BCREA- Mortgage Rate Forecast


• Bond yields on a rollercoaster ride but mortgage rates remain flat

. • Is the Canadian economy slowing?

• When will the Bank of Canada reverse course?

Mortgage Rate Outlook

Volatility continued in the Canadian mortgage market over the third quarter. Financial markets are currently digesting a complex economic environment as still high, though perhaps peaking, inflation collides with anxiety over a potential recession. That anxiety has expressed itself as volatility across Canadian bond markets with yields on Canadian government debt plunging before rapidly recovering in the second half of August. However, the Canadian yield curve has inverted as the level of long-term interest rates is now lower than short-term rates, a situation that in the past has heralded at least a slowdown in the Canadian economy, if not outright recession.

Five-year bond yields briefly declined through July, only to once again recover their previous 2022 highs as still rising core inflation prompted a reversal in expectations for monetary policy. Those expectations were solidified when the Bank of Canada raised rates by 75 basis points at its September meeting, signalling further rate increases to come. Despite the volatility in government bond yields, five-year fixed mortgage rates have remained relatively placid. We anticipate that five-year fixed mortgage rates will hover around 5.3 per cent for the remainder of the year, with the possibility of falling should recession fears amplify next year. Canadian variable rates are expected to increase to 5.55 per cent in the fourth quarter as the Bank of Canada continues its tightening cycle. However, we do anticipate some monetary easing by the end of 2023 as the Bank of Canada adjusts to a slowing economy.

Economic Outlook

Growth in the second quarter of 2022 registered 3.3 per cent at an annualized rate from the prior quarter, with real GDP rising for the fourth consecutive month. GDP growth in the second quarter, though still strong, is showing signs of slowing. Growth was lower than the Bank of Canada’s expectations and likely contracted slightly in July. The Canadian unemployment rate has ticked higher in recent months as job growth in Canada turned negative.

The Canadian labour market has shed about 115,000 jobs over the past three months, a potential sign the economy is slowing. That slowdown will likely continue, particularly in interest rate-sensitive sectors like housing, as the Bank forges ahead with its tightening cycle. Still, the Canadian economy is set to grow about 3 per cent in 2022. The bulk of the projected slowdown is likely to appear in early- to mid-2023 as higher interest rates constrain broad economic activity. By then, we should see at least some relief on inflation as the impact of high gas prices fades, supply chains are finally healed and higher interest rates reduce excess demand. That said, inflation has proved to be quite persistent over the past year and shows signs of more broad-based price pressure.

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Provided by: BCREA


Just Listed: 200 9330 University Cr., Burnaby, Burnaby North, SFU

Lush Forest Outlook

One UniverCity Crescent

3 Bed, 2 Bath 1290sqft

Priced at $778,800

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Lush forest and mountain top views, bright, spacious & in impeccable condition! This is the home you have been searching for. Welcome to this true 3 bed, 2 bath, 1290sqft luxury home, in prestigious One University Cr., located in UniverCity, Vancouver's premier lifestyle neighborhood. Features: freshly painted, East/West exposure, 2 large covered balconies, engineered floors, 9’ ceilings, open kitchen w/SS apps, quartz counters & breakfast bar & a cozy fireplace. The large master has his/her walk-through closets, 5pc ensuite w/soaker & separate shower. Parking, locker & well-appointed complex amenities w/gym. Close to: transit, shopping, indoor/outdoor rec. & a host of perks available only to UniverCity residents. Act Now! Call for your private showing.


Just Listed: 26 15030 58th Ave., Surrey, Sullivan Station

Bright & Thoughtful Layout

4 Bed, 2 bath, 1552sqft

Priced at $748,800

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Excellent Layout

2 Bed, 2 Bath, 989sqft

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Just Listed: 501 5288 Melbourne St., Vancouver East, Collingwood VE

Spacious 1 Bed Home

Excellent Condition

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BC Housing Market Showing Signs of Stabilizing Despite Decreased  Activity

The British Columbia Real Estate Association (BCREA) reports that a total of 5,645 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in August 2022, a decrease of 40.8 per cent from August 2021. The average MLS® residential price in BC was $918,378, a 2.1 per cent increase from $899,428 recorded in August 2021. Total sales dollar volume was $5.2 billion, a 39.6 per cent decline from the same time last year.

“Housing activity across the province remains well below normal but is showing signs of stabilizing,” said BCREA Chief Economist Brendon Ogmundson. “While inventory is up over last year, active listings have somewhat stalled at relatively low levels in most major markets and as a result we are seeing a healthier balance compared to last year.”

