In every housing market, an increase in interest rates usually poses positive and negative effects to some extent. That being the case, the Alberta housing market is not an exception. The January 2023 interest rate increase will possibly have an impact on this housing market. Those who are planning to buy houses in Alberta will, without a doubt, feel the impact. Some of the positive and negative effects that will be felt are as follows:
House prices will decrease
This could happen in Alberta after the January 2023 interest rate increase. House prices will eventually decrease, and it will be good news for some buyers who have been waiting to buy. House prices will decrease because of a decrease in the demand for housing. The increase in interest rate will discourage many buyers from taking mortgages. When the number of buyers taking mortgages goes down, it means few buyers will be able to buy. That is how the demand for housing will fall, prompting sellers to reduce house prices.
The sellers will lower the prices as they look forward to catching the attention of the few buyers remaining in the market. If you have been thinking of investing in real estate, this could be the time for you. When the house prices are low, you can be sure of getting a nice house at a very good price. You will not need to struggle so much to buy your dream home, especially in Alberta. Be among the first people who will take advantage of the low prices.
Buyers will suffer fewer risks
With interest rates being high, it means not many buyers will stick around in the market. Only a few who will be willing to face the high rates will be available in the market. In simple words, the demand for housing will be low. When demand is low, sellers will be very willing to abide by the requirements of buyers. The buyers will be at liberty to request inspection and appraisal to be conducted before they get into any deal.
The sellers will have no choice but to facilitate that because there are already more houses than buyers in the market. When buyers are satisfied with the appraisal and inspection conducted, they will be sure of what they are buying. In this case, they will not be prone to suffering risks. Every detail of the property they are buying will be checked, and they will be sure it meets the required standard. This is what will happen when it comes to investing in real estate in Alberta or any other place across Canada.
Numerous homes will be available
Don’t be surprised if you see more than enough new construction homes in the market in Alberta. The availability of plenty of homes in the market is usually occasioned by increasing interest rates. When interest rates increase, many buyers are usually eliminated from the market. They are eliminated because they cannot afford to handle the burden that comes with increased interest rates. Some do not even qualify to get mortgages, and that is why they cannot buy.
With such happening, a lot of homes are left on the market without buyers buying them. Some of these homes will even stay on the market for a very long time. When there are too many homes in the market, you can have a wide choice to choose from. Almost every type and design of house you need will be available in the market. So it will be upon you to look for one that suits you best. The probability of you finding a good house will always be high in this case. This will probably not be different in Alberta.
The cost of borrowing will increase
This is sad news to those who are gearing up to borrow so that they can buy their dream homes. Whether you are dreaming about new construction homes or existing homes, this will surely catch up with you. Since the interest rates have increased, the cost of borrowing will increase to take care of the high rates. This is where many buyers get discouraged from taking mortgages and end up letting go of their buying dream.
They simply cannot put up with the high cost of borrowing, and that is why they eventually postpone buying. They do so with the hope that the cost of borrowing will go down and they will be able to borrow and buy. So if you plan to buy a home in Alberta, you better be prepared with cash. Taking a mortgage might no longer be your option this time around. You can still look around for a more affordable lender that might help you out.
Mortgage interest payments will increase
Since the interest rates have increased, the mortgage interest payments will also increase. If you are lucky to get a lender, be prepared to dig deeper into your pocket. You will pay hefty amounts in the form of interest. The monthly payments will also be high than it has always been. This could see some buyers take a back seat as far as buying new construction homes is concerned.
This is not in Alberta alone but also in other parts across Canada. If you are confident enough that you will be able to handle this, you can still go ahead and buy. There are nice homes here in Alberta that are simply waiting for buyers like you. Start planning yourself but be prepared to face this if taking a mortgage is what you intend to go for. You still have a chance to buy and enjoy life in Alberta, so make good use of it.
If you have had plans to try a hand in the Alberta housing market, you already know what awaits you. No matter the situation, you should not think of quitting buying. There is no perfect time to buy because it’s not easy to predict what will happen in the market. The best time to buy is when you feel you are ready and you have the financial capacity. Do not listen to nay Sayers when embarking on a buying journey.