08.8.22 | Milton

What The Latest Interest Rate Hike Might Mean For Milton Real Estate

Another interest rate hike? The real estate market has already experienced a slowdown in Milton after the series of increases earlier in the year. Then, in mid-July, the Bank of Canada announced the news of the next rate, the biggest jump since 1998. The increase itself is not shocking. What is surprising is the size of the jump, a full percentage point that brings the rate up to 2.5%. This is the highest the interest rate has been for years. What will it mean for the Milton real estate market?

We’ve Already Seen A Shift

Back in the winter of 2022, Milton’s housing market was on fire, and it was easy to think that the soaring prices would never end. To put things in perspective, consider that a house purchased in December 2018 cost an average of $590,625. 

Three short years later, the same house would have sold in 2021 for $997,976, nearly double the value. In February, the price topped out at $1,142,001. This record-breaking price was great news if you were a seller. But the situation became increasingly difficult for buyers, especially those just entering the market. Something had to change.

In March, the Bank of Canada announced the first interest rate increase. And as interest rates went up, housing values finally started to come down. In March, the price fell slightly to $1,093,500 and has decreased every month since. 

The last stats are for June, which show that the average price for a Milton home now stands at $895,112. These prices are still high and out of reach for many first-time buyers. However, we are now in a situation that many believed we’d never see again. 

Can investments make homeownership more affordable? These other posts may provide some food for thought:

We Have Arrived At A True Balanced Market

You may have noticed a few more “For Sale” signs while walking or driving around your neighbourhood. That’s because more listings are available during a balanced market, and buyers and sellers are more or less evenly matched. Housing prices stabilize, and properties stay on the market longer. The days of multiple offers and frantic bidding wars are behind us, at least for now. Buyers can now submit conditional offers to protect themselves from buying a flawed property.

Did Sellers Miss The Boat?

When you look at the extra $200,000 you might have earned by selling a few months ago, you might feel like you missed the opportunity of a lifetime. But in many ways, you’re much better off selling now, during a balanced market. It’s true that you probably won’t sell your home as quickly or for as much money as you would have earlier. But falling prices mean your new home will also cost less. Plus, you’ll have more options to choose from, and may even have a little negotiating power.

And if you bought in 2018, your house has still nearly doubled in value, remember? No other investment would earn you such a high return after only three years. 

Selling successfully in the current market will require a little more effort. You’ll want to showcase your house in the best possible light by cleaning thoroughly and making minor updates and repairs. A local real estate agent can help you decide what upgrades to make depending on what buyers are looking for in your area. 

Regardless of the market, Milton will always be a very desirable place to live. Here are just a few reasons why:

A Surprise Buyers Probably Didn’t Expect

Those who hold variable mortgages can expect some changes. Your monthly payment may increase to keep the amortization period the same. Alternatively, your installment could stay the same, but with more going to interest and less paying down the principal of the loan. 

Now here’s something that might surprise those holding fixed-rate mortgages: Your rate could actually go down even as the target rate increases. How? 

Nothing in the real estate market happens in isolation. It’s all connected to the economy as a whole. As fears of an economic downturn have grown, the price of bond yields has dropped 30 basis points since July 22nd. 

Slower economic growth helps to lower inflation, which in turn results in lower mortgage rates. Some lenders have already reduced their five-year rates. If bond yield values drop again, fixed rates could also decrease even more.

Whether you have a fixed rate or variable, now may be an excellent time to discuss your options with a mortgage expert.

Buying In A Balanced Market

A balanced market is a relief to most buyers. More inventory available means you don’t have to settle for something less than ideal, and you don’t have to get caught up in expensive bidding wars. Housing values remain high, but deals can sometimes be found in certain neighbourhoods and situations where the homeowner is motivated to sell quickly.

Your best bet, whether buying or selling, is to work with a real estate agent who knows the area and has experience working in different types of markets.

Did you know that we offer a free 30-minute phone consultation for buyers and sellers? If you have questions about how to succeed in this changing market, reach out to us right here.