For the first time in recent history, the bank of Canada is slowing our economy. What does that mean in real life? Interest rates are going up in order to try and control inflation. “We are resolute in our commitment to restore price stability for Canadians and will continue to take action as required to achieve the 2% inflation target.” quoting from the Bank of Canada Press release October 26, 2022. The Bank’s endeavour is to have inflation at 2% versus the inflation rate of 6.9% on October 26, 2022, and 8% earlier in the year.
What does this mean if you live in Whitehorse? Whitehorse real estate prices will continue to decline. I used to tell buyers, “The sooner you buy a home, the cheaper it will be, because house prices are going up aggressively. Now I tell sellers, the longer you wait, the less your home will be worth because the Bank of Canada has announced a rate increase on December 7, 2022 and January 25, 2023. This will drive home prices even lower in Whitehorse.
Average price of a house
- 2020 $555,361
- 2021 $672,699
- 2022 $705,955 January – June 1st.
- 2022 $617,156 Sept 1 – Oct 31
The average price of a detached house in Whitehorse, Yukon 2021 was $672,699 vs 2020 $555,361. This represented a 21.1% increase in the cost of a house or $117,337.
Home prices decline by 12.5%
Year to date in 2022 the average price of a detached house has gone down 3.7% but that does not tell the whole story.
Deep Dive in 12.5% decline in Whitehorse house prices.
The chart below from Trading Economics.com shows the interest rate increases in 2022.
The market takes some time to respond to rate increases because smart home buyers receive a pre-approval from their bank. Most lenders will hold an interest rate for a qualified buyer for 120 days. This means that homes sold in August were purchased with an interest rate from May, June, July. Even though rates had gone up, buyers still had the buying power of 3 or 4 months earlier. The fear of losing a lower rate spurred some buyers to buy a home before they lost their rate hold.
The real slowdown occurred in September and October of 2022. The average price of a home in September and October was $617,156 representing a 12.5% decrease in the average sale price compared to the historic record-breaking average sale price from January, 1 2022 to June 1, 2022 of $705,955 or an $88,799 decrease.
Call me, Scott Sauer Remax Whitehorse 867.333.1095 cell. I have sold through 2 economic slowdowns and have the experience and market insight to help you achieve your Whitehorse real estate goals.