Another rise in interest rates has experts weighing in on whether or not housing prices will cool this summer.
The Bank of Canada's June rate hike, and subsequent rate hike on Wednesday, is expected to dampen activity impacting first-time home buyers wishing to enter the market and investors trying to stay in the market.
Dan Gemus, CEO and Broker of Record with the Dan Gemus Real Estate Team, says this week's news was a tough pill to swallow.
He says Windsor has been insulated over the last few years, where many homeowners have been able to take equity gain and move it to the next house, but one group hasn't been feeling secure.
"Who have not been able to take advantage of that has been the first time buyers. It's been challenging where they're in multiple offer situations all over again when it had slowed down for the later part of last year as well as January and February. So it's been challenging for them for sure."
Gemus says they're seeing many homeowners that have been wanting to move and trying to take advantage of the market before the rate increase, as well as homeowners jumping in because the pressure is just too high on them.
He says that's because of variable rate mortgages, but that thankfully in Canada, only about 1/3 of mortgage holders are on variable rates.
With a fixed-rate mortgage the mortgage rate and payment you make each month stays the same for the term of your mortgage, whereas a variable-rate mortgage will change with the prime lending rate as set by your lender.
"I don't know if this means that we're going to see prices reducing much more, we expected prices to come down more than they had. And if I look at our average price last year it ended the year at $616,000, well last month our average price was $582,000."
Gemus says the average sales price in Windsor had gone down to $473,000 in December, but that it had kept climbing from January on.
He says ultimately even beyond interest rate increase, the lack of housing inventory are driving those increases.
"A lot of homeowners saying you know what, I'm staying put, I'm not moving. Interest rates, not even choice, a lot of people also saying well if I move where will I go? Luckily over the last few months we've seen inventory numbers climb a little bit, but no where near where it needs to be which is putting the pressure on."
Gemus says we're dealing with a supply and demand issue in Windsor, and throughout Ontario, and it's something that isn't being dealt with fast enough to have a material reduction on prices for homes and rentals.
- with files from AM800's The Dan MacDonald Show