Bank of Canada's rate cut in June a small yet hopeful start
July 12, 2024
The big news in June was that the Bank of Canada reduced its target for the overnight rate to 4.75 per cent. It was the first rate cut since March 2020. Although the Toronto housing market will not change dramatically as a result, it is a hopeful step in the right direction. This reduction of 25 basis points in the policy interest rate may seem small, but it offers a breath of fresh air and diffuses some of the negative energy out there. It signifies hope that this is the beginning of real and badly needed change in the real estate marketplace, and hope is essential when it comes to our economy.
In addition, Canada’s inflation rate is slowly easing toward the two per cent target Bank of Canada would like to see, so again, there is hope for more rate cuts this year. We will likely see many potential home and condominium buyers wait to see what BoC decides. The market in Toronto will not change overnight, but the door has opened, and it brings some relief to borrowers. I don’t think rates will go back down to where we were at during COVID again. I do think that 4.25 per cent by the end of this year is a fair bet.
Coveted destination
Our population growth is undeniable. From Oct. 1 to Dec. 31, 2023 (a period of only three months), Canada’s population increased by 241,494 people. This was the highest rate of growth during a fourth quarter since 1956. This year in March, according to Statistics Canada, our country’s population hit 41 million, with more than 97 per cent of the growth due to immigration. Remember that people always need somewhere to live, whether they are looking to rent or to buy a house or condominium.
The GTA is one of the most coveted residential destinations in the world, and a healthy percentage of immigrants choose to settle here each year. Superior educational facilities, world-class hospitals, incredible shopping, amazing sports, inspiring arts and cultural opportunities… the list of amenities that provide us with the high quality of life that is envied around the world goes on.
Pent-up demand
Through my decades of industry experience, I have learned that after low economic cycles when the market comes back, it comes back with a vengeance. There is a massive pent-up demand for houses and condos in Toronto and the GTA – and frankly, across Canada – that will not go away any time soon.
Many of our major clients at Baker Real Estate Inc. are pencilling in launches, and we have some big, exciting projects coming in Toronto. The stage is set for success. Let’s hope that with future announcements, the Bank of Canada takes yet more steps in the right direction.
About Barbara Lawlor
Barbara Lawlor is president and CEO of Baker Real Estate Incorporated, an Honoree at the 2019 BISNOW Toronto Power Women Commercial Real Estate Leaders event, a panelist at the Key Media International Conference in 2018 and winner of the pinnacle 2017 Riley Brethour Award from BILD, among other accolades. She is also an in-demand columnist and speaker who is respected for her impactful industry voice. A member of the Baker team since 1993, she oversees the marketing and sales of condominium developments in Canada in the GTA, Vancouver, Calgary and Montreal, and internationally in Beijing. Keep current with The Baker Blog at blog.bakerrealestate.com