Five Factors That Could Affect Home Prices In 2017

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And we are back for the first blog of 2017 – we hope you’ve had an excellent New Year’s weekend and are looking forward to some interesting real estate investment projects. This weeks’ blog will discuss factors that could affect real estate prices in 2017, which could possibly help you invest at a lower price.

1) Interest rates: US Federal Reserve

In general, US and Canadian central banks set their interest rates independently. However, the rate set by the US Federal Reserve Chair has a huge impact on Canadian mortgage rates, giving American banks slightly more control over the real estate market.

When Janet Yellen, the Reserve Chair, increased rates by a quarter of a percentage point in December, she implied that there would be more rate rises in 2017. Sadly, Canadian homebuyers should expect mortgage increases this year though market analysts don’t think she will be moving so fast with her decisions.

2) The Canadian Economy

Nobody really knows what will happen with our economy this year. Things such as the political climate in the US, oil and gas prices and currency strength are all going to play a part in our economy’s growth.

But, if Canadians feel good about real estate prices, a small rise in mortgage interest rates won’t stop them from looking into family homes. However, as mentioned in the paragraph above, there could be a reduction in domestic buyers if the economy doesn’t do well.

3) Foreign buyers

These two words have made more noise than we expected this year, especially in the Vancouver area. Foreign buyers, especially from Asia, have been tirelessly trying to invest in Canadian real estate in 2016 and will not stop, despite the 15% tax our government wants to impose on them. The Chinese investors haven’t only been the wealthy, but also the middle class spending their money in Canada because of their failing currency. Their government is trying to reduce the spending abroad.

4) Construction

The government’s CMHC will make sure construction and home purchases stay in balance this year. The real estate market is slowly becoming more about condos and flats in high-rise buildings than suburban villas and buildings.

This shouldn’t be a worry because homes are always being built and bought.