Banks Predict Bigger Rate Drops, and Where Home Prices Could Be Headed

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 Predict Bigger Rate Drops Following Economic Turmoil

Nobody likes a show off, so we’ll try and be cool despite being totally right about everything! Two weeks ago we reported that Canada’s major banks were forecasting rate drops of between 1% and 1.75% by the end of 2025, and last week suggested that sudden economic volatility could push those predictions further. This week, we’re taking a victory lap as updated forecasts start pouring in, suggesting faster and deeper rate cuts sooner. Both CIBC and TD now expect the Bank of Canada to cut the key interest rate by another 2% by late 2025, bringing it to 2.5%.

Rent Hikes Slow Down

When rent only goes up, the best you can hope for is a smaller price hike. So I guess we have good news for renters? According to Urbanation and Rentals.ca’s July report, average asking rents increased 0.8% between June and July, and 5.9% since last year, averaging $2,201 across all home types. That’s the slowest price growth in the last 31 months. Most notably, however, were deep cuts in the country’s major markets, with rents dropping 8.4% in Vancouver and 5.7% in both Toronto and Brampton over the last year. The national average, however, hasn’t seen a dip since 2021.

Why One Research Firm Believes Home Prices Will Plummet, and Soon  

Canada’s housing market has been defying basic economic principles, with prices remaining high despite a drop in sales and a spike in inventory, but that could soon change. According to Oxford Economics, prices could drop 5% by the end of the year, as owners look to offload properties they can no longer afford once they face renewing their mortgages at a higher interest rate. Coupled with high inventory, the firm anticipates “widespread house price declines in all Canadian metros,” including a 10% dip in Vancouver, 7% in Toronto, and 5% in Calgary in the coming months.

Lower Rates Haven’t Brought Bidding Wars Back to the GTA

Toronto’s housing market remains on summer break as bidding wars become increasingly rare. According to our latest research, only 14% of 300 neighbourhoods analyzed across the GTA were in overbidding territory in July, down from 27% in June. Another 4% saw average sales at asking prices, while 82% saw average sales land below asking. York Mills buyers are seeing the steepest discounts, with homes going for about $170,000 under asking, followed closely by Eastlake, Oakville, which has been in the top five for 14 straight months. Parkdale and King are also seeing six-figure drops between asking and selling prices. 

And You Thought Gas was Expensive…  

Many Torontonians are paying as much for a parking spot as their parents paid for a house. According to our latest analysis, parking spots can add six figures to the price of a one-bedroom condo in certain neighbourhoods. While parking spots in York up condo prices by a mere $12,500, they push prices about $65,000 to $80,000 higher in most parts of the city, and a jaw-dropping $122,000 in East York. At the same time, the study finds that units with parking sell up to two weeks faster than those without, even at that higher price point.

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