The Rate You're Waiting For Could Bring Your Competition Back

A lot of buyers have a number in their head.

“When mortgage rates get to _, then I'll buy.”

I understand the logic.

A lower interest rate reduces the cost of borrowing, which should make a home more affordable.

But real estate doesn't happen in a vacuum.

The Bank of Canada recently published research examining what actually happens to housing when interest rates fall.

One of its findings is particularly important for buyers: housing demand can react faster than housing supply. Lower borrowing costs encourage more people to buy, while it takes much longer to create additional homes.

That matters because the mortgage rate you are waiting for may also be the rate that brings thousands of other buyers back into the market.

Right now, the lowest advertised high-ratio five-year variable mortgage rates are around 3.35%, while comparable five-year fixed rates are around 4.09%.

Meanwhile, Metro Vancouver sales remain well below normal seasonal levels.

For buyers, that combination creates something valuable:

less competition.

There are more properties to compare, sellers are often more willing to negotiate, and buyers can sometimes put conditions into offers that would have been difficult during a bidding frenzy.

Does that mean everyone should buy today?

Absolutely not.

But it does mean I wouldn't base a major life decision solely on trying to predict the next Bank of Canada move.

The same principle applies when someone is selling in Metro Vancouver to move to Vancouver Island.

The Mainland and Island markets aren't moving in perfect sync. VIREB's July numbers showed fewer sales but only modest growth in available inventory.

You therefore need to calculate both sides of the move.

What can I sell for?

What can I buy?

What will my mortgage payment be?

How much competition will I face?

And most importantly:

Does this move improve my life?

Those questions tell me far more than trying to predict whether rates will move another quarter point.

It's also something I coach real estate agents on constantly.

Our job isn't to tell clients what the Bank of Canada did.

Google can do that.

Our job is to explain what that information actually means for the decision sitting in front of them