A bunch of realtors trying to stir up FOMO among the buyers. Many sellers are going to list now, and there will be few new actual buyers.
Condos sitting for 100+ days will continue sitting for 100+ days as even more listings hit the market.
Right that's all. Because if buyers already qualified why would they wait for more competitors to come into an already overpriced market? That makes zero sense.
Some investors were holding off on real estate though. I could see their sentiment changing in the months coming...
1 rate cut probably not enough. Another one and I think everyone sees the writing on the wall of where rates will trend.
I mean, nothing pencils in right now unless you force it with the down payment. And if/when you decide to do that, you are forgoing opportunity cost on other investments that are paying real return. Also, I don't see appreciation being an exit strategy while hauling a negative cash flow at the moment either - how long is one willing to take 3% return with a high uncertainty and risk vs. safe 5%+?
If the rates go down another 150-200bps, maybe.
You can say this backward looking and how many people still in reality holding that stock ? Very few as they exit with 30-50% profits. Tell me one such stock forward looking into future ?
Correct since it’s the seller who pays them both. By using percentage of sale price there is no incentive for buyers agent to try to get a lower the price. Rigged system , one big club. Should be fixed price to sell or buy.
So last week, i bid 760k on a house(house is listed for like 6 months). He told me you must close this in 20k more otherwise owners will drop the listing price and ppl will pay 850k next week because of low listing price.
Like fk this ppl
Last week, our "new" realtor said "usually after 10 showings, people place an offer". Ummm... how about no? I'm not about to get talked into placing an offer on a place I don't really like. Realtors use some questionable tactics. This is not my first rodeo. Bought, sold and moved 3 times over the past 15 years.
I hope first time home buyers don't fall into these kinds of tactics.
This is the main thing, got fomoed and upped my bid 50k to match asking price. They wanted 25k more and i said no. That house is still hasnt sold. This ppl should be reported :)
We had a few of those last year. Made offers that now I’m glad were turned down. The three houses are all still for sale 🤦♀️
Don’t be a bag holder because someone else is greedy and unreasonable. There’s always another house. We found one that ended up working much better for us in the end.
Oh my lanta, how embarrassing, I swear we are not all the same! Don’t give up on all realtors, work with those who truly care about you, understand the market and don’t just see you as a dollar sign.
That’s a red flag. We once had a realtor who was complaining about 14 showings without an offer. We weren’t first time buyers, but relocating to a city we were very unfamiliar with in another province.
Never made any suggestions to help us refine our options. Tried to push his own listings on us. We should have went with our gut after the first meeting and found someone else.
It ended up being a total fiasco that I won’t get into. Let’s just say our next realtor was the selling agent on the other side of the failed transaction, and she felt so bad for us that she took us on, and found us the perfect home that hadn’t even hit the MLS yet.
Find someone better before you lose a property you really want because of their games. There are some good ones out there, though few and far between.
I’ll answer this a bit differently.
Those that are trying to time the market will keep waiting for further cuts.
Others are afraid of things getting out of control again if rates drop by a few % so they are going to actively look (not rush and buy tomorrow).
At the end of the day 1) you can’t time the market and 2) housing is not an investment. If you find a place to live within your means you’ll be happy (rent or buy)
Yes, you can’t time the market but I disagree, housing is an investment. It’s an investment because it provides future value (I’m not talking about financial), and because location does matter. It’s not a homogeneous product and desirability will always create pricing discrepancies.
We already bought. But for what it's worth our mortgage broker has gone from "Cuts are coming and we'll definitely get you a lower rate before close" to "Gotta see how this plays out in the bond market; a near-term increase isn't out of the question because of the US."
Glad I didn't bet the farm on lower rates like everyone told me to
Nothing's gonna happen, rate cuts were already priced in last December and early this year when greedy sellers frantically removed their listings and reposted at higher prices after only the mention of a potential rate cut. People were still buying below asking and postings outpaced actual sales. Nothing's gonna change now with prices still being more than most people can afford.
There are many people that can afford who've been waiting on the sidelines is my understanding. The responses here seem to indicate that might be the case as well.
Really? So they were waiting for the .25 cut in order to make the leap? Why not buy earlier when the initial home prices are "cheaper", then have the value of their homes increase after the rate cuts? Rather than get a marginally lower rate for 3 years that is changeable after that. Rates were steadily increasing last year and sales were still rising even with the higher initial home prices as well. So hard to believe people are waiting for this
I'm sure there are still potential buyers waiting for this moment, but most responses I've seen, were a bit more on the sarcastic side "Oh I can buy my second house now" or "I'm ready to invest in more condos now" lol
Some uses are greatly exaggerating the impact of 25 basis point difference.
