In the ever-shifting landscape of the real estate market, only a handful of factors hold as much sway as interest rates. The recent announcement from Bank of Canada is what both buyers and sellers have been waiting for: interest rates are holding steady. Let’s delve into how this decision is poised to affect both parties as we embrace the Fall Market. 

1. Relief for Buyers

For those currently in the market for a new home, the decision to maintain interest rates at their current level should come as a welcome relief. Consumers are able to have a bit more confidence when making their decisions. 

2. Perfect Timing for the Fall Market

Timing is crucial in the real estate world, and the decision to keep interest rates steady couldn’t have come at a more opportune time.  Traditionally, the fall season offers more inventory and a greater number of sales so with the interest rates remaining at 5%, we should see a very classic fall market.

3. An Expanding Inventory

Another promising aspect of the current real estate landscape is the mounting inventory. As more properties come onto the market, buyers will have a wider selection to choose from. This increased supply means that buyers can take their time and explore their options thoroughly, potentially finding the home that truly suits their needs and preferences.

4. Multifamily Residential Market Considerations

While the decision to keep interest rates steady is undoubtedly a positive development for the broader real estate market, it’s essential to acknowledge that these rates, although stable, are relatively high. This factor may have implications for the residential multifamily market. The high interest rates can potentially lead to a slower market for multifamily properties as they may not offer the same return on investment (ROI) as they would with lower interest rates. Investors might exercise more caution in this environment.

5. Thoughts for Future Raises/Drops

What can we expect for the October 25th announcement as well as further down the road? I recently had the pleasure of speaking with a few well-informed mortgage brokers who confirmed my thoughts. As for the October announcement, with our current trajectory, we should expect rates to remain steady as well. As we move into a quote unquote recession, one of the Bank of Canada’s only tools is to drop interest rates as quickly as possible. We are therefore predicting that we will start to see rate drops early 2024. Whether we will see rates as low as 1.5-2% again is not as probable but we are more likely to see would be a rate anywhere from 3.5-4%. 

The decision to maintain interest rates at their current level brings both relief and opportunity to buyers and sellers as we head into the Fall Market. Buyers could expect more stability and a broader selection of homes, while sellers may find motivated buyers eager to make a move. As we move forward, it’s essential for all stakeholders to stay informed and adapt to this evolving real estate landscape.

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