|  Will higher interest rates hit the housing market? The short answer is, not much — yet. But read on! The Bank of Canada raised its key interest rate target this week for the first time since 2018 to tackle surging inflation. The increase of 25 basis points, resulting in an overnight rate of 0.5 per cent, marked a shift away from the rock-bottom rates tied to the COVID-19 pandemic. The country’s big banks responded immediately by raising their prime lending rates as well — but how will all of this hit Canada’s hot housing market? "It'll take some froth out, which I think we would all enjoy," Re/Max Canada president Christopher Alexander told Global News this week. But he went on to say that the market will likely adapt and not see significant downturns as a result of a single rate hike. Demand for homeownership remains high and the number of homes on the market remains low, so increasing the cost of borrowing by raising interest rates won’t “take too much steam” out of the market, Alexander said. Real estate experts say it’ll likely take a series of rate hikes before the housing market feels the hit. Global News reporter Craig Lord has more here about how racing into Canada’s housing market while rates remain relatively low can be a “dangerous game.”  How to adapt to record gas prices Listen, we don’t want to keep bringing up gas prices either. But this time we’re coming with tips to help mitigate the record highs Canadians are seeing at the pump from coast to coast. Demand for fuel is surging as some parts of the country reopen from COVID-19 restrictions. Meanwhile, the war in Ukraine has constrained the critical flow of energy exports from Russia, sending prices per barrel of oil above US$110. With the Metro Vancouver area reporting retail prices for regular gas surpassed the $2-a-litre mark on Friday, and no end in sight for rising prices across Canada, it’s as good a time as any to focus on some of the basics of fuel efficiency. First up – smarter driving. Kristine D’Arbelles off the Canadian Automobile Association (CAA) told Global News that basics such as coasting to a stop and gradually accelerating, rather than stomping on the brake and gas pedal, can cut annual gas bills by as much as 20 per cent when practiced regularly. Second – smarter shopping. D’Arbelles cautioned drivers about over-relying on apps that help them find the cheapest gas station in their area. While it makes sense to use tools like that when you’re already heading along a regular route like a daily commute, going too far out of your way to save a few cents per litre might not have the impact you hope on your personal gas bill. Read more here about ways to maximize your car’s fuel efficiency and to debunk a few other popular myths about how to save at the pump.  Semiconductor shortfall Gas isn’t the only resource facing constraints amid the ongoing war in Ukraine. Semiconductors — the small chips integral to the automotive industry and consumer electronics such as gaming consoles and smart appliances — are also facing a shortage as key materials for producing the critical inputs are exported from the eastern European region. According to Sarah Prevette, chair of Canada’s Semiconductor Council, the ongoing conflict could exacerbate existing supply chain problems related to the COVID-19 pandemic that have made some electronics hard to find and put indefinite delays on some vehicle deliveries. "We've already seen prices start to jump," she told Global News. "So the trickle-down effect of the war could potentially spike chip prices, which means that Canadians may end up paying more for their electronics or appliances, or not being able to get them at all." Read more here about why industry experts are calling for more domestic production of semiconductors. ________________________ – THE QUESTION – “During this housing market high, should I buy a condo now for my investment? Or wait for the housing market to steady?” — A Money123 reader “Mortgage rates are expected to rise, but so are home values for the foreseeable future. If a person or household has the financial means to make a long-term investment like real estate, then it's as good a time as any to buy a property. The main factor that should be considered when someone purchases an investment property, including a condo, is the state of their household finances. Questions that should be considered: Have they taken care of other financial obligations, like their primary mortgage and/or other debts? Do they have enough for the required down payment? Can their budget accommodate the closing costs, condo fees and additional mortgage payment? Moreover, would a real estate investment be preferable over other types of investments available? Assuming the answers to all these questions are yes, then they should purchase a condo now. No one knows for sure what condo values or the rate policy will be in the future, so trying to predict and time those things isn't very practical. A real estate investment should be made with a long-term approach and a plan for holding the property for at least five years, but ideally longer. The longer the investment is held, the less the initial purchase price matters because real estate prices tend to appreciate over the long term. If the household's finances are stable they can also hold the property for as long as necessary to ensure they don't have to sell at loss.“ -James Laird, co-founder of Ratehub.ca and president of CanWise Financial mortgage brokerage
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