06/29/2022
📣 𝗟𝗘𝗧'𝗦 𝗖𝗟𝗘𝗔𝗥 𝗧𝗛𝗘 𝗔𝗜𝗥 — "rising interest rates" does not always mean "falling prices", or at least, if you're looking at things from a long-term (strategic) perspective!
No doubt, we are experiencing an ever-changing market with rates in flux, as the Bank of Canada began normalizing its monetary policy in March, making higher rates a reality. And while rates have been on the rise for most of 2022, the national average home price is now forecast to rise by 14% this year alone, as prices have continued to set new records, reflecting the unprecedented imbalance of housing supply and demand.
"𝘐𝘧 𝘵𝘩𝘦 𝘤𝘰𝘴𝘵 𝘰𝘧 𝘣𝘰𝘳𝘳𝘰𝘸𝘪𝘯𝘨 𝘪𝘴 𝘩𝘪𝘨𝘩𝘦𝘳, 𝘵𝘩𝘦𝘯 𝘵𝘩𝘦𝘳𝘦 𝘴𝘩𝘰𝘶𝘭𝘥 𝘣𝘦 𝘭𝘦𝘴𝘴 𝘱𝘦𝘰𝘱𝘭𝘦 𝘣𝘰𝘳𝘳𝘰𝘸𝘪𝘯𝘨 ... 𝘥𝘦𝘤𝘳𝘦𝘢𝘴𝘪𝘯𝘨 𝘥𝘦𝘮𝘢𝘯𝘥 𝘢𝘯𝘥 𝘢𝘱𝘱𝘭𝘺𝘪𝘯𝘨 𝘱𝘳𝘦𝘴𝘴𝘶𝘳𝘦 𝘵𝘰𝘸𝘢𝘳𝘥𝘴 𝘭𝘰𝘸𝘦𝘳𝘪𝘯𝘨 𝘱𝘳𝘪𝘤𝘦𝘴." Your way of thinking isn't completely wrong ... it makes total sense to feel that way, but historically it's not accurate — there is not a complete inverse relationship between prices and rates.
𝗕𝗼𝘁𝘁𝗼𝗺-𝗹𝗶𝗻𝗲: 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗿𝗮𝘁𝗲𝘀 𝗗𝗢 𝗮𝗳𝗳𝗲𝗰𝘁 𝗽𝗿𝗶𝗰𝗲𝘀, 𝗯𝘂𝘁 𝗻𝗼𝘁 𝗶𝗻 𝗮 𝘄𝗮𝘆 𝘄𝗲 𝗺𝗶𝗴𝗵𝘁 𝗲𝘅𝗽𝗲𝗰𝘁 — rates tend to decelerate appreciation, especially in today's market with buyer demand outpacing seller and builder inventory.