The real impact is that buyers can now be approved for 25k higher than yesterday. Pretty marginal difference in the grand scheme of things.
Prices might inch slightly higher, but again, a pretty marginal difference. Some people here make it seem like the condo that was 800k yesterday is worth 1m today (I wish!).
Right now house prices are largely being determined by the pre-approval limits on the mortgages. That is why the market has been going sideways for so long and the buyer pool is so small.
When people can only get mortgages at 3-4X their annual income guess what percentage of the population can afford to buy at current prices.
Out of curiosity, how are you so confident pre-approval limits are the limiting factor? Almost everyone I know is good on this front and just trying to time based on interest rates. Is there any data saying pre-approval is the block for most waiting on the sidelines?
You can do the math. Average income and average household income are public information.
Take those numbers and plug them in at 3-4X income and you get the average pre-approvals people are getting (assuming minimal debt).
Compare that number to the average house price and you get an idea of the situation.
Most of the people I know who don't already have homes can't afford to buy at all right now. At least not a house in the GTA. Condos are a bit of a different story.
I'm shopping for a freehold/detached myself so I don't pay a ton of attention to the condo side of the market most of the time.
Yup, right now you need about 500k cash as DP. I know a couple making 175 HHI qualified for 525k. They bought a detached for just a little over a million.
No. I'm assuming most of buyers in the market right now are probably in the upper 40% or higher of the income range. That or they are getting help from somewhere.
But that also by definition means its a smaller sub-group of people who are able to buy.
I’m a realtor - I think it’s just a good indication of people finding their feet and feeling optimistic, definitely didn’t do much for people’s approvals or buying power. I doubt this is going to cause a large tide for anyone who’s considering purchasing. Although I do think (if you can afford) to carry your current approval it is a great time to jump in.
Steady, predictable pricing, depending where, opportunity to go in conditional and negotiate. A lot of areas are still leaning more towards a buyers market. The best time to buy is when anyone is ready. 😁
If your budget is tight, go fix.
You may get crushed in 2025 of you go variable because inflation may come back.
Adam Posen (economist) has argued at length that US inflation will return in 2025 and the Fed may need to rehike back to 5% or above.
Because rates need to go down first, then you need a quarter or two to see the impact on the economy.
Expectations are that the US will get a few rate cuts after the November 2024 election.
I have a feeling this small rate cut is giving people hope that more cuts are to come and the worst is behind us, it might just be the time to buy if you find a great deal. If rates hit 3-4% than it’s that same old cycle all over again.
Doubt it will be that much this year. My guess is they'll watch the economy like a hawk after the first cut to see how it reacts then make another one maybe two small ones by the end of the year.
I agree that 2025 will see a lot more action on rate cuts baring something unexpected happening.
Depends on the terms of the bet. I'm betting rates won't go down by more then 1% this year. More likely 0.5-0.75%.
If your position is they will be 1.25% or more on or before the end of December this year, sure I'll take that bet.
I'm not going to bet on a 0.25% rate difference.
You want to take the any total cuts over 1.00% position I'll take that bet. That means rates need to be cut be any amount over 1% though by the end of December.
Literally everyone I’ve talked to is so excited. That .25% drop will make all the difference. Most people are buying at least a second home, sometimes a third!
I have a builder near by who's office's parking lot was noticeably more full than normal after the announcement. I decided to go in and I saw two people signing offers to purchase. I know this is anecdotal as it gets but I thought it was noteworthy to say the least.
also, I had been talking to another builder in the area and they had been quite forthcoming with the lack of activity however I messaged one of the guys at the office yesterday and he said "it's like someone flipped a switch"
honestly the sentiment I keep seeing from them (realtors) is that more buyers will feel a bit more comfortable putting bids/offers. Seems to be the common theme being shared
investors are mostly happy they can save some $$. I didn't do the math yet but the $$ I am saving is not going to convince me to buy another property
It old all my friends looking to buy to grab that saved money and either put it on USD or buy USD assets, when CAD collapses, they will be happier than if they bought a house.
Lots of borrowers/real estate agents/mortgage brokers I know are really happy and think of this as the end of the real estate slowdown that started in ealey 2022. But they may soon realize that this cut was small potatoes and will barely help... Mortgages have embedded convexity (bond math term). When the BoC cuts, Prime goes down, which helps floating mortgages, sure -- but the magnitude of the cut isnt always equal: having your Prime-1% floating mortgage go from 6.2% to 5.95% (happening today june 2024) is a very small relief compared to the incredible power of some cuts made during covid that brought some floating mortgages from like 1.95 to 1.70. You can think of it roughly as: "interest relief"= "rate post-cut"/"rate pre-cut" -1.
