For the first time in four years, the Bank of Canada has made a significant move by lowering its interest rate by 0.25%, bringing it down to 4.75%. This decision makes Canada the first G7 nation to lower interest rates in the current economic environment. But why does this matter to you, especially if you’re considering buying or selling a home? Well, interest rates are a big deal when it comes to mortgage payments and qualifying for a mortgage. Lower rates generally mean lower monthly payments and a greater chance of getting that all-important mortgage approval.
So, what does this mean for the real estate market? It likely means an upcoming strong market this summer. With lower interest rates, more people are likely to enter the market, leading to increased activity and potentially higher home prices. This is particularly relevant for those of you in Prince Edward Island (PEI).
Let’s take a closer look at PEI’s real estate landscape. In 2023, the average price of a home on PEI was $381,423, which was actually down 1.4% from the previous year. However, things have started to look up in 2024. For the first half of this year, the average home price in PEI is $291,133, marking a 2.5% increase from 2023. If we look ahead, experts predict that by 2025, the average home price in PEI will rise to $401,920, up by another 2.8%.
When we compare these figures with the national averages, we see a slightly different picture. So far in 2024, home prices across Canada have risen by 4.9%, and they are expected to go up by 7% in 2025. Despite these larger national increases, PEI’s home prices tend to be more stable. . For buyers, market stability means less pressure to “time the market” perfectly, and for sellers, it ensures a more predictable and steady increase in home values.
Now, let’s talk about what this all means for you. If you were thinking about buying a home but were sitting on the sidelines, now might be the perfect time to jump in. With interest rates beginning to drop and inflation somewhat under control, we can expect a burst of activity in the housing market. This means more options and possibly better deals as sellers prepare to list their homes.
If you are a seller now is the time to think about getting your home ready to put on the market. Think about making those minor repairs you’ve been putting off, sprucing up your curb appeal, and generally making sure your property looks its best. A well-presented home can attract more buyers and potentially fetch a higher price.
And buyers, it’s time to get your financial ducks in a row. Start by securing a pre-approved mortgage. Sellers take offers that are backed by a pre-approved mortgage more seriously. Make sure you have your downpayment and closing costs saved up and avoid making any large credit purchases, like buying a new car, which could affect your credit score.
Purchasing a home is challenging and you should always have the assistance of a REALTOR®. Contact a Century21 REALTOR® to learn more about the current market trends and get expert advice tailored to your needs. Whether you’re buying or selling, a REALTOR® can help you prepare and make the most of this exciting time in the real estate market. Happy house hunting!
Canada’s Interest Rate Drop Signals a Hot Summer Real Estate Market
