“Buyers will be impacted differently than Sellers”

For Home Buyers:

Positive Implications:

• Lower borrowing costs: Reduced interest rates could lead to lower mortgage rates, making homeownership more affordable for buyers.

• Increased purchasing power: Lower rates mean buyers may qualify for larger mortgages, allowing them to consider higher-priced properties. (But remember, fixed rates are NOT related to the BoC lending rate as much as they are to the Bond Market)

• Stimulated demand: Lower rates could spur more buyers to enter the market, easing potential concerns for sideliners. (But remember, DO NOT let FOMO guide you … fundamentals first, always!)

Negative Implications:

• Potential price inflation: Increased demand could push housing prices higher, potentially offsetting some of the initial affordability gains. (100% a huge concern as FOMO has often led our markets vs sound decision making)

• Limited inventory: High demand coupled with limited housing supply in Toronto could result in bidding wars and less negotiating power for buyers. (More true for FREEHOLD vs CONDOS, as CONDOS will more than likely remain on their downward trend given the massive influx of new construction + resale + investor offloads …. too much inventory to all of a sudden be gobbled up)

• Speculative behavior: Lower rates might encourage speculative buying, leading to an inflated market and potential risk of reigniting a housing bubble. 

For Home Sellers:

Positive Implications:

• Increased demand: Lower rates could attract more buyers to the market, potentially leading to faster sales and higher selling prices.

• Competitive advantage: With more buyers in the market, sellers may benefit from multiple offers and quicker closings. (More true for FREEHOLD vs CONDOS, as CONDOS will more than likely remain on their downward trend given the massive influx of new construction + resale + investor offloads …. too much inventory to all of a sudden be gobbled up)

• Improved market sentiment: Lower rates often signal economic stimulus, fostering a sense of optimism that can benefit sellers.

Negative Implications:

• Potential oversupply: If a surge in demand doesn’t match an increase in supply, it could lead to an oversaturated market in the long run. (100% what we saw with the previous 0.25% rate cut, specifically in the condo sector!)

• Uncertainty: Rapid market changes due to rate cuts may create uncertainty among sellers, making it challenging to gauge optimal pricing strategies.

• Affordability concerns: Rising prices due to increased demand may limit the pool of qualified buyers, potentially slowing down the selling process. (A big concern in the FREEHOLD world, as many pockets still remain priced well above what most can afford comfortably)