“Rate increases immediately affected buyers last year by reducing their purchasing power versus homeowners who were already sitting in their homes,” says Zoocasa CEO Lauren Haw. “Their home may have dropped in value but if they were in a fixed-rate mortgage, rising interest rates didn’t affect them. They’ll see big changes in their monthly carrying costs when their mortgage comes up for renewal.”Sign up to receive daily headline news from Ottawa Citizen, a division of Postmedia Network Inc.
Not everyone agrees. Low unemployment and a large buffer of unfilled job vacancies means few families are likely to need to sell their homes for financial reasons, Royal LePage says in its. Homes are “modestly cheaper” today than at the height of the pandemic boom – offsetting some of the impact of rising rates – and household savings remain above long-term norms, “making it easier to overcome down payment hurdles,” it adds.
With inventory expected to remain low in the first half of the year, Haw encourages anyone planning to buy early in 2023 to expect tight market conditions and to begin their home search as soon as possible. “Inventory and market conditions often improve in the spring and many sideline sellers are likely holding on as long as they can and will begin listing in the spring, leading to an improvement in inventory by early summer,” Haw says.