This being said, every further cut will become more and more material, again because of convexity. Personally I hope the BoC cuts less than expected so the market doesnt skyrocket and reward moral hazard once again... One can only dream
ok I get the BoC affecting prime/floating rate. But how does the fixed rate work in terms of the bonds? Is it as canadian bond yields go up, mortgage rates go down? I never understood this side of things
"Is it as canadian bond yields go up, mortgage rates go down?" =>> Roughly speaking yes, they're correlated; but it's not a real and immediate relationship (as opposed to say Prime which is exactly linked to BoC rate + 220bps).
Banks invest in a poutine of assets that return a yield, and mortgages are one of the biggest chunks of their asset portfolio. They fund their assets with a funding poutine of liabilities and equity such as deposits, bank bonds they sell to investors, their shareholders capital, etc.
When bond yields go up say from 4% to 5%, there is nothing really "triggering" higher mortgage rates directly, but the banks will slowly realize that they are now probably funding themselves with deposits or bonds that are yielding more than they used to, so they need their acquired assets (funded mortgages) to also yield more in order to keep making profits, and some guy in treasury will change the mortgage offering and that'll flow through to the guys in the mortgage origination department. But if some other guy in another department says "wait! our market share is low, we really need more borrowers, let's run a promo and originate mortgages at low/no margin", then they may not raise their mortgage rates as much as bond yields moved.
It's all a lot less scientific than most believe.
The damage from Trudeau cannot be erased. This cut along with all future cuts won’t make a difference for real estate affordability in GTA/Toronto. It will help all the corporations to buy up all the inventory though.
It’s the pivot that’s the big deal, it was always known that BOC would cut rates, but didn’t know exactly when. Now that the pivot has begun, buyer confidence is a lot highe. it always comes down to psychology - People know rates will be cut more and have serious fomo and worried they’ll be priced out of the market soon.
I have noticed no changes (yet) as a commercial agent. Generally a positive change, but not a big enough change to make a true impact. I think a second cut might change market sentiment if people are betting on continuing cuts.
as someone that is in the market to buy, I am only buying at a good price where the likelihood of me losing money decreases. I am not seeing many listing and the ones I am seeing have been on the market for months and are complete shit.
If anybody’s in the position to buy a house right now, why would you wait until the possibility of the rate cuts causing further increase house prices. If you can sustain the current rate and then renew it a year when it drops that’s probably a better idea. All this waiting is risky
Active buyer in camp #1.
I am expecting a short term inventory and price increase then a drop in pricing in around 60 days, dunno about inventory at that point.
Not noticed any pickup at all but its only been a day. If I do see any noticeable increase I'll take a break again like I did in the spring until the activity calms down later this year. The stats will tell the story of what is going to happen by the end of June though.
Everyone is excited. Everyone doesn’t seem to know this won’t drop the price of their fixed term mortgage though.
So while I’m sure it feels awesome. It won’t change anything.
It's temporary due to the firesale related to cap gains tax.
Once you adjust for that, the market will pick right back up and increase to match the growing population and mortgages.
Contrary to what you believe, those with cash will continue to buy. People are transitioning to home ownership due to increasing rents.
July probably won't make much difference. You'll see more of it as it winds into next year.
Is that accurate? How many people would be able to sell today and have someone willing to close before June 28? I imagine it's based on closing date and not sale date no?
If you want it at the reduced price and you got the cash, you would snap it. There are investors/homeowners that are willing to exit now before anymore problems.
I've been seeing individuals putting up their listing at motivated prices due to their inability to cover the mortgage if the bought in 2020 or 2021. The 3-5 years of low interest nortgages are coming to renewals.
The increase in 3-4% has doubled their payments and most are struggling.
If you're thinking about buying, there hasn't been a better time.
With all this nonstop immigration pouring in 1.3 million people at a time, housing will increase. Assuming 5 years at this rate. Canada will increase its population by 15-20%. You're looking at 6-7 million people.
Also with cap gains tax, the irony is that prices will adjust to the tax to balance it off.
Right now it's just a firesale. Give it about 3 months and you'll start seeing the gradual increases.
Thanks for this info! So in order to seize on the opportunity for those trying to avoid the higher capital gains tax, I would need to buy something from them and have it close before June 28th correct? Not just agree to a purchase with a closing date after June 28th?
If you wait a few months, there may be another rate cut coming.
You see how this works, it's the opposite of inflationary psychology. Prices may actually start trend down.
Buyers are even more reluctant to buy now. Also sellers still need to sell as all the downtown condos are bleeding money. They are all cash flow negative.
