Canadian Real Estate Markets: Rate Cuts and Demand
- RBC warns rate cuts failed to stimulate major markets in July.
- Sales weakened while inventory climbed.
- Investors lighten market exposure in key regions like Toronto.
Canadian Real Estate Dips Deeper Even After Rate Cuts!
The Bank of Canada’s rate cuts in June and July did not stimulate buyers psychologically, according to RBC. Home resales fell again in some markets, including Vancouver, Calgary, and Toronto, in July, after a small uptick between May and June.
This was due to the lack of psychological stimulation from the market changes.
The bank predicts that deeper cuts are needed before mortgages become affordable enough to stimulate markets, as recent cuts are not expected to significantly stimulate demand.
Market Imbalance: Canadian Real Estate Sees Demand Fall and Supply Surge!
July Market Data Summary
- Major markets show slow market, exacerbated by price distribution.
- High-priced markets experience slower sales and higher inventory levels.
- Supply and demand balance remains tight in Calgary, Edmonton, and Montreal, potentially leading to higher prices.
- Vancouver and Fraser Valley maintain balanced markets, but buyers are slipping.
- Toronto plunged into oversupplied territory, suggesting lower prices may be needed for inventory flow.
All markets in the group experienced eased conditions from last year, with new listings growth outpacing sales in Toronto, Vancouver, Calgary, Fraser Valley, Edmonton, and Montreal.
RBC’s Inventory Surge Analysis
- Markets are driven by investors withdrawing from the market and sellers believing rate cuts will end the downturn.
- In Toronto, this could be due to the completion of newly built units, lower rates boosting buyer interest, or homeowner distress from high rates.
- The bank predicts a market sputtering in the coming months, requiring larger rate cuts for any significant impact on demand.