Despite recent rate cuts by the Bank of Canada, housing affordability remains a challenge, according to RBC economists. With rates down, many anticipated an increase in purchasing power, but the reality is far from expected. High property prices and stringent lending criteria continue to hinder potential homebuyers, making it difficult for many to enter the market despite the lower borrowing costs.
The Persistent Affordability Crisis
While rate cuts typically boost affordability by lowering mortgage payments, they have done little to offset Toronto and Vancouver’s escalating home prices. These cities have seen such rapid price growth in the past few years that even reduced rates can’t bridge the gap for average income earners. As a result, housing remains out of reach for many Canadians, particularly first-time buyers who struggle with saving for down payments amid rising inflation and stagnant wages.
What’s Next for Buyers and the Market?
Looking forward, experts suggest that while rate cuts are a step toward boosting housing affordability, they alone are insufficient. More aggressive policies addressing supply shortages and increasing inventory are critical to bringing down prices. For potential buyers, staying informed and considering market timing and location could offer better opportunities as conditions evolve.
