Rishi Sondhi, economist at TD, checks on the health of the Canadian housing market ahead of the BoC's interest rate decision.
The Bank of Canada has lowered its trend-setting overnight rate by a quarter percentage point at each of its last three meetings.Sondhi said a 50-basis-point cut would likely “hold some psychological meaning” for would-be buyers in addition to the tangible relief it would provide, leading to “a sizeable increase in activity” in the next few months.
“We’re heading for the bottom of the market, but we don’t know when it will be, and buyers are hesitant to move too soon and miss out on a lower rate before home prices begin to rise substantially,” he said. Sondhi noted that home prices have largely trended flat across Canada in the months since the Bank of Canada first cut rates in June, so those potential homebuyers who have decided to wait haven’t yet been penalized for their decision to do so.When it comes to the potential for growth in home values in the coming months, some areas are more primed for price increases than others, Sondhi said.