The Bank of Canada recently announced a quarter-percent rate drop, signalling a shift towards easing, but the changes are gradual. It’s important to remember that if policy effects are delayed—it can take months to see an impact. While these rate drops are a step in the right direction, they’ve been changing slowly, and the damage from overly conservative policies is already evident in the Real Estate market.
Sales are down 5% compared to last year, but interest rates were at 5% then and we're now three-quarters of a percent lower. Despite that, the market remains sluggish. I predict that we’ll see additional rate drops in the upcoming October and December announcements. It’s also crucial to watch the U.S. election, as the Canadian and American economies are closely linked.
While lower rates may help, history shows that steep rate drops can lead to a recession, which could impact real estate in the long run. However, I believe we’ve passed the bottom of the market and prices will start rising gradually. October’s average sale price could exceed $1.1 million, with more activity in the first-time buyer segment.
The next rate announcement will be on October 23rd. If you have any questions about the market, feel free to reach out!
-Ralph Ciancio
