Photo: Castanet Staff
The Bank of Canada raised its key lending rate to 0.5 per cent on Wednesday in a bid to help fight inflation. Some banks followed suit, raising their prime rates, which will impact homeowners with variable rate mortgages and new buyers.
But what will be the impact on the real estate market in the Thompson Okanagan?
Probably negligible, according to Association of Interior Realtors president Kim Heizmann.
“The Bank of Canada increasing interest rates may have an impact on housing demand, but likely not drastically,” said Heizmann.
“We are in dire need of new inventory to resolve the demand and supply imbalance that has been persisting for months. If we don’t see a sharp increase in supply or drastic decrease in demand in the incoming busy spring months, I cannot see this situation improving, unless the government takes some proactive steps to improve supply and affordability.”
The BC government is introducing legislation to require cooling off periods for resale properties and newly built homes, similar to rules that already exist for pre-construction condominium sales.
Heizmann doesn’t see that being the answer.
“The cooling off period will have an impact, just not the one that’s intended. A cooling off period could incentivize frivolous offers, create uncertainty for the seller, and ultimately tie-up properties doing little to improve affordability in BC’s uniquely challenging housing market,” she argues.
Instead, she says a better option would be the implementation of a five-day pre-sale period, that stipulates no offer can be made on a property until five days after it has been posted. “This would ensure that potential buyers could do their due diligence, arrange a home inspection, view the property, review critical documents, etc. Without encouraging frivolous offers and creating uncertainty for the seller. “
The question many are asking is how to bring the market back to balance?
Active listings are at an all-time low in the interior and the benchmark price for a single-family home in the Central Okanagan is over $1 million.
“Given that the price of a home is primarily driven by supply and demand, government interventions that only target the transaction process, such as a “cooling off period”, will never be enough to restore consumer confidence in housing markets,” explains Heizmann.
She says supply-side measures are what is needed, including recommendations from the Development Approvals Process Review and The Expert Panel on Housing Supply and Affordability.
The Association of Interior Realtors would also like to see the establishing a permanent national housing roundtable, and suggests governments make infrastructure investments to local governments conditional on community plans that increase density and mixed housing types. That should also help address the housing affordability crunch in the Interior and across most of the province.
