With the Bank of Canada poised to announce another rate cut, the housing market, particularly in Metro Vancouver, is on the brink of significant change. The expected 25-basis-point reduction tomorrow could signal the end of Vancouver's summer sales slump, potentially driving down prices and increasing demand to absorb excess inventory.
Predicting a further 1.5% interest rate decrease within a year, enticing fence-sitters to enter the market. A recent Royal LePage survey revealed that nearly 75% of millennials and Gen Z prioritize homeownership, with one-fifth planning to buy within three years. Lower interest rates could significantly improve affordability for these buyers.
As rates decline, monthly payments become more manageable, stimulating demand. This could lead to a reduction in excess inventory and a more balanced market by 2025.
In some areas, like Surrey's Central City and Burnaby's Brentwood, high monthly payments have deterred buyers. Recent development completions have flooded these markets with listings. Many buyers who purchased presale during the pandemic are now struggling to afford the higher rates and potential negative cash flow.
Investors are becoming more selective but remain interested in desirable properties. Detached homes, priced competitively, still attract multiple offers. However, the condo market is grappling with excess supply, especially in areas with recent building completions. The detached home market, with its limited supply, is expected to tighten more quickly.
Buyers are advised to be patient but cautions that opportunities might not last. Price stability within a year and has already observed cooling in certain areas like Maple Ridge, Kelowna, and the Fraser Valley.
Experts are also monitoring the U.S. Federal Reserve's rate cut cycle. A U.S. rate cut could align the two countries' monetary policies, potentially benefiting the Canadian dollar.
