The Biggest Interest Rate Cut Since Covid, and New Condo Sales in the GTHA Down 81%

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.

It’s The Big One 

Some are calling it “jumbo,” some are calling it “supersized,” some are calling it “sizeable,” but most Canadians are probably just going to call it “a relief,” as the Bank of Canada announces its biggest interest rate cut since COVID began in March of 2020. On Wednesday the Bank dropped interest rates by 50 bps, bringing its policy rate to 3.75%. The move was widely expected following last week’s strong inflation data, which showed that prices had only risen 1.6% since last year, down from a 40-year high of 8.1% in the summer of 2022, and 2.9% this past January. 

Are We There Yet?  

With interest rates taking a significant dip this week you might assume that Canadians will be diving into the housing market head-first, but new data suggests you’d be wrong. According to a new survey conducted by Leger on behalf of Everyrate.ca, nearly three-quarters of those considering buying or refinancing are waiting for rates to hit 3%, which isn’t expected until mid- to-late 2025. Younger Canadians are planning to hold out even longer, saying they’ll be on the sidelines until rates drop below 2%, or lower, while older buyers and borrowers say they’re more indifferent about rate changes.

GTHA New Condo Sales Hit Multi-Decade Lows

The last time Toronto’s condo market was this slow the Raptors hadn’t played their first game in the NBA yet. According to Urbanation just 567 new condos were purchased in the Greater Toronto Hamilton Area (GTHA) during the third quarter of 2024, the lowest quarterly total since the opening months of 1995. New condo sales were down 81% from last year and 87% below the ten-year average. Annual sales are also down 63% compared to this time last year and 84% below the same period in 2021, putting the city on track for an annual low not seen since the Raptors first season (1996).

It’s a Great Time to Buy a $4 Million+ Home  

Money can’t buy happiness, but it can buy you a luxury property in one of Canada’s most desirable neighbourhoods, and isn’t that basically the same thing? According to Sotheby’s Canada’s Top-Tier Real Estate: Fall 2024 State of Luxury Report, Canada’s high-end market is stabilizing after years of slow economic growth and high interest rates. In Toronto and Vancouver, excess inventory, limited competition, and falling interest rates have created the most favourable conditions for luxury buyers since 2017. Calgary and Montreal, meanwhile, continue to see booming demand for high-end homes, and Sotheby’s predicts more activity nation-wide as rates continue to drop.

How Low Can We Go?  

Round and round interest rates go; where they stop, nobody knows — but economists have some thoughts. According to the latest forecasts from Canada’s biggest banks, interest rates will keep plummeting into the new year. RBC and National Bank expect rates to drop another 1.75 basis points over the next 12 months, bringing key interest rates to 2%. CIBC predicts the Bank of Canada will lower rates to 2.25% by the end of next year, while BMO and TD forecast a rate of 2.5% by the end of 2025. Scotiabank, meanwhile, expects rates to hold steady at 3%.

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