Bank of Canada Turns On Damage Control, Delivers Jumbo 50 bps Rate Cut

Bank of Canada Turns On Damage Control, Delivers Jumbo 50 bps Rate Cut

►► The Bank of Canada delivers their first Jumbo Rate cut since the Pandemic and while most Canadians are secretly celebrating this monumental shift in the mortgage world, there is actually a BIGGER problem behind the scenes.

In this episode of Prime Properties TV, I'm going to show you the gravity of this game-changing 50 basis point rate cut by the Bank of Canada and explain to you why there's a whole lot more brewing beneath it all. Make sure you tune in for more!

00:00 - Intro
01:17 - Bank of Canada's Jumbo 50-bps Rate Cut
02:08 - The Problem with the Jumbo Cut
02:37 - Expect Another 50-bps Cut in December
03:26 - Expect a Recession in Canada
04:03 - How the Rate Cuts have Affected the Real Estate Market
05:56 - How the Bank of Canada Plans to Cut Rates Until 2025
06:18 - The Low Inflation Problem We Have Right Now
07:26 - Expect More Job Losses to Come
08:44 - Rate Cuts Don't Mean Prices Go Up

#torontorealestate #bankofcanada #mortgage #canada

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[ReganNA-qiqy]

When is 1/2 of a percent a gargantuan rate cut?

[tudvalstone]

The problem with the condos in Toronto is that many new buildings are not very nice, personally I would never want to live in one, but older buildings in better locations are still in demand and some have seen tremendous appreciation so now are fully valued, while detached homes are really the most sought after and no new ones are being built, but prices have been stagnating due to high mortgage rates.

[BotBot-yc]

Hi Zhen, can you comment on this questions. I read in the past that 15%-25% of detached homes in Toronto are owned by investors. If condos are not selling, their owners are putting them for rent and for cheap. This means that detached home investors can't rent and might have to sell them.

[kentg]

If you are American - are you allowed to take out a Canadian mortgage ?

[dhruvpatel]

What about immigration they are cutting now

[datruth]

Seems weird that the market would pickup when we reach actual GFC level recession.

So when people start really losing their jobs, that's when everyone will decide to buy a house at historically high prices?

[fingersm]

I think construction accounts for 40% with all factors

[baseline]

2025 will be the start where the bears start complaining about the real estate market.
Mind u they complained on the way down saying prices arnt falling enough.

[rdefacendis]

The Ontario Home Sales per 1000 population is a touch misleading... the sales numbers are less pessimistic than the chart shows. The majority of the boom in new arrivals into Canada since 2022 are not home buyers... they fall into three categories - international students, refugees, and temporary foreign workers. None of these cohorts (or very very few) are in the market to buy.

We see this impact on another stat that everyone seems to quote... GDP per capita. It has been falling for 7 straight quarters... Why? Because our population boom is made up of low skill workers who either can't find a job or can only find a low paying one - it skews the average and median income numbers down. The reality is that the size home buying cohort has remained STATIC as our TOTAL population has increased (because we screwed up our immigration system allowing in far too many low income, low skill persons.)

To further illustrate my point with an extreme example... what would this chart look like if we admitted 5 million refugees into the country? The chart would look far, far worse. Now imagine the chart if our immigration system attracted 5 million wealthy individuals who were able to buy as soon as they arrived.

We are re-tooling our immigration system in real time... our population is about to fall. As these temporary, low income, low skill residents leave the country, sales per 1000 population will rise along with real GDP per capita ....

Totally agree however, that the economy is about to roll over... buckle up....

[tudvalstone]

Perhaps you missed the +43, 000 jobs in Ontario. Sales are up y/y in Hamilton and GTA, there's also some fiscal stimulus with govt workers having won a higher raise than given initially and they will be soon getting a nice check for past due amount. It all looks up for Ontario, but BofC cannot be concerned with just one province.

[GreenBeanGreenBean]

Condos going up in 2025 and houses flat to down? yep! (you got it reversed)... the rapid rate reductions will flip condos back to cashflowing hard... meanwhile houses and their 1.2m average pricepoint will be slow to increase with the sheer amount of debt needed to buy.

(my condos with 30% LTVs so small mortgages will be printing money fast with rates falling)

[nunol]

buyers get ready for cheaper homes soon

[stephenfermoyle]

its time for you to find a new topic, it is tired