Will Oil Prices Shrink Ontario Home Sales?

Interest rates for Ontario home sales are on the uptick. The question now is what effect surging oil prices will have. 

If factors affecting demand for housing in 2022’s red hot real estate market are any indicator, Ontario home buyers and sellers could be in for a wild ride yet. 

February rang in the start of the new year with inflation of  5.7%, the highest since 1991. That’s a steep climb from 5.1% in January, more than double the Bank of Canada’s (BoC) target rate of 2%. But what could have been a definite setback for Ontario home sales has yet to put out the fire.

Increasing rates from home sales

Where Ontario Homes Sales Are Headed

BoC tried to temper inflation by raising the overnight rate it charges lenders from 0.25% to 0.5% March 2. The rate is projected to inch up to 2% by year end, but that may not be enough on its own to dampen Ontario home sales. Key factors affecting demand for housing would have to change for that to happen.

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BMO Financial Group managing director Doug Porter traces the real estate power house to low interest rates, supportive government policies, and reduced spending options. Where economists have been tripped up are on oil prices and supply chain issues. Higher prices for oil, natural gas, and commodities like wheat and potash benefit real estate investors. 

What could happen if inflation hits a predicted 6.5% this summer is speculative at best. Ontario home sales have increased on average provincially by 25.8% since February 2021. So will house prices drop in Ontario this year? Some advisors, and armchair observers, say so.

The Ukraine war is unlikely to change the BoC’s planned trajectory. “The Bank of Canada doesn’t see the war as an obstacle to tightening” the money supply, BMO economist Sal Guatieri, author of Canadian Housing: Caught in the Crossfire, says. 

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March’s increase was 25 basis points. BoC is plotting increases through to 2023. Raising that benchmark rate by 100 basis points would dramatically pause housing prices, Porter suggests. Mortgage pundits point out every 0.25% increase in the prime rate equals about $13 in monthly interest per $100,000 borrowed for a standard 25-year mortgage. 

As the mortgage financing gets tighter, more potential buyers will drop out. The 53% of borrowers with variable rate mortgages (National Bank of Canada stats) may have to lock in a fixed rate to “ride out” a rate-cycle hike, rate analyst Rob McLister says.

Find a mortgage refinance lawyer near me. 

Rebounds in the global economy, and stronger household buying power when supply chain obstacles ease up drive inflationary pressures, as do wage increases. Economists are now looking to the second half of 2022 for potential relief in factors affecting demand for housing, like oil prices.  

Where the Cheapest Houses in Ontario Are

With Ontario home sales soaring since 2017 on the MLS home price index (HPI), finding affordable housing takes serious sleuthing. Some of the cheapest houses in Ontario are in regions where real estate services saw the slowest growth. The average house sold in February 2022 for:

  • $350,000 in Kingston 
  • $360,000, North Bay
  • $704,112, Windsor-Essex
  • $766,948, Grey Bruce-Owen Sound  
  • and $844,000 in Ottawa.

Adding names to house title in Ontario — costs to expect when you buy Canada real estate. 

How to Find Out What a House Sold for in Ontario

  • Ask a local realtor.
  • Go to an Ontario Land Registry Office
  • Search the OnLand online registry..
  • Use online databases like Honest Door, House Sigma, or Realosophy. 

Fix property title errors with title insurance.  

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Get Real Estate Lawyer Services for Less

Axess Law has virtual real estate lawyers for Ontario home sales regardless of where you live. When you’re ready to buy or sell, our licensed legal teams prepare the documents your lender needs to close Ontario home sales. 

Our professional real estate lawyers go over your agreement of purchase and sale for essential clauses that give you time to get a professional home inspection, or locate favourable mortgage financing. We negotiate with buyers’ or sellers’ lawyers to amend your sales contract if circumstances require it. 

Ensure offers to purchase are legally binding.  

Axess Law arranges the property title transfer, and checks for financial claims or construction liens that can impede a property sale. You can arrange to discharge mortgages, or take on new mortgage loans when you use Axess Law. We do it all, for one low, flat fee (excluding taxes, disbursements, or third party charges).

Remove financial liens on property you want to sell. 

Affordable Real Estate Lawyers 

Access lawyers for less in Greater Toronto Area, Ottawa, or by remote video conference. Our flat fee rates are affordable, and all inclusive (excluding taxes, disbursements, or third party charges). Your final invoice includes no surprises, or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it. 

You can get independent legal advice, or add a family member to the property for a modest title transfer lawyer fee. Axess Law offers you only the legal services you absolutely need. 

Hire a real estate lawyer in Ontario. 

Virtual Lawyers Anywhere You Are in Ontario

Axess Law has virtual real estate lawyers anywhere in Ontario where you need one. Finalize real estate transactions online by remote video conference call, 7 days a week. We use secure, confidential video conferencing software to protect your privacy.  

Axess Law reviews your agreement of purchase and sale, and liaises with realtors and mortgage lenders to prepare legal documents for your real estate purchase or sale. We witness your signature online, or you can drop by any Axess Law office in Greater Toronto Area or Ottawa. 

Using an Axess Law virtual lawyer is easy, affordable, and convenient.

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