Interest Rate Relief: What The Recent Rate Drop Means For Canadians
For the first time in over four years, the Bank of Canada lowered the benchmark interest rate by 0.25% on June 5, 2024. The benchmark rate now sits at 4.25% while the prime rate is now 6.95%. The last interest rate reduction was in March of 2020, when the BoC slashed the rate to an all time low of 0.25%. In March of 2022, the BoC changed directions and began one of the steepest rate hiking cycles in history. By July of 2023, the benchmark interest rate increased a staggering ten times to 5%, which was a two decade high. Canadians have been anticipating this month's rate cut for a while, as inflation and GDP continues to slow. According to the Bank of Canada, many economic factors pointed towards a slowing economy, suggesting that Canada's monetary policy no longer needs to be as restrictive. Homeowners with variable rate mortgages or a home equity line of credit will immediately benefit from this rate cut. Although Canada's benchmark interest rate is not directly tied to fixed-rate mortgages, it is expected that fixed-rates will also drop. Fixed-rates are tied to yields for Government of Canada bonds, which have dropped and are currently hovering around 3.4%. This will translate into lower fixed-rate mortgages in the short term. Many believe that this rate cut is not significant enough to make any noticeable changes for most Canadians, however it is a step in the right direction. The lower rate will slightly increase purchasing power for homebuyers, but more importantly, it should prompt more confidence in the real estate market and begin to fuel price appreciation. As real estate prices and demand in the GTA has remained stagnant for some time, June's rate cut is expected to bring positive change to the market. If you are a homebuyer, take advantage of the lower rates but don't wait too long, as prices will begin to creep up as more rate reductions come. If you are a seller, now may be the time to list your property for sale as buyer demand picks up. Whether you are considering upsizing, downsizing, investing or anything in between, reach out to me for expert guidance.
Real Estate Market Update - May 2024
The May 2024 real estate market in the Greater Toronto Area saw less home sales and increased inventory, especially in comparison to last year's spring market pick-up. Home sales are down 21.7% compared to the same time last year and are down slightly in most GTA markets compared to April 2024. Toronto is the only region in May to experience an increase in sales and prices, while all other regions, including York, Peel, and Halton experienced slight declines in sales and average prices month-over-month. However, the amount of new listings is up 21.1% compared to last May. Many homeowners are anticipating an uptick in real estate demand, as indicated by the recent notable increase in new listings. On the other hand, buyers are still waiting for clear signs of dropping interest rates. As borrowing costs decline over the next 18 months, more buyers are expected to enter the market. As for now, sales activity will likely remain stagnant. As inventory increases and demand remains stable, homebuyers have more choice and are benefiting from more negotiating power and lower prices in the short term. This is not expected to last as interest rates begin to lower and demand raises as a result. The Bank of Canada's interest rate drop of 0.25% on June 5, 2024 has marked the start of declining rates since 2020. Buyer confidence and purchasing power will likely increase in the coming weeks, changing the dynamic of the GTA real estate market for the rest of 2024. If you are curious about how coming changes will affect your real estate plans, feel free to reach out to me for expert guidance. To see how prices have been affected in your area, please click the link below to get access to TRREB's May Market Statistics for all areas in the GTA. The stats are broken down by average sales price, number of homes sold, number of new listings, and average days on market for each property type; detached, semi-detached, townhouses, and condos. https://trreb.ca/wp-content/files/market-stats/market-watch/mw2405.pdf If you want to know more about what is happening in your specific area, you can book a call with me by clicking the link below. https://calendly.com/davidrizzuto/consultation-call?month=2024-06
Real Estate Market Update - April 2024
April 2024 Market Update: The Greater Toronto Area real estate market continues to remain steady. For April 2024, there has been little movement with average selling prices on a month over month basis, and even on a year over year basis. The number of sales in April have increased slightly or remained steady in most GTA market areas compared to March. However, compared to the same time last year, sales are down about 5%. The most notable change in the real estate market is the drastic increase in the amount of new listings. More and more homes have been listed for sale since the beginning of the year, but April saw the largest jump in new listings. April listings are up 47.2% compared to last year, creating ample choice for homebuyers while keeping prices mostly unchanged. The rise of new listings signals that many homeowners are trying to capitalize on more favorable market conditions, and are banking on the increased demand for homeownership in the spring market. However, with the looming interest rate cuts, many homebuyers are still waiting to enter the market until more favorable borrowing costs are available. Some homeowners are beginning to face much higher mortgage payments at renewal, which is contributing to the heightened inventory and growing demand for less expensive properties. Experts are still predicting an increase in buyer demand and positive price growth as interest rates come down in the coming months, and into 2025. If you want to know how these changes affect your real estate plans, reach out to me today! To see how prices have been affected in your area, please click the link below to get access to TRREB's April Market Statistics for all areas in the GTA. The stats are broken down by average sales price, number of homes sold, number of new listings, and average days on market for each property type; detached, semi-detached, townhouses, and condos. https://trreb.ca/wp-content/files/market-stats/market-watch/mw2404.pdf If you want to know more about what is happening in your specific area, you can book a call with me by clicking the link below. https://calendly.com/davidrizzuto/consultation-call?back=1&month=2024-05
Categories
Recent Posts
