As we look forward to the spring of 2024, there's good news on the horizon for the British Columbia housing market. After a period of slowing home-buying activity towards the end of 2023, it appears that the market is poised for a significant boost, thanks to anticipated changes in mortgage rates.
The Current Scenario
Towards the end of 2023, the real estate market experienced a notable slowdown. This was primarily influenced by higher mortgage rates and a general cooling down of demand and prices. According to the Canadian Real Estate Association (CREA), this resulted in a dip in home sales by 0.9% both month-over-month and year-over-year as of November 2023. With demand decreasing, many potential sellers decided to wait out the market, anticipating better conditions in the future.
The Silver Lining: Lower Mortgage Rates
However, as we step into 2024, the scenario is starting to look more favourable for both buyers and sellers. One of the most significant factors contributing to this positive outlook is the potential for lower mortgage rates. BMO Economist Robert Kavcic provides insight into this trend, noting that borrowing costs may have already peaked, given the end of the Bank of Canada’s tightening cycle.
In a promising development, several lenders, including Equitable Bank, THINK Financial, and MCAP, lowered their five-year insured fixed interest rates below 5% as early as mid-December 2023. This trend suggests that fixed mortgage rates will likely continue to decrease as 2024 progresses. Additionally, variable-rate mortgages are expected to follow suit with the anticipated drop in the policy rate.
Impact on the Spring Housing Market
What does this mean for the spring housing market in British Columbia? First and foremost, these lower mortgage rates are likely to reinvigorate the market. Potential buyers who were previously hesitant due to high borrowing costs might find this a more opportune time to invest in property. Similarly, sellers who were on the sidelines, waiting for a more favourable market, might find the spring of 2024 to be the right time to list their properties.
The combination of more affordable borrowing costs and a pent-up demand from the latter part of 2023 could lead to a bustling spring market. This would be a welcome change from the sluggish pace that characterized the end of the previous year and could signal a return to a more dynamic and robust real estate environment in British Columbia.
In summary, the anticipated lower mortgage rates in British Columbia are set to play a pivotal role in shaping the spring 2024 housing market. For potential homebuyers, this could be a golden opportunity to enter the market. For sellers, it could mean a return to more active and profitable transactions. The coming months will be crucial, and all eyes will be on how these predicted changes in mortgage rates will revitalize the housing market in British Columbia.