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Although there has been a soft real estate market at the beginning of 2024, the BC Real Estate Association (BCREA) believes that home sales will increase by the end of the year.

In his latest economic forecastsreleased on Thursday morning, the BCREA says that all eyes are on the Bank of Canada’s interest rates, and when the country will start to see them decrease.

“Buyer confidence appears to be dependent on the Bank of Canada lowering its policy rate returning to the market. BC home sales are tracking at an annual rate of 65,000 units through the first quarter of this year, essentially the same pace as the first quarter of last year,” BCREA said.

“This is despite Canada’s five-year fixed mortgage rates already plummeting to start the year, falling from over 6 per cent at the end of 2023 to 5.09 per cent in the first quarter,” the association added.

“So, the biggest question for the provincial housing market is when and by how much the Bank of Canada will lower its policy rate. The answer to that question depends on how the Canadian economy and, crucially, Canadian inflation will evolve in the coming months. “

The BCREA says the Lower Mainland tends to be the “engine room” of the province’s economy, balancing out the rest of BC’s “underperformance.”

He notes that declining affordability in Greater Vancouver will remain a significant concern, however, he expects sales to pick up later this year.

“A combination of falling fixed mortgage rates and strong population growth is expected to drive sales higher this year and next. After a very slow 2023, we predict sales in Greater Vancouver will rise 7.3 percent this year, while Fraser Valley sales will rise 7.4 percent, and Chilliwack sales are expected to increase 8.1 percent. “

The BCREA says it expects price growth in the region to “moderate” as inventories are expected to normalize this year after a 20-year low in 2023.

All markets in the Lower Mainland should see a one to two percent increase, BCREA said.

“However, the full impact of falling interest rates and an improving economy is expected to increase prices in more affordable areas of the Lower Mainland in 2025, with prices rising by 4 percent or more in Chilliwack and the Fraser Valley.”

The BCREA says it believes the BoC will begin lowering interest rates in June, as the economy notes “weak economic growth, a slowing labor market, and a downward trend in inflation.”

“We continue to forecast that the Bank will cut its policy rate starting in June, with as many as 100 basis points of cuts by the end of 2024. As a result, we expect home sales to pick up in the second half of the year. ultimately rising 6.9 percent over last year and entering 2025 with strong momentum.”

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