2025 IS LOOKING POSITIVE
FOR REAL ESTATE SALES AND ACTIVITY
All indicators show us that 2025 is going to be an active real estate market despite all of the confusion out there with the Canadian Government and the US Government issues. The Last Quarter of 2024 was very strong in Real Estate Activity for Chilliwack. Always remembers that there are "micro markets" that have to be paid attention to. Chilliwack is an active market and there are micro markets even within Chilliwack and we are happy to explain that to you if you want to have a chat sometime. I took the MLS DETAILED STAT SHEETS provided from CADREB
and I added the total Sales Dollar Volume for the months of October, November and December 2023, and the same months for 2024 and the DIFFERENCE in SALES DOLLAR VOLUME in 2024 as compared to 2023 was an increase in almost $200 Million Dollars in SALES VOLUME in just those 3 months!
We finished the year strong!
WHAT IS GOING ON WITH INTEREST RATES?
3.25% NOW TO 3%
The Bank of Canada (BoC) recently announced a 25 basis point reduction in its policy rate, bringing it down to 3%. This move is part of an ongoing effort to support economic growth while maintaining price stability. But what does this mean for Canadians, especially homebuyers?
Why Did the Bank of Canada Reduce Its Policy Rate to 3%?
The BoC decided to lower its rate due to inflation hovering around 2% and an economy with excess supply. Since June 2024, the Bank has been in a rate-cutting cycle to stimulate economic activity. Lower interest rates encourage borrowing and spending, helping to strengthen the economy over time.
How Is the Canadian Economy Expected to Perform in 2025 and 2026?
Despite global uncertainties, Canada’s economy is expected to grow by 1.8% in both 2025 and 2026. Factors influencing this outlook include:
- Stronger consumer spending driven by lower interest rates
- Improved housing activity, though business investment remains sluggish
- Export sector support from increased oil and gas capacity
- Labour market recovery, with job growth showing positive signs
While these trends are encouraging, slower population growth due to reduced immigration targets may moderate economic expansion.
What Factors Are Influencing Inflation in Canada, and What Is the Bank of Canada’s Inflation Forecast?
The Bank of Canada expects inflation to stay near 2% over the next two years. Factors impacting inflation include:
- Shelter price inflation, which remains elevated but is gradually easing.
- Fluctuations in oil prices affecting overall price levels.
- Temporary tax suspensions, such as the GST/HST on select consumer products, creating short-term volatility.
- Surveys indicating stable inflation expectations among businesses and consumers.
With inflation under control, the BoC has room to continue adjusting rates to support the economy.
How Do Bank of Canada Rate Cuts Affect Canadians with Variable and Fixed-Rate Mortgages?
If you have a variable-rate mortgage, this rate cut means that more of your monthly payment will go toward paying down the principal rather than interest. This could result in lower overall interest costs over time.
For those with fixed-rate mortgages, the impact is less immediate. Fixed rates are influenced by bond yields, which have fluctuated in recent months. However, if the BoC continues to cut rates in 2025, fixed mortgage rates could trend lower in the future, making refinancing a more attractive option.
What Economic Factors Could Influence Further Rate Cuts in 2025?
One major factor influencing future rate decisions is the potential for U.S. tariffs. If the U.S. imposes broad tariffs on Canadian exports, the BoC may be forced to accelerate rate cuts to cushion the economy.
TD Economics
predicts the BoC will cut rates by another 100 basis points by the end of 2025, potentially bringing the lending rate down to 2%. However, the pace of cuts will depend on economic data, inflation trends, and external risks.
How Does the Bank of Canada’s Lending Rate Impact Borrowing Costs for Canadians?
Lower interest rates reduce borrowing costs, making it cheaper to finance big-ticket items like homes and cars. This is particularly good news for homebuyers, as mortgage rates often decline when the BoC lowers its policy rate.