A major headline today reads Inflation surges 5.7% as prices spike most since 1991.
"Canadian consumer price inflation jumped to a new three-decade high in February, cementing expectations the Bank of Canada will aggressively hike interest rates in coming months to rein in price pressures."
Expectations are being reinforced that the Bank of Canada (BOC) will have to get serious about combatting high inflation through a series of interest rate hikes in 2022. It is obvious that the BOC has seriously screwed up and is way behind the curve on inflation.
I expect rates to rise several times in 2022. In fact, I wouldn't be surprised to see individual rate hikes of 0.50% at a time at some meetings.
This will mark the beginning of a major shift in real estate market psychology in the Fraser Valley housing markets. The red hot housing markets in Surrey, Langley, North Delta and Abbotsford are likely to experience a gradual slowing as financing costs rise. There is generally an inverse relationship between house, townhouse and condo prices and mortgage rates.
Buyers might actually gain some advantage if prices correct enough to offset higher carrying costs, at some point in the medium term. I suspect we are about to see a pendulum shift in Fraser Valley real estate this year.