The housing supply is easing
This comes after a few of Canada’s largest cities saw real estate listings skyrocket in recent months as hordes of sellers put their properties available on the market whilst demand from potential buyers couldn’t sustain. That includes the Greater Toronto Area, where latest listings rose 21.1% year-on-year last month, with 18,612 properties hitting the market. Similar trends were seen in Calgary and Vancouver, where latest listings rose 18.7% and 12.6% year-on-year in May, respectively. However, real estate sales declined in all three cities. Toronto saw 21.7% fewer sales year-on-year in May, the Toronto Regional Real Estate Board reported Wednesday.
According to the panel, 7,013 homes modified hands this month, in comparison with 8,960 in May last 12 months, coinciding with a transient market rebound. TRREB President Jennifer Pearce said homebuyers were waiting for “clear signs” of falling mortgage rates before purchasing a property.
“When interest rates fall, prices usually rise.”
The impact of the rate of interest cut on the true estate market in Canada
“As borrowing costs decline over the next 18 months, more buyers are expected to enter the market, including many first-time buyers,” she said in a press release. “This will create much-needed space in a relatively tight rental market.”
About 56% of Canadian adults energetic in the true estate market said they’ve needed to postpone their home search because the Bank of Canada began raising its key rate of interest from near zero in March 2022. Leger survey earlier this 12 months on behalf of Royal LePage. Of those still waiting, just over half said they might resume their search if rates fell. One in ten said a 25 basis point drop can be enough for them to get back in.
Canadian homebuyers await cuts
“There’s certainly pent-up demand,” Karen Yolevski, chief operating officer of Royal LePage Real Estate Services, said in an interview. “Typically, when interest rates go down, prices go up. So that would be the time when people come off the sidelines, knowing and expecting that prices are likely to go up.”
In the Greater Toronto Area, the typical sales price of a house fell 2.5% year-over-year to $1,165,691 last month. In the City of Toronto, there have been 2,701 sales, a 17.3% decrease from May 2023, while in the remaining of the Greater Toronto Area, home sales fell 24.3% to 4,312.
“In general, buyers have been looking for positive signs,” said Scott Ingram, a sales representative at Century 21 Regal Realty in Toronto. “The sentiment effect is always greater than the actual dollar and cents amount. When people are looking for good news, they snap up the deal.”
