Home Prices Down; Affordability Improves in BC

According to the latest British Columbia Real Estate Association (BCREA) report, residential sales by dollar volume declined by 39 per cent to $2.1 billion in September, compared to September 2007. Residential unit sales were down 34 per cent to 5,107 units during the same period. The average MLS® residential price in the province was $412,149, down 7 per cent from September 2007.

“Weaker consumer demand and a large number of homes for sale are having an impact on home prices in the province,” said Cameron Muir, BCREA Chief Economist. “Despite relatively strong fundamentals, consumer confidence is low. The global liquidity crisis and volatile equity markets are intensifying this sentiment, causing many households to pull back spending on major purchases.”

“However, affordability is improving,” added Muir. “The carrying cost of the average home in the province is now lower than at any time since the end of 2006.”

Bank of Canada Lowers Key Rate by .25%

Today’s announcement by the Bank of Canada that it is reducing its key interest rate by a quarter point means that lenders will be under competitive pressure to decrease rates for variable-rate mortgages and lines of credit based on the prime rate. However, lenders differ in when exactly they adjust their variable rates. At the same time the US Federal Reserve has today reduced their rates by .75% in an emergency meeting.

Fixed-rate mortgages are not likely to be affected directly by today’s announcement as their rates are influenced primarily by movements in the bond market and not the Bank of Canada’s overnight rate.

With today's Bank of Canada drop, the bank prime rate should lower to 5.75% from 6.00% reducing the rates on variable mortgages and lines of credit.

Taken from email newsletter received from Origin.