The Bank of Canada\u2019s 25-basis-point cut in September was at best ignored by the national market, with sales falling 1.7 per cent compared to the month before. (REUTERS\/Blair Gable) \u00b7 REUTERS \/ Reuters <\/p>\n
Canada\u2019s housing market is looking closer to its old, pre-pandemic self \u2014 fractured by region, shaped by local economic factors and behaviours, and no longer moving in lockstep with the Bank of Canada\u2019s interest rate decisions.<\/p>\n
The BoC\u2019s 25-basis-point cut in September<\/a> was at best ignored by the national market, with sales falling 1.7 per cent<\/a> compared to the month before. As the central bank\u2019s next announcement approaches, economists and brokers report its influence is being overpowered by region-specific affordability issues, entrenched regional psychology and \u2014 most of all \u2014 concerns about employment.<\/p>\n \u201cIt’s not one big housing market,\u201d said National Bank of Canada economist Daren King. \u201cIt’s always plenty of small regional markets with plenty of regional differences. And the last four or five years have been the exception because of the pandemic. Everybody wanted to buy a new home at the same time.\u201d<\/p>\n In an analysis of September’s national real estate data, King writes that the \u201cbalanced\u201d conditions nationally mask weak markets in Ontario and B.C. \u2014 where affordability remains a huge issue even as prices have dropped \u2014 and sellers\u2019 markets elsewhere.<\/p>\n A hold on Wednesday could mean a \u201cslight decrease\u201d in activity, King says, while a cut might yield a small increase, \u201cbut I’m not expecting a five per cent increase in transactions, for example, even with an interest rate cut.\u201d<\/p>\n Another 25-basis-point cut won’t make much of a financial difference for many, notes Leah Zlatkin, a licensed mortgage broker and LowestRates.ca expert. \u201cFor every $100,000 borrowed, you’re going to lower your monthly payment by something like $13 to $15,\u201d she said. \u201cFor somebody in a province where their mortgage is $200,000, that’s 30 bucks a month.\u201d<\/p>\n Rate cuts are also only directly reflected in variable-rate mortgages, Zlatkin notes \u2014 and few people currently believe variable rates will go much lower. \u201cMany clients were burned in the past,\u201d she said, and few are willing to gamble on variable rates staying low.<\/p>\n With monetary policy\u2019s direct impact waning, attention shifts to broader economic anxieties like the U.S. trade situation, as well as local conditions, King says.<\/p>\n People are used to homes flying off the market and when they don’t, it makes them question why.Broker-owner Chris Perkins on the Halifax market<\/p>\n \u201cIf tomorrow we have an agreement that is favourable for us, we’ll probably see a big rebound in markets like Toronto and Vancouver,\u201d King said. \u201cBut uncertainty is compounded by the effect of affordability. In those very unaffordable markets, only a small uncertainty is amplified by the affordability problem.\u201d<\/p>\n Story Continues <\/p>\n