Finally! Rate Cuts Boost Sales

Toronto and Vancouver see major sales surges as buyers return, fueled by recent rate cuts

Author

Urban 411
November 07, 2024

Today, we're covering

🏙 Toronto Home Sales Jumped 44% in October

🏡 Vancouver Home Sales Surge 30% After Rate Cuts

😣 Over 1 Million Canadian Homeowners Face Rate Hikes in 2025

👷🏼 High Injury Rates Plague New Construction Workers

🤔 WTF of The Week

Read Time: 4 minutes

🏙 Toronto Home Sales Jumped 44% in October

  • GTA home sales surged by 44.4% in October compared to the previous year, with detached homes up 46%, semi-detached 44%, townhouses 56%, and condos 33.4%.

  • The Toronto Regional Real Estate Board (TRREB) attributes the surge in activity to lower interest rates following four Bank of Canada rate cuts,

  • The average home selling price rose 1.1% year-over-year to $1,135,215, with the composite benchmark price down 3.3%.

  • New listings in the GTA rose by 4.3% year-over-year, indicating moderate market activity and continued inventory availability for buyers.

Why it Matters: While detached and semi-detached homes experienced modest year-over-year price increases, condos and townhomes saw minimal movement due to oversupply. Although prices have remained relatively stable, they are expected to rise in 2025 as supply tightens and demand increases.

🏡 Vancouver Home Sales Surge After Rate Cuts

  • Metro Vancouver real estate markets are seeing a rebound following the recent interest rate cuts by the Bank of Canada.

  • Home sales in October increased by over 30% year-over-year, with Greater Vancouver recording 2,618 sales and the Fraser Valley 1,330 sales.

  • New listings in Greater Vancouver rose 16.9% from October 2023, significantly exceeding the 10-year average

  • Prices remain generally downward; Greater Vancouver's benchmark price is down 1.9% from last year

Why This Matters: The market appears to be stabilizing, and buyers are returning due to lower mortgage rates. Further interest rate cuts are expected, with the following announcement on December 11, which could influence market activity.

😣 Over 1 Million Canadian Homeowners Face Rate Hikes in 2025

  • 85% of 1.2 million mortgages up for renewal in 2025 will face significantly higher interest rates, ranging from 1% to 2.25% more than their original terms.

  • Increased interest rates are causing a rise in mortgage delinquencies, which are still below pre-pandemic levels but are trending upward.

  • Private lenders are experiencing a surge in defaults and foreclosures, with the delinquency rate for single-family homes rising from 1.7% to 5% between 2022 and 2024.

Why This Matters: The high rate of mortgage renewals could result in a spike in home listings as owners try to sell to avoid default, especially in markets like Toronto. Potential buying opportunities may arise if distressed sales or listings surge lead to lower property prices.
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👷🏼 High Injury Rates Plague New Construction Workers

  • According to a new report, over 55% of construction injury claims in Alberta are from first-year workers.

  • 330,000 Canadian construction workers (1 in 5) will retire in the next 10 years, deepening the labor shortage.

  • High demand and a labor shortage are leading to an influx of inexperienced workers in construction.

Why This Matters: The high injury rate among first-year workers in Alberta highlights the risks posed by inexperienced labor, compounded by a growing labor shortage. This creates a vicious cycle where fewer experienced workers and limited training opportunities jeopardize safety and production capacity.

🤔 WTF of The Week

The map below highlights the real cost of homes in various countries, represented by the monthly wages needed to purchase a 100-square-meter home.

It makes you realize that Canadian and U.S. home values might be significantly undervalued compared to many countries, especially given the perceived lifestyle advantages and economic stability they offer.