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Let's talk about Toronto Real Estate!
In February, both home sales and new listings in the GTA saw an increase compared to the same period in 2023, as well as on a month-to-month basis. Additionally, selling prices showed a slight upward trend compared to last year.
While the numbers are showing signs of positive market growth, home sales remained well below the record levels set in February 2021 due to the impact of higher borrowing costs.
Check out Alex's latest video where he goes over all the numbers in detail!
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Market Update
From Sean Smith of Dominion Lending
Renewals – the importance of shopping around:
I am seeing a tremendous number of clients coming up for renewal where their bank is not offering them competitive interest rates. Some rates are up to 1% higher than the market currently offers.
Banks understand that a portion of their mortgage book cannot shop around due to the higher interest rates and are capitalizing on these opportunities.
The takeaway: A 15-minute conversation can save your clients thousands of dollars.
The Bank of Canada Announcement:
Unsurprisingly, the Bank of Canada has maintained the overnight rate at 5% yesterday, consistent with its public stance in recent meetings.
Tiff Macklem also reaffirmed the Bank of Canada’s commitment to normalizing its balance sheet and signaled cautiousness regarding potential lingering inflation risks.
There was a quote from Tiff Macklem yesterday that sums up the bank's key concerns very well: “We don’t want to keep monetary policy this restrictive longer than we have to, but nor do we want to jeopardize the progress we’ve made in bringing down inflation.”
Over the next few months, the bank is waiting for further declines in core inflation readings. Once those are in, the cuts will start. Some economists predict cuts of up to 2.5% (250bps) over the next two years, bringing the overnight rate down by half its current levels.
The Economic Highlights:
Lingering Inflation Concerns: While CPI inflation dropped to 2.9% in January, core inflation measures remain elevated, ranging from 3% to 3.5%. The Bank anticipates inflation to stay around 3% in the first half of the year, though there are indications of easing wage pressures.
Speculation on Rate Cuts: Despite concerns, there's growing speculation that inflation may slow more rapidly, possibly leading to a rate cut by mid-year. However, Governor Tiff Macklem emphasized that it's too early to consider lowering the policy interest rate.
Future Outlook: Higher interest rates are affecting household spending, especially mortgage renewals, so the Bank may signal a shift towards easing monetary policy as the economy slows. This signal could come as early as the April 10 meeting, with a potential rate cut expected by June.
Economic Landscape: Although the Canadian economy is experiencing modest growth and avoiding a technical recession, there are signs of weakness. These include declining real GDP per capita, and a significant performance gap compared to the United States. Increased business insolvencies are likely linked to CEBA repayment requirements and higher interest rates.
Labor Market and Population Growth: Despite challenges, the Canadian job market remains robust, with new jobs created and the unemployment rate declining to 5.7% in January 2024. Moreover, Canada's population growth is at its highest level since 1950, driven by increased immigration.
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