Jay Lewis Hey Josh, thanks for joining me. So there’s some big news from the government this morning. What can you tell me about the announcement about our rates?
Josh Tagg Well, this morning was the Bank of Canada’s rate announcement day and kind of leading up to it, after they increased rates in both June and July, there was data that came in and generally the expectation was that they were not going to increase rates again today. And they didn’t. So there’s really no surprise there but what we’re unsure about is what’s going to happen over the rest of the year. The economists talk about it like a cycle. This is a cycle of rate increasing. The next cycle will be one of rate decreasing. The question is are we done this cycle and when is the next one of the decreasing going to begin, right? So that’s really the unknown, but today no change, which is actually a relief.
Jay Lewis Good. So for all of our buyers that are sitting on the fence, what does this mean for them for the next, you know, three, six months?
Josh Tagg You know what, if we can find the rates stay where they’re at for the next few months, I expect that what we’re going to see is something similar to what happened over the spring when there were no increases for a four-month period and there’s kind of the expectation that the increases were done. So we did see a lot of those who were sitting on the sidelines through the fall, summer fall of 2022, came back to the market almost with a vengeance. So we had a lot more real estate activity happening across the country in Edmonton. Calgary’s gone crazy. So, I think what we’re going to find is that, especially if in six weeks there’s another announcement of no change to the rate, I think we’re going to find that the buying activity picks up. So, if you’re sitting on the sidelines, you’re not going to have as much company there. And when you do get back in, I would think that you’re going to be up against more buyers than you would be if you move sooner.
Jay Lewis Gotcha, so from what I’m hearing from you, it’s maybe it’s time to consider beating the rush, get your pre-approvals done and start shopping.
Josh Tagg Like I know that’s a very salesy kind of thing to say, you know. Yeah. People think with mortgage brokers and with realtors, do it now before it’s too late. You know we don’t want to stress anybody out, but I think you know as we’ve come near or we’re at or near the top of the interest rates, we do have fewer buyers. And the basic supply and demand of basic economics tells us that with fewer buyers, we’re not going to see as high of prices. But once the interest rates start to come down, it’ll be easier for people to qualify for these loans or for these mortgages, but that’s going to bring more buyers to the table. So I suspect that as interest rates start to decrease in 2024, we’re going to see more buyers, which is going to continue to provide that upward pressure on the real estate prices.
Jay Lewis Prices and inventory. Yeah. And inventory.
Josh Tagg Yeah, for sure. Right, because as people are buying what’s there, the inventory continues to shrink.
Jay Lewis Yeah, no, we’re seeing the same thing. So yeah. Okay, well, thanks for that update, Josh.
Josh Tagg I’ve got a question for you, actually. Do you mind if I ask you one here before we stop this? I’ve seen in the media some people kind of putting together the idea or a hypothesis of sorts that one of the reasons prices have been going up over the last year or so is because of a lack of inventory. And one of the reasons for lack of inventory might be people who have, you know, 2 or 3 percent interest rates on their mortgages, not wanting to sell their homes, because that means they’re buying something theoretically bigger, but at a much higher interest rate. Have you seen anything in what you’re doing in Edmonton that kind of might give some credence to that theory?
Jay Lewis Yeah, so I have had a few, you know, sellers that are also buyers that have been waiting. A lot of their concern is, you know, what they’re buying and what’s going to happen over the next couple of years. So they know what to expect with the house they have right now or the home that they’re in. Right. They’ve maybe even looked forward a little bit and said like, with this new interest rate, what does it cost us? And then they’re doing the math of like, what happens if we buy a house significantly more and the rate goes more than they expect? So yeah, I think so. I think we’re seeing a lot of the support for our sales right now is from out-of-towners, right? So BC, Ontario especially is coming here. Edmonton’s super affordable. So for us Edmontonians, it’s kind of like it seems expensive, but if you’re coming from somewhere else, it’s an amazing deal, right? So I do think there’s a little bit of fear and I do think that that’s making it hard on our inventory.
Josh Tagg And there are what, six cities in Canada with over a million people or metro areas with over a million people and Edmonton is by far the most affordable of all of them right there’s no nobody’s trying to convince anybody that Toronto or Vancouver are affordable by any metri, and Calgary has since taken off and so that leaves Ottawa, Montrea, and Edmonton but Ottawa Montreal are also expensive so Edmonton is the place to get into real estate. I feel like for an average income earner, there’s a lot more buying ability in Edmonton than anywhere else in Canada.
Jay Lewis Yeah. And if you’re looking for a small commute, like under 30, there are some amazing deals.
Josh Tagg 100%. Totally agree. Awesome. Well, it’s a good thing. So I think today’s announcement from the Bank of Canada was overall positive. There’s still a threat of a little bit more increase in the rates, but I think things are gonna level out and we’re even seeing some signs pointing towards some decreases. So that should only mean good things.