Financial Post ~ July 4th, 2024
Canadian real estate and overleveraged borrowers need a bigger saviour. A measly 25-basis-point drop in average mortgage rates only translates into a little more than two per cent improvement in payment affordability (home buying power). Hence, the psychological boost from the bank’s initial cut of the cycle can only take the market so far.
What real estate really needs is to wake up the sleeping giants — sidelined buyers. And, make no mistake, they’re there. On top of domestic housing demand, Canada has seen its population rise by a record 1.27 million in the 12 months through June 30, 1.06 million in the period before that, and 0.54 million in the 12 months before that.
All told, we’ve added 2.87 million new housing seekers in three years. That’s more than the entire population of Manitoba and Saskatchewan combined, according to official estimates from Statistics Canada.
So, when will rates drop enough to save borrowers’ wallets and keep home prices buoyant?
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