Optimism remains in housing market after interest rate hike

There has been a lot of concern recently about the recent interest rate hikes and how they could impact the housing market, but while the latest rate hike likely means more pain for buyers, some are still feeling optimistic about Saskatchewan’s housing market.

The Bank of Canada raised its key interest rate by 50 basis points, or by half of one per cent, on Wednesday. For those financing a home and those looking to buy, the interest rate hike will not be welcomed.

“Those who are looking to renew their mortgage, that’s certainly going to sting, and those who are looking to get into the housing market, that’s also going to sting,” said Chris Guérette, CEO of the Saskatchewan Realtors Association.

Chris Guérette on May 17, 2022. (Libby Giesbrecht/650 CKOM)

She said Wednesday’s rate hike wasn’t a complete surprise, because inflation needs to get under control. But there is a little bit of room for optimism in the province, Guérette said, based on the way the market has reacted over the past few months.

“The interest hikes that we’ve had, have not had a cooling impact on our market,” Guérette said. “Because we haven’t experienced those peaks and those lows, we’re kind of sort of very steady.”

But that doesn’t mean everything is coming up green, she added, saying the latest hike may push people further from affording a home, force people to wait before making the big purchase, or even give up on the possibility of owning a home altogether.

For those who are looking to get into the housing market, Guérette said they could face a bigger hurdle than just the interest rate.

“We still have a housing shortage here,” Guérette said.

Inventory is always a concern, she said, because it should be easy for people to move into a home, either to make way for a major life event or for economic purposes.

Another factor has been a labour shortage for developers trying to build new homes or condos, but they are expressing that to the provincial government, Guérette said, and know they are being heard.

Guérette knows it’s important to attract people to the province, but said there needs to be somewhere for them to live.

But despite the challenges, Guérette says there is still a strong and stable market in Saskatchewan, especially when compared to other provinces. She said Saskatchewan offers stability, strength, and affordability not found elsewhere in Canada.

“Saskatchewan is the place to be right now,” she said

For those concerned about prices and a volatile market, Guérette said she believes the issues will largely be minor and temporary.