The results are in: June’s rate cut didn’t revive Canada’s housing market
Fresh home sales data has finally answered the question for real estate watchers: The Bank of Canada’s initial interest rate cut in June did not open the floodgates to buyers, many of whom remain sidelined through an unseasonably slow spring housing market.
Sales figures from local real estate boards released in the past week show last month’s home sales did not see much of an uptick after the Bank of Canada’s quarter-point cut on June 6, the first decrease in four years and a substantial shift in monetary policy after the central bank’s fastest tightening cycle on record.
“Despite the Bank of Canada rate cut at the beginning of last month, many buyers kept their home purchase decisions on hold,” the Toronto Regional Real Estate Board (TRREB) said in its monthly report that showed a year-over-year drop in June home sales.
The Real Estate Board of Greater Vancouver echoed findings of buyer hesitancy persisting in June, with home sales in the metropolitan market out west also holding below seasonal levels.
Phil Soper, CEO of Royal LePage, tells Global News that he thought there would be more of a response on the ground after the long-awaited cut in borrowing costs.
“I honestly expected more of a reaction from the marketplace,” he says.
The reaction to lower borrowing costs appears to be showing up first among existing owners who have started to list their properties, Soper says, as evidenced by rising inventories in markets across Canada.
But he notes that a 25-basis-point cut wasn’t enough to “change the affordability game” for first-time buyers who remain shut out of the ownership market.
While many buyers in the market today have been able to secure fixed-rate mortgages below the five-percent bar, Soper expects rates on
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