Let's compare the average sales price in Oakville in March of 2022 at the prevailing 5 year fixed mortgage rate at that time of 2.9% vs the current average sales price in Oakville at the end of August of $1,492,687 at the current 5 year fixed mortgage rate of 5.99%. I know 6% basically, ouch right? It sounds scary but you end up $226,052 better off. First of all you would have about $130,000 more cash in your savings account since 20% of $1,492,687 is quite a bit less than 20% of $1,856,258 right? Yes, ok, the monthly payment becomes $7,633 instead of $6,952 but you have an extra $130,000 to account for this. After the 5 year term is over, your balance remaining is close to $200,000 less which means your net worth would be $200,000 higher than if you bought the same house in March of 2022 when interest rates were so low!

Interest rates and the price of real estate have an inverse relationship. Rates go up, prices go down (I'm not oversimplifying, it's really that simple). In this market the prices have gone down much more than the effect of the raised interest rates. There's a very good chance the current rates will not change until at least Q2 of 2024 if not Q3 or Q4, but if and when the rates change direction (go lower) I expect a quick and sizeable increase in the average sales price. Smart shoppers might have a good 12 months to take advantage of these low prices before the party starts again. By party I mean the days of bidding wars and unconditional offers. The icing on the cake of buying now is that not only are the prices 19% cheaper now than at the peak of the market, we are most likely (and hopefully) at the peak of the Bank of Canada's rate hike cycle so there's a very good chance your renewal rate 5 years from now could be less than what it is now.

Please note that my email here is not intended to try to convince anyone to buy a property if they are not ready and motivated by their own personal reasons. I just want to shed some light on how the real numbers look once the higher rates are applied to the much lower prices. This is the most comfortable market for buyers that I have seen in a very long time (it's not a buyer's market, just balanced).

I'm always happy to talk about real estate. Please feel free to reach out any time. 905-399-4269.