Inflation, cost of living top concerns of homebuyers, sellers: Re/Max

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Followed by a lack of affordable housing and high rents

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Inflation and rising cost of living are the main concerns of those looking to buy or sell real estate according to a trend report published by Re/Max Canada on Feb. 22.

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Although inflation has forced the Bank of Canada to raise interest rates, dampened demand for housing and thereby lowered home prices, the higher cost of living is weighing on potential homebuyers in other ways.

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“The real impact of inflation on home ownership is the pressure on people’s incomes and (their ability to put food on the table),” said Elton Ash, executive vice president of Re/Max Canada, in an interview. “Luckily, gas prices have come down in some cases, but it’s the overall cost of living that’s really affecting Canadian attitudes. With all the pressure and salary levels that can’t keep up with inflation, how can they afford an apartment? And so there’s this pressure on all Canadian wallets right now.”

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Re/Max Canada’s 2023 Industry Trends Report found that 34 percent of Canadians planning to enter the market cited rising costs and inflation as their top concerns, followed by a lack of affordable housing in their community (25 percent) and high rents (25 percent).

The poll also found that 66 percent of Canadians think tackling the crisis in affordable housing and supplies should be among the top priorities for governments across the country, and 41 percent believe that cutting red tape in zoning and the development needed to improve care.

Navigating the market successfully in inflationary times means “fForget the noise and look at your own personal situation,” said Tim Hill, real estate consultant at Re/Max All Points Realty, in the report.

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“Make a real estate decision based on how it will benefit you and your family. If it makes sense, do it. If not, don’t follow the herd,” Hill said.

As the market awaits sustainable, long-term solutions that improve inventories and ultimately affordability across the country, sellers are being urged to stay flexible.

“I recommend that your property is valued and marketed according to current market conditions; and when reviewing sold comparatives, be open to adjustments,” said Akash Bedi, broker and owner, Re/Max Executives Realty, Winnipeg, in the report.

The much-anticipated spring season should give a better sense of where buyers and sellers stand.

Bank of Montreal chief economist Sal Guatieri is betting sellers will prove they are willing to be more flexible.

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“As we head into the important spring season, we will see who is more willing to close a deal, seller or buyer; We are betting on the former as affordability is still poor,” Guatieri said in a note to clients.

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In addition to inflation, RE/MAX expects high interest rates, the mortgage stress test, low inventories, and an influx of immigrants to be the main forces shaping housing markets in 2023.

According to Re/Max, 1,554 Canadians were interviewed by Leger for the survey cited in the report. The survey was conducted between January 20 and 22, 2023 using Leger’s online panel, which has approximately 400,000 members nationwide and has a 90 percent retention rate. A probability sample of the same size would give a margin of error of +/- 2.5 percent in 19 out of 20 cases.

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