Interest Rates Drop, and Average Home Prices Expected to Rise in Most Markets

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.

Canadian Nests Won’t Empty

Canada just got a fresh credit report and suffice to say it’s not moving out of its parents’ basement any time soon. According to a new study by Equifax Canada, the country’s consumer debt hit $2.5 trillion in the second quarter, marking a 4.2% increase from Q2 of last year, as 15% of owners faced a $300 or more hike on mortgage payments at renewal. The study also found that as first-time home buying rates plummet, adult children are staying home longer. Nation-wide, 29.2% of households now include an adult child, as well as nearly 33% of those in Ontario.

Interest Rate Drop Announcement Drops 

Interest rates are a lot like an inverted roller coast; quick to climb and slow to fall. This week the Bank of Canada brought this wild ride a moderate notch lower for the third time in a row when it once again reduced its key interest rate by 0.25%, which it credits to improving economic conditions and lower inflation rates. Experts expect the slow crawl to continue, with a recent survey of economists predicting two more quarter-point drops in the last remaining announcements of the year, bringing the year to a close with an estimated interest rate of 3.75%.

Toronto’s Real Estate Industry is Shrinking Along with the Market 

When the going gets tough, Toronto’s real estate professionals get going —to find another job that is. This past July, the Toronto Regional Real Estate Board (TRREB) — which gives its real estate professional members access to data and resources — saw its first year-over-year membership decline since at least 2016. That’s according to a tweet by CPA and realtor Scott Ingram, who speculated that high membership fees and low sales volumes are causing some real estate professionals to reconsider their membership, and perhaps even their profession. According to Ingram, membership now stands at 73,315, down 1,363 from last year.

Fall Market Shaping Up to Be a Regionally Mixed Bag

The leaves are starting to fall, and so are mortgage costs, but the question remains: Will anyone rake them up? According to Re/Max Canada’s Fall Housing Market Outlook, sales prices will increase in 76% of regions this fall by one to six per cent, and about a third will become sellers markets. At the same time, places like Charlottetown, North Bay and London will likely see little change to prices, while cities like Toronto, Hamilton, Burlington, and Kitchener-Waterloo are expected to see prices decline by up to 3%, as homes largely remain out of reach for buyers  — especially first-timers.

Rate Relief Not Enough to End Renewal Shock

Despite the recent interest rate drop, the Royal Bank of Canada is warning those up for renewal in 2025 that they aren’t out of the woods just yet. During its third quarter earnings call, Canada’s biggest bank said that many mortgage holders are going to face some sticker shock in the months ahead, when the bulk of its mortgage holdings come up for renewal. Already 0.24% of the bank’s mortgage holders are more than 90 days behind on their payments, up from 0.2% last quarter and 0.13% a year ago, and it expects that number to continue rising into 2025.

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