Breaking through a significant barrier, the Government of Canada’s 5-year bond yield soared above 4% on Friday, a threshold that often influences 5-year fixed mortgage rates. This level is viewed as a key resistance point for interest rates.

Many economists believe that if the 5-year yield remains above 4%, we can expect fixed-rate mortgage hikes to be on the horizon well into the fourth quarter of 2023. The situation is intriguing, and we await whether this rise is an anomaly or that it will retreat back into the 4’s or will continue upward.

Last week, major banks such as CIBC, RBC, TD, and Scotiabank reacted to the market shift by increasing their fixed rates.

Meanwhile, the baby boomer generation, accustomed to their core values of stable, long-term, and low fixed rates, observes these fluctuations with interest. For first-time homebuyers, the non-stop challenge is to find affordable options in cities that fit their budget. However, there is a silver lining, small towns and medium-sized cities once non-options are experiencing growth, offering a welcome change from the fast-paced economies of larger urban centers. The ever evolving work landscape allows for more flexibility, with people embracing remote work, multiple careers, or digital nomadism enabled by Elon Musk’s ever-expanding Starlink satellite network.

In the realm of financing, the key is to establish a consistent and legitimate paper trail within the same field, ideally professionally, for a period of three to five years. Proper documentation is essential, and if one can align their passion with their work, the location becomes a matter of choice.

Interestingly, Zoocasa recently published an article titled ‘What Canadians Earning the Median Income Can Afford,’ shedding light on some surprising locations where the Canadian dollar stretches further, such as Saint John, Edmonton, and Quebec City, in addition to the expected high-cost areas like southern Ontario and the coast of B.C.

Ultimately, real estate and its location are about personal choices and the company one keeps. A luxurious $3,000,000 penthouse can turn into a mess while a remote boreal split-level can become the most comfortable place on earth, depending on how one chooses to make it their own.

A Closer Look: Ottawa

As we prepare to embark on another work week for the thirty-second time this year, let’s take a closer look at the unique Ottawa real estate market, which stands out as one of the most diverse in Canada. The city and its surrounding areas offer an array of living options, ranging from family-friendly townhome developments and luxury urban condos to serene riverfront properties and cozy rural communities.

As the nation’s capital, Ottawa hosts numerous embassies and their international staff, making it a melting pot of cultures. Bordering the province of Quebec, Ottawa experiences its own set of market trends and distinct tax implications. Despite being one of Canada’s largest cities, Ottawa boasts a relatively low population density when compared to metropolises like Toronto or Vancouver.

In July, the average sale price for new homes in Ottawa saw a significant increase of $37,834 compared to the previous year, marking the first year-over-year rise in home prices in the capital in 10 months.

According to recent statistics from the Ottawa Real Estate Board, the average sale price for freehold-class properties in July reached $754,188, representing a 5% increase from July 2022. Additionally, sale prices for new homes rose by 1% since June, where the average sale price was $746,445.

With the steady addition of new listings to the housing market, inventory continues to grow, providing homebuyers with a wider range of choices. While August may bring a slight slowdown, it’s essential for buyers not to lose momentum in their search for the perfect property.

Despite two recent quarter per cent interest rate hikes by the Bank of Canada, both transactions and average prices are up from the same period last year, indicating a strong sense of confidence among consumers in the real estate market.

In July, the Ottawa Real Estate Board recorded 2,234 new listings for homes and condos, which is 6% lower than the previous year. Furthermore, the months of inventory for freehold-class properties have decreased slightly from 2.8 months to 2.7 months.

I’m always interested in new clients and talking about real estate in general. You can email me at Matt.Monks@migroup.ca or at 519.279.1302.

Have a great week!