Gooooood morning! This is the Toronto real estate newsletter that's as unpredictable as our summer weather. Get ready to dive into this week as our fall market is right around the corner!
Here’s what we got for you today:
✍️ Inflation slows… will we see a 0.5% cut?!
😰 Are homeowners trapped by falling prices?
🏢 Canadian condo prices see 1st Double-Dip DECLINE on record
Toronto
Overall
Inventory
9,416 (1.97%)
Sold
252 (-5.62%)
Toronto
Detached
Inventory
2,006 (7.33%)
Sold
85 (-1.19%)
Toronto
Condos
Inventory
6,224 (-0.16%)
Sold
126 (-6.67%)
Stats as of 9:30am EST.
CANADIAN INFLATION SLOWS, MORE RATE CUTS EXPECTED
Inflation in Canada is cooling faster than expected, with a July CPI increase of just 2.5%—the slowest in three years.
Shelter and car prices are leading the slowdown, and economists predict three more rate cuts in 2024.
Canada’s unique inflation model, influenced by mortgage costs, is driving this rapid deceleration.
Market Reactions
The market is responding positively to the slowdown in inflation and the anticipated rate cuts. Bond yields are stabilizing, and some lenders are already adjusting their fixed mortgage rates downward in anticipation of the Bank of Canada’s future cuts. This could mean better mortgage deals are on the horizon, but many buyers are still holding out, waiting for further reductions before making a move.
How You Can Use This News
Create social posts about how upcoming rate cuts could improve mortgage affordability. To take it a step further you can use simple visuals to show potential savings from lower rates.
Send out an email explaining to clients on how these changes could make it a great time to buy - depending on their circumstances of course.
Some Talking Points For Your Calls:
Market Insights: Explain that inflation is slowing and rate cuts are expected, which could lead to lower mortgage rates.
Share Market Movement: Highlight that the market is reacting positively, with some lenders already adjusting their rates in anticipation of further cuts.
Encourage Pre-Approvals: Emphasize that pre-approvals now could provide an advantage as more rate cuts might increase market activity.
SOME HOMEOWNERS TRAPPED BY FALLING PRICES
Homeowners who bought during the 2020-2022 peak are now facing significant equity losses as prices drop, making it hard to sell without taking a hit.
This situation is similar to the 1990 market correction, but with a twist—today’s high immigration levels may help stabilize demand.
The "trapped" effect could limit move-up buying in certain regions, particularly in the outer GTA and parts of British Columbia.
Market Reactions
The market is seeing a mixed reaction. While some areas are experiencing a slowdown in sales and price drops, particularly in the outer GTA and parts of British Columbia, there's also cautious optimism due to the potential stabilizing effect of high immigration. However, the overall sentiment is one of uncertainty, with many homeowners choosing to stay put rather than sell at a loss, leading to fewer move-up buyers and a more stagnant market in certain regions.
Some Talking Points:
Falling Prices and Equity: Explain how the recent price declines are impacting homeowners' equity, especially for those who bought during the market peak, and how this could affect their ability to sell and move up.
Immigration’s Stabilizing Effect: Discuss how high levels of immigration might help stabilize demand in certain regions, offering some hope for future price recovery.
The Importance of Timing: Emphasize the importance of timing in real estate transactions, particularly in a volatile market, and how waiting for the right moment could help preserve equity and buying power.
CANADIAN CONDO PRICES DOUBLE DIP
Condo prices in Canada dropped by 0.5% in July, marking the first-ever recorded double dip in this segment.
Prices are now 9.6% below their April 2022 peak, although they still outperform the broader market.
Market Reactions
Sentiment is skeptical and pessimistic, with comparisons to past downturns and concerns about ongoing price declines. Some express anxiety over further dips, while others point out that high immigration might eventually stabilize the market. Overall, there's a mix of worry and uncertainty.
Some Talking Points For Your Calls:
Market Parallels: Discuss the comparisons to past downturns, particularly the 1989-1994 period, to help clients understand potential market risks.
Price Decline Concerns: Acknowledge ongoing price declines and the possibility of further dips, encouraging clients to stay informed and consider their long-term goals.
Immigration vs. Supply: Highlight how high immigration rates could eventually support the market, despite the current decline, offering a potential silver lining for future stability.
