Where Is The Housing Market Going In 2023
April 4, 2023 | Posted by: Dino Pupulin
Where is the housing market going in 2023?
With 2023 underway, and the latest Bank of Canada rate increase to 4.5%, combined with the stress of the increased cost of living on Canadian households, the questions that are on everyone’s minds are… where will rates go from here, and what does this mean for the housing market? While no one has a crystal ball, the good news is that most economic forecasts are projecting this to be the last rate hike for some time and that the predicted recession later this year will be a relatively quick one – expected to end in 2024. Although the latest rate increase in January wasn’t welcome news, this projection does mean some positive things as we go through 2023. First of all, if you plan on selling or buying a home, this forecast may suggest some stability in the housing market. This means it’ll be easier to price and negotiate if you’re selling, and if you’re buying, it’ll mean that you can shop the market with confidence that you’re purchasing at what is most likely as close to the dip in the market as economists are forecasting. It is important to call me to get a pre-approval prior to making any offers, as any rate increases may affect your buying power.
If you are planning on sitting tight in your current home, 2023 really is about finding ways to adjust for a lot of Canadian families. If we assume the forecasts are correct, we now know what we’ll have as a budget for the next 12 months. The relative short timeframe of the predicted recession means that no matter your situation, there is probably a short-term solution we can work towards to help with cashflow over the next year.
If you’re looking at making a move once the recession is over, which is expected to be in early 2024, it’s important we touch base to review your options. It is widely expected that The Bank of Canada will lower overnight rates to spur the general economy post-recession, and this will have a tangible effect on the real estate market due to pent-up demand, which will be exacerbated by an undersupply of housing stock. As a result, you’ll want to make sure you’ve got everything you need in place and know exactly what you will be able to buy. No matter what camp you fall into over this year and next, it’s important to be prepared prior to making any decisions. Give me a call, and we can put together a plan that’s most advantageous for your individual situation.
Did you know?The deadline to contribute to your RRSP this year is March 1. Your home may be the perfect tool to pay yourself first and grow your net worth. Here are three quick tips that can help make that happen, even in a more challenging economic climate.
- Many homeowners feel caught between competing financial priorities – paying down their mortgage and keeping up with monthly bills often means retirement savings take a back seat. With the right plan in place, it may be possible to simplify your debt, reduce interest costs, and save for retirement. If there is enough equity in your home, you can borrow to invest in your RRSP if you have the contribution room.
- Consolidate your high-interest debt such as credit cards, car loans and other consumer obligations and roll it into a mortgage, which, despite the current rate environment, is still one of the lowest-cost fund options available. Very often, this strategy can have a positive effect on monthly cashflow, and reducing the number of payments you have to manage each month makes life simpler – who doesn't love that?
- If you’re considering skipping an RRSP contribution this year, ensure you check with a tax professional first. In some situations, the contribution might ‘pay for itself’ by offsetting a good portion of the amount of tax you might owe. Don’t leave money on the table!
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