With a second rate cut from the Bank of Canada, one might posit this will lead to a sudden boom in the housing market, but history suggests otherwise. Data since the 1980s shows that home prices often decline following BoC rate cuts, due to the lag effect and economic deterioration that usually follow the peak of a cycle. Considering nearly half of all Canadian mortgages are renewing in the next two years, many of which were signed at considerably lower rates, a rebound in home prices may occur further into 2025. The longer the pullback, the longer the resurgence. However, new restrictions on property use add an element of uncertainty to this potential outcome.

It's still too early to see the effects of lower borrowing costs, as residential sales are 17.6% below the 10-year seasonal average. Some buyers are coming off the sidelines and capitalizing on the available opportunities, yet others are finding difficulty in selling. The total number of properties currently listed for sale is around 39% over last year. Overall, price trends across all segments have moderated, with slight declines month-over-month. Condos continue to be the only property type experiencing a year-over-year decrease.

Greater Vancouver holds 6 months of inventory, between a balanced and buyer's market. Cities like North Vancouver, New Westminster, Port Moody, Ladner, and Pitt Meadows have just 4 months of supply, signalling a seller’s market. July marked the fourth consecutive month of declining new listings, though it still had more than last year, ranking second highest since 2008.

The second half of 2024 could potentially outpace the first in sales, as pent-up demand continues to build. While new listings dropped in July compared to August, the absorption rate stayed steady, dipping slightly to 41% from 42%. Active listings grew slower, likely due to some sellers losing patience and pulling their homes off the market. 

After hitting a high of 4.46% in 2023, the 5-year Canada bond rate is down to 2.9%. With economic data pointing to a sluggish economy here in Canada and the U.S., expect that trend to continue through the remainder of 2024. As we look ahead, the three remaining Bank of Canada meetings could lead to interest rate cuts and lower fixed rates.

The initial changes to the Residential Tenancy Regulations laid out in Bill 14 came into effect on July 18, 2024. It required four months' notice, instead of the previous two months' notice, for evictions due to personal or caretaker use, giving displaced tenants more time to find a home. Additionally, the dispute period was changed to 21 days (previously 30 days) for when a landlord issues a notice to end the tenancy on behalf of a purchaser.

With zero prior consultation from industry stakeholders, there was significant pushback due to the adverse effect of preventing first-time homebuyers from purchasing a tenanted property. Particularly for those under Canada Mortgage and Housing Corporation (CMHC) programs, which require the property to be vacant at possession. It got to a point where agents had to steer their clients away from tenanted homes to avoid any potential conflicts at closing. Kind of defeats the purpose of more inventory if no one is willing to buy.

As of August 1, 2024, first-time homebuyers requiring insured mortgages with less than 20% down, can extend the amortization period from 25 to 30 years. The caveat is that it only applies to newly built homes. Another form of optics from the government, and more of a liquidity injection rather than improving affordability. New construction requires an additional 5% GST on top of the purchase price, and now that there is less investment in newly built condos, it appears like another attempt to stoke demand.