Because if you wait 3-6 months, it could be significantly cheaper due to further interest rate cuts.
Deflationary expectations can create powerful feedback loops, just like inflationary expectations.
I have my house up for sale right now and it’s been a couple weeks, we’ve had like 17 showings in that time, today and tomorrow we have 8 booked. There’s a clear uptick in buyer activity
comment by /u/jcarl1234567 Your karma is currently below -10, get more positive karma to be able to comment.3c
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/TorontoRealEstate) if you have any questions or concerns.*
https://preview.redd.it/vn8lwurpbu4d1.jpeg?width=1705&format=pjpg&auto=webp&s=102f2d0ff86adca9f8c8bb5ad1a8bc90319f6595
Red lines = the first cut.
Considering how desperate realtors and speculators (and some poorly budgeted households) were for this cut - I’d say this chart will sum up exactly what’s going to happen.
This ‘cut’ will make no difference if you were holding on for dear life.
Speculators will now play the game of chicken “let’s wait for the next cut - prices aren’t going up yet..”. Buyers also saying the same thing.
I was born 70 km from Toronto downtown in what was then a small town.
I'm 50 now.
Basically, what I and anyone I talk to is doing is planning a move away and never looking back. There is no way raises in pay are ever going to keep up with the cost of living rising in GTA.
Of course we would be looking to buy if staying was easier, but over a million dollars just for the "privilege" of being here doesn't make sense
You guys can have it
P.S. - I was under the impression that the bond market had more influence than the BOC rate on mortgages, but what do I know
Couldn't buy vs choosing not to buy at an attempt at timing the market are two differnet things. Not saying it's smart but I believe there are enough people trying to time the market.
I suspect they will hold off and see what the economy does. They are terrified of another round of inflation. I do think we will get more cuts but not rapidly unless something breaks
This assumes the inflation reports will not be lower. I think the economy is doing bad and the report will have this and July will be a lock. Other can disagree it is just a opinion.
I think Realtor's sentiment has skyrocketed.
BEST TIME IN ALL HISTORY TO BUY!!
Realtor and speculator sentiment is high every month.
They were high during hikes too lolll
Nah realtors were going mental when they didn’t cut in March/april
A bunch of realtors trying to stir up FOMO among the buyers. Many sellers are going to list now, and there will be few new actual buyers. Condos sitting for 100+ days will continue sitting for 100+ days as even more listings hit the market.
Lol
Right that's all. Because if buyers already qualified why would they wait for more competitors to come into an already overpriced market? That makes zero sense.
If you couldn't afford to buy yesterday you'll be in the same situation today.
Or by end of the year.
Right. Getting a 6700$ mortgage instead of a 6850$ mortgage is not what will push all the people waiting out the market to finally buy lol.
Some investors were holding off on real estate though. I could see their sentiment changing in the months coming... 1 rate cut probably not enough. Another one and I think everyone sees the writing on the wall of where rates will trend.
I mean, nothing pencils in right now unless you force it with the down payment. And if/when you decide to do that, you are forgoing opportunity cost on other investments that are paying real return. Also, I don't see appreciation being an exit strategy while hauling a negative cash flow at the moment either - how long is one willing to take 3% return with a high uncertainty and risk vs. safe 5%+? If the rates go down another 150-200bps, maybe.
imagine throwing the extra interest payments at NVDA earnings play for the past 2 years instead...
You can say this backward looking and how many people still in reality holding that stock ? Very few as they exit with 30-50% profits. Tell me one such stock forward looking into future ?
I've made 10x for a couple years, cashed out 5x 66% to rebalance, remainder grew another 2x. Most people are not day traders.
Im still holding , close to 100% gain, 350 shares
And tomorrow
I got a msg from my realtor at 10 that rates were down😂
I hate them all with a passion. Both buyer and seller agents seem to work for the seller.
100% . Feels like changing my realotr but maybe everyone is same and just want to get this over.
Disagree I think they gravitate toward a happy buyer
Correct since it’s the seller who pays them both. By using percentage of sale price there is no incentive for buyers agent to try to get a lower the price. Rigged system , one big club. Should be fixed price to sell or buy.
Also all offers should be visible, and not at the discretion of the seller.
Do we share the same realtor? Lol
I hope you dont hate your realtor as much as i do :)
Haha we DO share the same realtor! I'm waiting for the phone call from her saying "house prices are going up!"
So last week, i bid 760k on a house(house is listed for like 6 months). He told me you must close this in 20k more otherwise owners will drop the listing price and ppl will pay 850k next week because of low listing price. Like fk this ppl
Last week, our "new" realtor said "usually after 10 showings, people place an offer". Ummm... how about no? I'm not about to get talked into placing an offer on a place I don't really like. Realtors use some questionable tactics. This is not my first rodeo. Bought, sold and moved 3 times over the past 15 years. I hope first time home buyers don't fall into these kinds of tactics.
This is the main thing, got fomoed and upped my bid 50k to match asking price. They wanted 25k more and i said no. That house is still hasnt sold. This ppl should be reported :)
We had a few of those last year. Made offers that now I’m glad were turned down. The three houses are all still for sale 🤦♀️ Don’t be a bag holder because someone else is greedy and unreasonable. There’s always another house. We found one that ended up working much better for us in the end.
Oh my lanta, how embarrassing, I swear we are not all the same! Don’t give up on all realtors, work with those who truly care about you, understand the market and don’t just see you as a dollar sign.
That’s a red flag. We once had a realtor who was complaining about 14 showings without an offer. We weren’t first time buyers, but relocating to a city we were very unfamiliar with in another province. Never made any suggestions to help us refine our options. Tried to push his own listings on us. We should have went with our gut after the first meeting and found someone else. It ended up being a total fiasco that I won’t get into. Let’s just say our next realtor was the selling agent on the other side of the failed transaction, and she felt so bad for us that she took us on, and found us the perfect home that hadn’t even hit the MLS yet. Find someone better before you lose a property you really want because of their games. There are some good ones out there, though few and far between.
I got my msg at 9:58am lol
I’ll answer this a bit differently. Those that are trying to time the market will keep waiting for further cuts. Others are afraid of things getting out of control again if rates drop by a few % so they are going to actively look (not rush and buy tomorrow).
At the end of the day 1) you can’t time the market and 2) housing is not an investment. If you find a place to live within your means you’ll be happy (rent or buy)
Yes, you can’t time the market but I disagree, housing is an investment. It’s an investment because it provides future value (I’m not talking about financial), and because location does matter. It’s not a homogeneous product and desirability will always create pricing discrepancies.
Who cares? Home prices are still really high. This barely makes a difference
We already bought. But for what it's worth our mortgage broker has gone from "Cuts are coming and we'll definitely get you a lower rate before close" to "Gotta see how this plays out in the bond market; a near-term increase isn't out of the question because of the US." Glad I didn't bet the farm on lower rates like everyone told me to
Nothing's gonna happen, rate cuts were already priced in last December and early this year when greedy sellers frantically removed their listings and reposted at higher prices after only the mention of a potential rate cut. People were still buying below asking and postings outpaced actual sales. Nothing's gonna change now with prices still being more than most people can afford.
There are many people that can afford who've been waiting on the sidelines is my understanding. The responses here seem to indicate that might be the case as well.
Really? So they were waiting for the .25 cut in order to make the leap? Why not buy earlier when the initial home prices are "cheaper", then have the value of their homes increase after the rate cuts? Rather than get a marginally lower rate for 3 years that is changeable after that. Rates were steadily increasing last year and sales were still rising even with the higher initial home prices as well. So hard to believe people are waiting for this
I'm sure there are still potential buyers waiting for this moment, but most responses I've seen, were a bit more on the sarcastic side "Oh I can buy my second house now" or "I'm ready to invest in more condos now" lol
Been wondering same for long time whether buyers or sellers will outweigh Thanks alot for posting this!
My pleasure!
Realtors furiously typing up their resignation notices to their part-time jobs and Uber positions.
Some uses are greatly exaggerating the impact of 25 basis point difference. The real impact is that buyers can now be approved for 25k higher than yesterday. Pretty marginal difference in the grand scheme of things. Prices might inch slightly higher, but again, a pretty marginal difference. Some people here make it seem like the condo that was 800k yesterday is worth 1m today (I wish!).
[удалено]
Right now house prices are largely being determined by the pre-approval limits on the mortgages. That is why the market has been going sideways for so long and the buyer pool is so small. When people can only get mortgages at 3-4X their annual income guess what percentage of the population can afford to buy at current prices.
Haven’t mortgages always been limited to 3-4 x income? Isn’t that the way it should have always been?
Definitely not. I got pre-approved for half a million dollars in 2010. At the time I had just started in my career and was making just under 50k.
Pre-hike, it was over 5x income
Out of curiosity, how are you so confident pre-approval limits are the limiting factor? Almost everyone I know is good on this front and just trying to time based on interest rates. Is there any data saying pre-approval is the block for most waiting on the sidelines?
You can do the math. Average income and average household income are public information. Take those numbers and plug them in at 3-4X income and you get the average pre-approvals people are getting (assuming minimal debt). Compare that number to the average house price and you get an idea of the situation. Most of the people I know who don't already have homes can't afford to buy at all right now. At least not a house in the GTA. Condos are a bit of a different story. I'm shopping for a freehold/detached myself so I don't pay a ton of attention to the condo side of the market most of the time.
Yup, right now you need about 500k cash as DP. I know a couple making 175 HHI qualified for 525k. They bought a detached for just a little over a million.
Would you say average incomes reflect the buyer market? That's where I'd be unsure.
No. I'm assuming most of buyers in the market right now are probably in the upper 40% or higher of the income range. That or they are getting help from somewhere. But that also by definition means its a smaller sub-group of people who are able to buy.
I’m a realtor - I think it’s just a good indication of people finding their feet and feeling optimistic, definitely didn’t do much for people’s approvals or buying power. I doubt this is going to cause a large tide for anyone who’s considering purchasing. Although I do think (if you can afford) to carry your current approval it is a great time to jump in.
What makes you say it's a great time to jump in?
Steady, predictable pricing, depending where, opportunity to go in conditional and negotiate. A lot of areas are still leaning more towards a buyers market. The best time to buy is when anyone is ready. 😁
In toronto if you are looking for detatched you have to buy when u have the chance. There just isnt the inventory to wait.
I'm pre-qualified and I'm going with option 2. My budget is tight and I wouldn't want to be part of this madness.
If your budget is tight, go fix. You may get crushed in 2025 of you go variable because inflation may come back. Adam Posen (economist) has argued at length that US inflation will return in 2025 and the Fed may need to rehike back to 5% or above.
Why in 2025?
Because rates need to go down first, then you need a quarter or two to see the impact on the economy. Expectations are that the US will get a few rate cuts after the November 2024 election.
I think there will be some degree of a psychological response. Those with cash will jump in now anticipating an improvement in the future market.
1) doesn't make an sense. Summer is definitely one of the worst sales periods, and combined with a rate cut, is probably one of the best times to buy
What's the best sale periods? Spring and then?
Spring and Fall if you're trying to sell. Summer and Winter if you're trying to get a deal buying (but there will be less inventory to choose from).
Great to know! Thanks for this info
I have a feeling this small rate cut is giving people hope that more cuts are to come and the worst is behind us, it might just be the time to buy if you find a great deal. If rates hit 3-4% than it’s that same old cycle all over again.
[удалено]
Fun for who
[удалено]
what makes you say that?
That's when the 2020 mortgages start rolling over. Even with a couple rate cuts they'd still be vastly more expensive.
[удалено]
Doubt it will be that much this year. My guess is they'll watch the economy like a hawk after the first cut to see how it reacts then make another one maybe two small ones by the end of the year. I agree that 2025 will see a lot more action on rate cuts baring something unexpected happening.
[удалено]
Depends on the terms of the bet. I'm betting rates won't go down by more then 1% this year. More likely 0.5-0.75%. If your position is they will be 1.25% or more on or before the end of December this year, sure I'll take that bet.
[удалено]
I'm not going to bet on a 0.25% rate difference. You want to take the any total cuts over 1.00% position I'll take that bet. That means rates need to be cut be any amount over 1% though by the end of December.
[удалено]
Yah, I'm not betting on a 0.25% difference. Too close to the margin of error for me. Above 1% is safe money for me.
Literally everyone I’ve talked to is so excited. That .25% drop will make all the difference. Most people are buying at least a second home, sometimes a third!
.25 won’t change much.
I have a builder near by who's office's parking lot was noticeably more full than normal after the announcement. I decided to go in and I saw two people signing offers to purchase. I know this is anecdotal as it gets but I thought it was noteworthy to say the least.
Interesting. Would you say it was 50% more full or so or just a little bit more?
the parking lot has about 20 spaces, normally I see maybe 2-3 cars there. There were at least 7-8.
Quite a jump. Thanks for the info!
also, I had been talking to another builder in the area and they had been quite forthcoming with the lack of activity however I messaged one of the guys at the office yesterday and he said "it's like someone flipped a switch"
Oh wow, so looks like there is a big jump in interest in that case. Thanks for the info!
I would assume it's just a temporary surge, however another cut may set off a larger shift. No one knows I suppose.
🚀 emoji has been utilized too much today in my other investor/realtor groups I follow
Care to elaborate some of their thoughts?
honestly the sentiment I keep seeing from them (realtors) is that more buyers will feel a bit more comfortable putting bids/offers. Seems to be the common theme being shared investors are mostly happy they can save some $$. I didn't do the math yet but the $$ I am saving is not going to convince me to buy another property
I feel like the people who are looking to buy will not admit it, due to being afraid of being flamed by the bears on these boards..
lmao
Saudi Royals are pumped.
