for a 50 basis point or 0.5% cut at the December meeting.
Perhaps, this is the reason why we have not seen the Buyer urgency in Fraser Valley real estate that was expected with the past two 25 basis point rate cuts. People know, there is an expectation for further cuts over the next year or so. Taking all of this into consideration, my advice would be that if you are an active Buyer in the marketplace and find a home you want to purchase; purchase it with a variable rate, or a 1-2 year fixed rate. For every 25 basis point drop we see, it amounts to only $15/month less for every $100,000 you borrow.
Additionally, active listings continued to rise over the month of July for all property types in the Fraser Valley real estate market. With sales decreasing and inventory increasing, we should continue to remain in a balanced-buyers market across the Fraser Valley. We can expect sale prices to plateau, or, fall. How long this trend will continue, will largely depend on the Bank of Canada’s decision to cut interest rates.
Below, I have outlined the benchmark sale prices for all asset types:
