The big banks are now predicting rates will drop faster and further than they expected just a few months ago.
- Back in June, experts thought rates would hover around 3.4% by mid-2024.
- But by August, they adjusted that prediction to 3.15%.
- And now, the big banks are calling for jumbo rate cuts starting in December, with rates possibly dropping to an average of 2.75% by June 2025.
What’s Driving These Rate Cuts?
According to CIBC, inflation has been tackled, and now it’s time to focus on getting the economy back on track. The Bank of Canada is might cut rates by 50 basis points at both the December and January meetings. Based on current CIBC forecasts, the BoC policy rate could drop to 2.25% by June 2025 — much faster and deeper than anyone expected.
Why the rush to cut rates? Canada’s unemployment rate is climbing, reaching 6.6% in August. Although the economy grew at a 2.1% pace in Q2, most of that growth came from government spending and business investment. Meanwhile, consumer spending is struggling, and growth is expected to slow down significantly in the second half of 2024. This economic slowdown is pushing the BoC to slash rates in hopes of boosting spending and economic activity.
Impact on Toronto Real Estate
We’re seeing a split in the market. Seasoned investors are diving in, viewing the lower rates and softening market as a chance to grab great deals. On the other hand, mom-and-pop investors and first-time buyers are waiting for even lower rates or more certainty about where the market is headed.
Take the Toronto condo market, for example. Condo prices have fallen to early 2021 levels, and there’s a flood of new inventory — about 19,000 new condos are hitting the market this year.
But demand isn’t keeping up. Higher rates are scaring off first-time buyers, and condo investors are feeling the pinch with negative cash flow. With prices stagnant, many investors are choosing to sell their properties.
What to Expect Moving Forward
As rates continue to drop into 2025, we’re likely to see more buyers re-enter the market.
Timing the market can be tough, and even the pros don’t always get it right, but if you’re looking for deals, this could be the time to buy while the market is soft. Keep an eye on the next few months—it’s going to be interesting.
How We Can Help
If you’re considering jumping into Toronto real estate, we’re here to help!
Our brokerage specializes in buying and selling homes, particularly multiplexes in Toronto. Whether you’re eyeing a ready-to-rent property or need help converting a single-family home into a multiplex, we’ve got the expertise and resources to guide you through the process.
Here’s what it’s like to start as a client with us:
- Initial Consultation: We’ll talk with you to understand your needs and teach you how to invest wisely in Toronto real estate.
- Market Search: We’ll search the market to find the perfect property for you.
- Renovation Support: If the property needs renovations, our trusted contractors are ready to help, and we’ll coach you as you manage the project.
- Leasing and Management: If you need help renting out and managing your property, our leasing and management team is here for you.
Ready to get started? Click on the link below, and let’s start working together!
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