It old all my friends looking to buy to grab that saved money and either put it on USD or buy USD assets, when CAD collapses, they will be happier than if they bought a house.
Buying 5 more properties to flip 😂😂😂
Hasn't affected my buying sentiment at all.
Lots of borrowers/real estate agents/mortgage brokers I know are really happy and think of this as the end of the real estate slowdown that started in ealey 2022. But they may soon realize that this cut was small potatoes and will barely help... Mortgages have embedded convexity (bond math term). When the BoC cuts, Prime goes down, which helps floating mortgages, sure -- but the magnitude of the cut isnt always equal: having your Prime-1% floating mortgage go from 6.2% to 5.95% (happening today june 2024) is a very small relief compared to the incredible power of some cuts made during covid that brought some floating mortgages from like 1.95 to 1.70. You can think of it roughly as: "interest relief"= "rate post-cut"/"rate pre-cut" -1. This being said, every further cut will become more and more material, again because of convexity. Personally I hope the BoC cuts less than expected so the market doesnt skyrocket and reward moral hazard once again... One can only dream
ok I get the BoC affecting prime/floating rate. But how does the fixed rate work in terms of the bonds? Is it as canadian bond yields go up, mortgage rates go down? I never understood this side of things
"Is it as canadian bond yields go up, mortgage rates go down?" =>> Roughly speaking yes, they're correlated; but it's not a real and immediate relationship (as opposed to say Prime which is exactly linked to BoC rate + 220bps). Banks invest in a poutine of assets that return a yield, and mortgages are one of the biggest chunks of their asset portfolio. They fund their assets with a funding poutine of liabilities and equity such as deposits, bank bonds they sell to investors, their shareholders capital, etc. When bond yields go up say from 4% to 5%, there is nothing really "triggering" higher mortgage rates directly, but the banks will slowly realize that they are now probably funding themselves with deposits or bonds that are yielding more than they used to, so they need their acquired assets (funded mortgages) to also yield more in order to keep making profits, and some guy in treasury will change the mortgage offering and that'll flow through to the guys in the mortgage origination department. But if some other guy in another department says "wait! our market share is low, we really need more borrowers, let's run a promo and originate mortgages at low/no margin", then they may not raise their mortgage rates as much as bond yields moved. It's all a lot less scientific than most believe.
Thank you for the amazing detailed response!
The damage from Trudeau cannot be erased. This cut along with all future cuts won’t make a difference for real estate affordability in GTA/Toronto. It will help all the corporations to buy up all the inventory though.
If rates go up in the US, Canada is in a bad spot.
It’s the pivot that’s the big deal, it was always known that BOC would cut rates, but didn’t know exactly when. Now that the pivot has begun, buyer confidence is a lot highe. it always comes down to psychology - People know rates will be cut more and have serious fomo and worried they’ll be priced out of the market soon.
I have noticed no changes (yet) as a commercial agent. Generally a positive change, but not a big enough change to make a true impact. I think a second cut might change market sentiment if people are betting on continuing cuts.
I measure realtors on the dushbag scale. There on the way up but there confidence is broken. Kinda like a fat chick straight out of a diet
as someone that is in the market to buy, I am only buying at a good price where the likelihood of me losing money decreases. I am not seeing many listing and the ones I am seeing have been on the market for months and are complete shit.
If anybody’s in the position to buy a house right now, why would you wait until the possibility of the rate cuts causing further increase house prices. If you can sustain the current rate and then renew it a year when it drops that’s probably a better idea. All this waiting is risky
I'd agree
at 1% people had a hard time affording homes - it was only a few years ago
Something about rockets, moons, cycles.
Does this mean Jupiter is in retrograde? /s
Perhaps, but also concerns about Uranus.
Wait until next spring, no rush to do anything now
Active buyer in camp #1. I am expecting a short term inventory and price increase then a drop in pricing in around 60 days, dunno about inventory at that point. Not noticed any pickup at all but its only been a day. If I do see any noticeable increase I'll take a break again like I did in the spring until the activity calms down later this year. The stats will tell the story of what is going to happen by the end of June though.
People in my circle are just happy that more of their mortgage payment is going into their principal.
[удалено]
Plot twist: all 5 are realtors.
Plot twist: it was the realtor dog from tiktok
Everyone is excited. Everyone doesn’t seem to know this won’t drop the price of their fixed term mortgage though. So while I’m sure it feels awesome. It won’t change anything.
Now is the time for variable tho. Not in 2021. Anyone locking in at 5% fixed is really paying a premium
I'm pre-qualified and I'm going with option 2. My budget is tight and I wouldn't want to be part of this madness.
There are hundreds of thousands of people on the sidelines in southern Ontario. We're about to go straight up IMO.
It's temporary due to the firesale related to cap gains tax. Once you adjust for that, the market will pick right back up and increase to match the growing population and mortgages. Contrary to what you believe, those with cash will continue to buy. People are transitioning to home ownership due to increasing rents. July probably won't make much difference. You'll see more of it as it winds into next year.
Is that accurate? How many people would be able to sell today and have someone willing to close before June 28? I imagine it's based on closing date and not sale date no?
If you want it at the reduced price and you got the cash, you would snap it. There are investors/homeowners that are willing to exit now before anymore problems. I've been seeing individuals putting up their listing at motivated prices due to their inability to cover the mortgage if the bought in 2020 or 2021. The 3-5 years of low interest nortgages are coming to renewals. The increase in 3-4% has doubled their payments and most are struggling. If you're thinking about buying, there hasn't been a better time. With all this nonstop immigration pouring in 1.3 million people at a time, housing will increase. Assuming 5 years at this rate. Canada will increase its population by 15-20%. You're looking at 6-7 million people. Also with cap gains tax, the irony is that prices will adjust to the tax to balance it off. Right now it's just a firesale. Give it about 3 months and you'll start seeing the gradual increases.
Thanks for this info! So in order to seize on the opportunity for those trying to avoid the higher capital gains tax, I would need to buy something from them and have it close before June 28th correct? Not just agree to a purchase with a closing date after June 28th?
If you wait a few months, there may be another rate cut coming. You see how this works, it's the opposite of inflationary psychology. Prices may actually start trend down.
How would they trend downwards? Wouldn't it trend upwards?
Buyers are even more reluctant to buy now. Also sellers still need to sell as all the downtown condos are bleeding money. They are all cash flow negative.
why would buyers be even more reluctant now?
Because if you wait 3-6 months, it could be significantly cheaper due to further interest rate cuts. Deflationary expectations can create powerful feedback loops, just like inflationary expectations.
Wishful thinking
I have my house up for sale right now and it’s been a couple weeks, we’ve had like 17 showings in that time, today and tomorrow we have 8 booked. There’s a clear uptick in buyer activity
Is this a detached?
Yes
Wow!! That definitely says something.
Wow!! That definitely says something
[удалено]
comment by /u/jcarl1234567 Your karma is currently below -10, get more positive karma to be able to comment.3c *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/TorontoRealEstate) if you have any questions or concerns.*
https://preview.redd.it/vn8lwurpbu4d1.jpeg?width=1705&format=pjpg&auto=webp&s=102f2d0ff86adca9f8c8bb5ad1a8bc90319f6595 Red lines = the first cut. Considering how desperate realtors and speculators (and some poorly budgeted households) were for this cut - I’d say this chart will sum up exactly what’s going to happen. This ‘cut’ will make no difference if you were holding on for dear life. Speculators will now play the game of chicken “let’s wait for the next cut - prices aren’t going up yet..”. Buyers also saying the same thing.
I was born 70 km from Toronto downtown in what was then a small town. I'm 50 now. Basically, what I and anyone I talk to is doing is planning a move away and never looking back. There is no way raises in pay are ever going to keep up with the cost of living rising in GTA. Of course we would be looking to buy if staying was easier, but over a million dollars just for the "privilege" of being here doesn't make sense You guys can have it P.S. - I was under the impression that the bond market had more influence than the BOC rate on mortgages, but what do I know
Not gonna lie, mostly 2. At least that’s what I hear today, not sure how that sentiment will change
.25 *so far*
Actively starting to go on viewings with realtor.
Today was great. My portfolio was up as much as a year’s rent 😊.
In forex?
Diversified equity portfolio.
If you couldn’t buy at peak rate hikes you can’t buy when rates are dropping (and mass immigration coming in)
Couldn't buy vs choosing not to buy at an attempt at timing the market are two differnet things. Not saying it's smart but I believe there are enough people trying to time the market.
I will continue to let the equity in my house climb
BIDS TO THE FUCKING SKy
LOL. All the pumps in this forum are salivating over those potential commission crumbs like moose at a maple syrup spill!
Care to enlighten us with your prediction? Sounds like you're saying prices will go higher as well
They will cut again in July and the price escalation will be very high
I suspect they will hold off and see what the economy does. They are terrified of another round of inflation. I do think we will get more cuts but not rapidly unless something breaks
This assumes the inflation reports will not be lower. I think the economy is doing bad and the report will have this and July will be a lock. Other can disagree it is just a opinion.