Reviving Canada's real estate market – beyond rate cuts

As we navigate through 2024, Canada has already witnessed two interest rate cuts, with the possibility of another two, perhaps even three, on the horizon. While these rate reductions signal a positive shift, they alone won’t restore full confidence in the GTA real estate market. The rate cuts are just the beginning; other fundamental changes are needed to cultivate a steady and thriving marketplace.

Critical change

One significant area requiring attention is the mortgage stress test. Originally implemented to ensure borrowers could withstand potential rate increases, the stress test has now become a barrier for many would-be homeowners. In today’s environment, where rates are already trending downward, easing or even eliminating the stress test could provide much-needed relief for buyers. This move would align the lending criteria with the current economic realities, making homeownership more accessible to a broader range of Canadians.

Another critical change that could support the market is the introduction of a 35-year amortization period. Extending the amortization period would lower monthly payments, making homeownership more affordable for first-time buyers. This extended timeline can be a game- changer, particularly in Canada’s high-priced markets, where every dollar counts. Combined with rate cuts, this could offer the breathing room that many buyers need to enter the market confidently.

Furthermore, the requirement for a substantial deposit has kept many potential buyers on the sidelines. Lowering the deposit requirement, especially for true first-time homebuyers, could unlock the doors to homeownership for many. This change would not only stimulate the market but also provide a pathway for younger Canadians who are currently priced out of the market. With more accessible financing options, the market could see a surge in activity, driven by a new wave of buyers eager to invest in their first homes.

Poised and ready

The buying public is poised and ready, as evidenced by the flurry of activity that occurs whenever a tremendous deal is offered at one of our sites. This behavior underscores the fact that the public is wise, informed and patiently waiting for the right opportunity. The current market offers some of the best deals we’ve seen in more than a decade. Developers who are in tune with today’s buyer demands are presenting exceptional offerings that cater to the current economic climate.

Savvy buyers recognize the value in these opportunities and are taking advantage of them. We believe we are at the lowest point of the market, where interest rates may continue to fall, but prices will not follow suit. Those who choose to purchase now are positioning themselves in a winning situation. As rates decline and other fundamental changes take hold, these buyers will benefit from the foresight of entering the market at this opportune time.

Ultimately, while interest rate cuts are an essential step toward revitalizing the Ontario real estate market, they must be accompanied by other critical measures. Removing the stress test, extending amortization periods and lowering deposit requirements will create a more inclusive and vibrant market. The conditions are ripe for those ready to seize the moment – there has never been a better time to buy.