The initial Bank of Canada rate cuts this past summer did not spur housing activity as anticipated. Potentially, more rate cuts on the way will continue to affect the housing market outlook. New listing levels are expected to rise as sellers who may have held back enter the market, hoping that lower mortgage rates will attract additional buyers.
While the current Bank of Canada rate of 4.5% may still not be enough to reduce home affordability, it does provide a glimmer of hope for potential buyers as interest rates continue to fall.
Canadians across the country are anxiously awaiting additional rate cuts, which will promote future home affordability. While consumer confidence is beginning to rise, mortgage affordability must be balanced with rising unemployment to reduce the number of households with strained budgets.
In addition, while home prices have cooled a bit, home prices in Canada remain among the highest in the world’s most advanced economies (Japan, France, Germany, Italy, and the UK). These still-high prices have resulted in many potential first-time home buyers withdrawing for now. Higher property taxes, higher qualifying stress-test rates, and the current wave of mortgage renewals will also factor into the Fall market’s success.
In 2023 alone, the country saw an influx of 46% of new Canadians, contributing to housing demands and pricing. As rates continue to drop, the hope is that prices will stabilize owing to increased supply as demand rises.
If you are looking to enter the housing market as a buyer or seller or simply have questions about how to best prepare for a future move, don’t hesitate to contact me!