As we head into the final stretch of 2023, the big story in real estate was the Bank of Canada’s decision to hold its key lending rate at 5%. While they have not ruled out future increases, I’m hopeful that two consecutive announcements without a bump is a strong signal to buyers and sellers that we’ve reached the peak. 

There’s no doubt that this ongoing uncertainty surrounding the lending environment has affected real estate activity. The Toronto Regional Real Estate Board released their sales data today, and the roughly 4650 sales for the month are low for October. 

That said, interest in real estate remains. At our office, we’re seeing an average of 85 showings per day during the week and 110 on weekends. At one of our west-end listings this month, we had over 160 guests attend an open house, with an additional 47 showings booked by sales reps. Ultimately, this semi received a dozen offers and sold for 39% over the asking price. Another member of our team had two challenging listings and was debating taking them off market until the New Year. After deciding to stay the course, and following some challenging negotiations, both listings resulted in successful sales.

So, yes, 4650 sales this month is low, but it’s important to remember sales are still happening.

The other financial matter of interest to many people relates to recent articles stating that approximately 60% of mortgages at Canadian chartered banks are set to renew between now and 2026. This is concerning because these homeowners will be adjusting to a vastly different lending environment than the one in which they’ve grown accustomed. Today’s 5-year fixed mortgage is roughly 6.25%. This was not the case five years ago.

Regardless, don’t bet on a fire sale. Firstly, Canada’s unemployment rate remains below pre-pandemic levels. Secondly, all borrowers have passed the ‘stress test’ and qualified for higher rates than they’re currently borrowing at. Thirdly, and most importantly, the banks are all exploring avenues to mitigate the impacts of any payment shock. This may include renegotiating mortgage terms from variable to fixed rates or extending the amortization periods to reduce the size of monthly payments. The last thing anyone wants is for people to lose homes. This will be top of mind for policy makers and industry leaders as they help homeowners navigate a changed lending environment. 

I would encourage anyone reading this to reach out to me at (416) 723-2383, or to contact a member of the Harvey Kalles sales team. We have been in business since 1957 and can offer clarity around changing housing markets.