Spring is the main event for Canada’s real estate market. March through June make up just one-third of the year but those months account for a disproportionate 42% of annual sales.
Using CREA data for the last 10 years, we can plot home sales by month.
Canada’s economic engine ultimately determines the mortgage rates we pay. And these days, that engine is running at a lower RPM than in the past.
“Canada’s economy is in a new age,” says Desjardins Economics. In a report released last week it states that economic growth potential “will remain between 1.5% and 2.0% from now until 2030.”
If this call is even remotely true (remote being the most we can expect from an economic forecast), then we’ll have gone from a 3.3% real average growth rate since the 1960s to as low as 1.5% for the next 15+ years. A healthy growth rate is closer to 2.5%.
Is it any wonder then that Desjardins concludes: “…interest rate equilibrium levels will be lower than in the past?” At these stunted growth levels, even risk-haters may start considering variable mortgage rates.
Each year about 300,000 Canadians buy their very first home — at least, that’s how many did in the years 2009-2013 (source: Altus Group via The Globe and Mail).
Typical first-timers have been purchasing homes that are roughly 11.6% cheaper than the national average. That implies up to a $355,000 price tag for today’s typical first-time purchase, much higher than previous reports have estimated.