| Well, they did it. On June 7th The Bank of Canada raised the benchmark interest rate to 4.75% and the feds expect more increases this year that could go up as high as 5.6%. The increases from earlier this year and last year have already put a squeeze on new houses being built, CMHC says housing stats in Vancouver fell 45% in May while Toronto dropped 28% and Montreal 35%. These are big numbers considering how big immigration has been and is to expected over the next couple years. Jerome Powell at the U.S. Federal Reserve had some good news and some bad news that could affect Canadians hoping to renew mortgages or extend loans. The good news is that the U.S. Central Bank followed the Bank of Canada’s lead and after 10 rate hikes in row has decided to take a break and leave its benchmark rate around 5.1 per cent. The bad news is that, like our Canadian counterpart Tiff Macklem (who paused rate hikes just to resume them), they expect more increases this year. In the past, Powell had suggested a Canadian-style pause could be risky stating “We understand the hardship that high inflation is causing, and we remain strongly committed to bringing inflation back down to our two per cent goal.” It will be interesting to see what is going to happen in other countries, such as the U.K., as their rates are even higher than ours and what they are going to do with their markets. The reality is this has been going on in the real estate market for as long as I can remember. There’s always factors that affect the market, whether it’s interest rates, the economy or immigration. The best way to visualize what I’ve been dealing with in my almost 30 years of selling real estate is this very official graph I drew. |
| As you can see, the market in the long term goes up. On the way there are peaks and valleys and even a loop-di-loop, but it is always going up. My best advice for new buyers is to hold and build equity, even with higher rates we are still building equity. At the beginning of this year when rates were increasing we thought that rates would come back down, now it’s looking like they are going to stay up and long term we are going to see interest rates between 5-6% and that will be the new norm. Like it or not we have to get used to it, and we will. The world is not getting any larger and more and more people are moving here. The demand for housing will keep increasing and with new housing being reduced we will see a major price increase in the next few years. This is what happened after the early 80’s market and again after the 2008 crash; after those markets we saw the biggest gains. While this summer onwards will be a good opportunity for buyers, they may not have much to choose from and it’s safe to say that 2025 will have a big real estate boom. |
May 12, 2026 
