The Saretsky Report April 2022

The Saretsky Report. April 2022

Steve Saretsky -

Last month I wrote about the early signs of the housing market beginning to turn. Fewer offers, less FOMO, etc. Again, none of this should have come as a surprise, we’ve had two years of record home sales and runaway price growth, and trees don’t grow to the sky. The housing market always has ups and downs and this time is no different. The downs are coming, even if that is just a slowdown. When I wrote last months report, the Canada 5 year bond was yielding 1.5%, and today it sits at just over 2.5%. In just one month, the most important metric in Canadian housing moved 100bps. In case you need a reminder, the Canada 5 year bond prices our 5 year fixed rate mortgage. When yields rise on the 5 year bond, so too do borrowing costs for fixed rate mortgages. In other words, over the past 4-5 weeks we’ve seen the typical 5 year mortgage go from about 2.8% to 4%. We haven’t seen 4% mortgages in nearly a decade.

I know the media likes to talk about foreign buyers, investors, taxes, and housing supply, but at the end of the day, the largest influence on the Vancouver housing market is the cost of borrowing. Let’s run some basic numbers here on borrowing costs.

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The Canadian Economy

Steve Saretsky -

As we expected and discussed in last months report, the Bank of Canada raised interest rates another 50bps in October. Markets were pricing in a 75bps rate hike but the Bank of Canada failed to deliver, citing growing concerns around financial stability. It’s the first time in awhile they have...

Steve Saretsky -

It was another slow month for the Greater Vancouver housing market in September. While housing activity was historically low, there is still much to talk about across the housing spectrum. The volatility across global financial markets has been extreme and that is no doubt having a major influence on our...

Steve Saretsky -

There’s always lots to talk about in the Vancouver housing market, especially these days. We have plenty of updates this month on interest rates, trigger rates, and the investor/ rental market. Housing activity remains on the same course it’s been on over the past few months. Greater Vancouver home sales...

Steve Saretsky -

Continuing on the theme from last month, housing activity continues to slow as expected when the Bank of Canada raised interest rates by 100bps last month and instantly reduced borrowers purchasing power. Remember, over 50% of new mortgage applicants this year have been going with variable rate mortgages, in large...

Steve Saretsky -

I’m a bit later than usual in writing this report and it’s probably for the best. As of this writing on July 13th, the Bank of Canada raised interest rates a monstrous 100bps, the single largest increase since 1998. This will have significant ramifications for the housing market, not just...

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The Saretsky Report. December 2022