BoC Rate Cuts Won’t Save Real Estate in Canada 🇨🇦

The BoC is set to lower their overnight rate yet again this September. Will it jumpstart the market? Will home sales and prices accelerate? Or will real estate prices continue to drop?

In today's video, Surrey Real Estate Specialist, Steve Karrasch of Macdonald Realty discusses the upcoming expected BoC rate cut in September and his opinion on how this will impact buyers, sellers and mortgage borrowers.

What do you think? What impact will a September rate cut have on the real estate market?

Are you considering making a move and looking for more specific advice on your property?

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The opinions expressed herein are solely that of Steve Karrasch PREC and not Macdonald Realty or the FVREB and should not be misconstrued as advice or the basis of an agency relationship whatsoever. Please consult your professional advisor prior to taking action on any decisions relating to the matters discussed in these videos. This communication is not intended to cause or induce breach of an existing agency agreement.

[tatoforever]

Im planning on leaving Canada. It’s just not possible to live here anymore…

[davidhughes]

My problem with the “people were stress-tested at 5.25% so they should be fine” argument is that yes, they were stress tested at 5.25 and only paid 2.75 or whatever, but they blew their brains out on cars, renos, credit card debt etc thinking that rates will be “lower for longer”, instead of using the cash flow to prepare for 5.25. So they aren’t “even” or ahead in any way.

[dirtlump]

80, 000 Listings now in Ontario and rising rapidly day by day.... 47, 500 Listings in BC and 27, 000 Listings in Alberta with similarly rapid accelerating upwards trajectories in Listings numbers ...
The numbers of potential Buyers just aren't keeping pace and likely won't heading into recession !

[jupitereye]

Even if rates were to drop another 200bp or even more than that, it still wouldn't matter too much. I was comparing prices of food and other goods and services from 4-5 years ago, everything went up from 50% to 150% in some cases. Electricity will go up soon, gas will go up as well, insurance is going up, strata fees and taxes will go up, and wages will effectively fall behind. Considering all this, even if we were to have those super-low interest rates on pair with 2015 levels, the affordability is not there anymore. Savings are melting, future prospects are not there, and the overall economy is bad. We will be stuck in this limbo for a while, my thinking is probably very gray next 10-15 years. And if new crises and conflicts arise globally we could be looking at a very sluggish 20 years ahead, easily.

[James-tkoy]

Great information. I think you have not taken into account things like inflation. The cost of rent in my town went from 1000 for a one bed room to 1500 for a one bed room food prices have doubled.

So if rates go down and houses go down, then buying would be twice as affordable than rent.

Because of the lack of supply of housing and corporations buying places and no one building new homes what makes you think that house prices will drop with rate prices? You never really explained any reason why.

[robcos]

When the BoC cherry picks the data it will say whatever he wants it to say. When you remove or add items to the cpi it doesn’t tell you the true picture of inflation. Use the original basket of goods in the cpi and then you will have a better picture of inflation.

[dootdoot]

I Find Lumber prices are massive leading indicators for where the market is going. the dip is over, everything is going up. Not a ton. But up.

[MarthaSwolert]

Renewal up in a few months. Currently at 2.4% hoping for sub 5 locked in for 5+ years. It was nice to have 2.4% but anywhere under 5 should be easy or you are over leveraged.

[bc]

Correctly priced houses will sell regardless of the rates or economy. So many listings are sitting unsold because realtors are not educating their clients on market conditions and recently sold comparables.

[jefftaylor]

Also, add in the cost of food, fuel, and TAXES/FEES by all three levels of government.

[tatoforever]

Trudeau allowing any foreign investor to buy properties in Canada is also an other mayor factor for the house crisis. Also, we don’t lack land in Canada. Why is land so costly?

[Carolinapetroska]

No matter where the rates are going, the market will stay dead for many years to come. Thanks to the government. Real estate in Canada is no longer interesting.

[AVable]

"A downturn in prices is what is needed for price recovery" ... oh man. Recovery to where? Rates are almost irrelavant now. Prices have peaked for the next 10-15 years. Get used to it. Its only down from here.

[jonh]

Look at this guys room, tells you everything you should know about taking advice from this guy

[sadafbabar]

Interest rate hike has made us not take interest in buying house.

[samr_]

i love how we talk about the Canadian economy cooling and heating like the US when we all know the big elephant in the room, there IS NO Canadian economy, we have a monopoly in every sector, telecom, food, energy, supply chain... and everything that happened since 2020 has caused them to increase their margins in folds... the layoffs is just a byproduct of the whole great resignation wave we had the whole gen Z i am doing work on my laptop by the beach we all knew one day ppl like that are worthless to a company, was just a culture thing... and let's not even talk about all the min wage jobs by foreigners.... Canada has 1 economy and that is real estate... everyone from banks to government to contractors are in bed together to keep this ponzi scheme going... that's why you can't find a single economist or anyone talking about economy without spending 1/3 of their conversation about real estate

[vert]

Banks are fairly certain the rates we will get in the short term will be low enough to spark inflation in the next 12-24mo. This means fixed rates WILL stop being lowered at one point, and variable will dip under. My guess is this will happen spring 2025.

[sandybridge]

I have a question i would really like answered please. What rights does a co-signer have on a property. Can a co-signer borrow against home equity or pull equity from your home without your permission? Can they demand money from you or force you to sell your property for the % they are cosigning for? There are many risks to being a cosigner but are there risks to being the person who has a cosigner?

[ThamilNesan]

Even Bank of Canada cuts interest rate, mostly other major banks rates always 1% over the prime rate, so it's not going to be great relief, plus our food prices example $1.99 bread is now almost $4, jobless and jobs lost, lower salavery wages, owning or renting house expenses, all are high too. TrudeauSingh collaboration has killed our Canadians economy strength to poverty nation

[dustins]

Good analysis and description Steve. Some may think that lowering interest rates will lead to a mad rush like 2021 - 22. The difference is that in 2020 we had massive stimulus injected into the monetary system along with cheap rates (I got 1.65% in Nov 2020). This time, there are no (free money) stimulus cheques and the economy is slowing toward a proper recession globally. Anything is possible but like you mentioned in the video, this will probably need several months to play out before buyers feel secure in their jobs, banks feel confident to lend on high ratio mortgages and prices start to rise again.