Where Banks Say Rates Are Headed, and Condo Investors Lose $600 a Month on Average

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week.

Big Banks Bet on Where Interest Rates Go Next

It’s been just over a week since the Bank of Canada announced another interest rate cut, bringing its key rate to 4.5%, meaning it’s time for financial institutions to speculate wildly about the future. Kicking things off on an optimistic note are TD and CIBC, projecting a 1.75% drop by the end of 2025, or 2.75% total. Coming in with more conservative estimates are BMO, which projects a 1% drop, Scotiabank at 1.25%, and RBC with a 1.5% decline in the forecast. We can confirm, however, that no bank owns a crystal ball or has fortune tellers on the payroll.   

Prices Hover as Toronto Condo Market Freefalls

When people aren’t buying, sellers typically lower their prices — it’s kind of the basis for the whole economy — but not Torontonians. Despite facing one of the worst sales environments in decades, condo prices remain relatively flat. According to the Toronto Regional Real Estate Board condo sales were down 20% last quarter compared to Q2 of 2023, while inventory shot up 36.5%. Meanwhile, selling prices only dipped by 1.2% compared to the same period last year. According to TRREB, Torontonians are so confident rates will continue to drop that they’re unwilling to give buyers a significant discount in the meantime.

Tough Times for Toronto Condo Investors  

The housing market tables have turned faster than the lazy Susans at New Ho King, as what was once considered a sure bet for Canadian investors has proven a costly mess. According to a report by CIBC and Urbanation 82% of Toronto’s new condo investors are cash flow negative, up from 52% in 2022, with those who closed in 2023 losing an average of nearly $600 each month. While ownership costs have ballooned by 21% in the last 12 months rents have only increased by 1.2%, which the authors warn will only further slow construction in the years ahead. 

Toronto Rents Down for the First Time Since COVID

Toronto’s investors and owners’ loss is shaping up to be renters’ gain, as plummeting demand and surging inventory caused rental rates to trend downward for the first time since 2021. According to a new report by Urbanation, average condo rents in the Greater Toronto and Hamilton Area decreased by 1.2% year-over-year, and rental costs in Toronto proper declined by 2.1%. While Urbanation and Rentals.ca have been reporting a decline in month-over-month asking prices in the region all year, the latest report is the first to confirm leases are actually being signed at a lower rate this year compared to last.

The Americans are Coming  

With political unrest and instability growing rampant, there is reason fear there may soon be an influx of migrants at the southern border — but not the one Fox News usually talks about. Montreal-based Moving2Canada, which helps foreigners relocate to Canada, recently told Fortune Magazine that it’s seen a significant spike in interest from Americans since the presidential debate on June 27th, echoed by a similar surge in related Google searches in the days that followed. The agency told Fortune that would-be American expats cite gun legislation and the end of Roe v. Wade as their top reasons for moving north.

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