Year-to-date, BC residential sales dollar volume was down 22.1 per cent from the same period in 2021 to $63.8 billion. Residential unit sales were down 30.5 per cent to 62,502 units, while the average MLS® residential price was up 12 per cent to $1.02 million.

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Provided by: BCREA


BCREA 2022 Third Quarter Housing Forecast Update: High Mortgage Rates Will Weigh on Housing Activity Through 2023

Third Quarter – September 2022

The dramatic rise in Canadian mortgage rates has prompted an equally dramatic shift in the BC housing market. While the year started with home sales on pace to exceed 100,000 unit sales for a second consecutive year, aggressive monetary tightening in response to the highest inflation in decades quickly sent demand to the sidelines as five-year mortgage rates more than doubled. Compounding the impact of rising mortgage rates, mortgage stress test requirements mean many potential buyers have to qualify at more than 7 per cent.

There are some signs, however, that fixed mortgage rates have now peaked. Expectations for the Bank of Canada to raise its overnight rate to above 3 per cent have been priced into mortgage rates since the early spring. But, with the Bank of Canada firm in its intent to lower inflation, both fixed and variable mortgage rates are expected to stay elevated over the next year. As a result, home sales will finish 2022 much weaker than last year’s record-breaking totals and that weakness will likely carry into 2023. We anticipate that provincial home sales will end 2022 down 35 per cent to 81,900 units and fall a further 5 per cent to 77,790 units next year.

With sales far below normal levels, inventory has been accumulating, though from record-low levels at the start of the year. Weak sales and an increase in inventory mean that some market segments, largely more expensive markets, have tipped into buyers’ market territory. Consequently, average MLS® home prices have come down from peak levels, somewhat due to major shifts in the composition of sales toward less expensive homes, but also largely as a result of significantly depressed sales activity. We anticipate that, owing to a steep increase at the start of the year, home prices averaged across all of 2022 will still end the year up 4.4 per cent but average price levels will be slightly lower in 2023.

While the housing market is currently feeling the weight of higher interest rates, the downturn is unlikely to be long-lived as BC’s strong population growth combined with extremely favourable demographics means there will be no shortage of demand for housing in the province.

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Provided by: BCREA


Metro Vancouver’s housing market sees fewer home buyers and  sellers in August

Metro Vancouver’s* housing market is experiencing a quieter summer season marked by reduced sale and listing activity.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,870 in August 2022, a 40.7 per cent decrease from the 3,152 sales recorded in August 2021, and a 0.9 per cent decrease from the 1,887 homes sold in July 2022.

Last month’s sales were 29.2 per cent below the 10-year August sales average.

“With inflationary pressure and interest rates on the rise, home buyer and seller activity shifted below our long-term seasonal averages this summer,” Andrew Lis, REBGV’s director, economics and data analytics said. “This shift in market conditions caused prices to edge down over the past four months.”

There were 3,328 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in August 2022. This represents a 17.5 per cent decrease compared to the 4,032 homes listed in August 2021 and a 16 per cent decrease compared to July 2022 when 3,960 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 9,662, a 7.3 per cent increase compared to August 2021 (9,005) and a 6.1 per cent decrease compared to July 2022 (10,288).

“Home buyers and sellers are taking more time to assess what this changing landscape means for their housing needs,” Lis said. “Preparation is critical in today’s market. Work with your Realtor to assess what today’s home prices, financing options, and other considerations mean for you.”

For all property types, the sales-to-active listings ratio for August 2022 is 19.4 per cent. By property type, the ratio is 12.2 per cent for detached homes, 25.3 per cent for townhomes, and 24.8 per cent for apartments.

Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,180,500. This represents a 7.4 per cent increase over August 2021 and a 2.2 per cent decrease compared to July 2022. Sales of detached homes in August 2022 reached 517, a 45.3 per cent decrease from the 945 detached sales recorded in August 2021.

The benchmark price for a detached home is $1,954,100. This represents a 7.9 per cent increase from August 2021 and a 2.3 per cent decrease compared to July 2022.

Sales of apartment homes reached 998 in August 2022, a 38.8 per cent decrease compared to the 1,631 sales in August 2021. The benchmark price of an apartment home is $740,100. This represents an 8.7 per cent increase from August 2021 and a two per cent decrease compared to July 2022.

Attached home sales in August 2022 totalled 355, a 38.4 per cent decrease compared to the 576 sales in August 2021. The benchmark price of an attached home is $1,069,100. This represents a 12.7 per cent increase from August 2021 and a 2.5 per cent decrease compared to July 2022.

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Provided by: REBGV

Reciprocity Logo The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.