Bank Of Canada Cuts Overnight Rate
This Wednesday morning, the Bank of Canada announced a seventh consecutive cut to its key overnight lending rate – a figure which now stands at 2.75%, down a full 2.25% from its recent peak of 5% last June.
BoC Governor Tiff Macklem cited the ongoing climate of economic uncertainty being created by the new United States administration’s unpredictable trade policy as the impetus for yet another drop in interest rates, with shaken consumer confidence and decreased business spending and hiring putting a damper on what had, prior to January, been a cautiously optimistic overall outlook for the Canadian economy in 2025.
In listening to much of the analysis floating around in print and on the major Canadian networks this week, it seems to be the consensus that at least three subsequent rate drops are coming our way this year, taking us down to the 2% mark by the end of 2025. The next rate announcement is scheduled for April 16th.
So, what does all this mean for Waterloo Region’s housing market? It’s understandable that any increase in economic volatility will slow activity in even the most robust of markets. People tend to postpone major spending decisions when there are heightened concerns about job security, investments, and inflationary trends. Real Estate, however, is a gargantuan sector, well downstream of other fickler investment and lending markets – any major swings in pricing as a result of falling interest rates may not be wholly felt until months down the road. Real Estate turns slowly.
As things stand today, we’re continuing to see activity in Waterloo Region rise in accordance with the normal seasonal springtime uptick, though levels remain lower than where they’ve been in the previous two years. Prices, though, are holding firm. Last month, we actually saw single detached homes gain ground on both monthly and yearly benchmarks. It’s also smart to keep perspective in mind here – we’re returning to a much more “traditional” and balanced real estate market. Price increases year over year should settle back into the 3-6% range, which I’m sure is welcome news for buyers. But overall property values are still up significantly in the last five years – in the region of 20%, on average – which is good news for property owners and sellers. The bottom line, we think, is that a return to balance in the market might be exactly what the doctor ordered for everyone.
As always, folks here at the Watty Way are happy to make ourselves available to talk if you have any real estate related questions about your own situation. These are certainly uniquely challenging times economically-speaking, and it can help to get an expert opinion on property values and market trends from a team with decades of combined experience in Waterloo Region’s market.