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Bank of Canada Cuts interest rates to 4.75% 25 basis point cut for the first time in four years I bet that's literally the sound that every real estate owner is making Canada wide cuz it's been a really rough ride and I think what this signals right now is that the worst is behind us from an interest rate perspective but I don't think the Market's going to rebound the way that I think most people will think or want to expect right and I'll be breaking this down for you on this week's reaction video now if you do want to chat with me about your real estate plans and how this interest rate cut can impact you you could book call me using a link that's right here on the screen because you're going to see as you watch this video that it's not going to affect every segment of the market the same and just because there's a rate cut doesn't mean that everything is roses and daisies and the Market's going to go to the moon it's not and I'm going to show you why with some data and when you understand the nuances of what I'm about to explain to you in this video you'll understand why that this isn't the Saving Grace that everyone may be hoping for simply click on the date and the time that works best for you and then when you see the prop fill in your name email mobile phone number and a question you have for me and then we'll chat then good day Toronto welcome to another episode of prime properties TV my name is Zen and enjoying the content I'm putting out there do me a favor and like And subscribe so the Bank of Canada finally Cuts interest rates after four years I think a lot of people are kind of relief but I'm going to kind of explain some of these little highlighted bits on the importance of this Freight cut what it signifies the sentiment change but some of the hurdles that the real estate market is still you know good encounter right so the first thing I have highlighted here are Bank of Canada's Governor uh his remarks where he says if inflation continues to ease and our confidence that inflation is headed sustainably towards a 2% Target continues to increase it is reasonable to expect further cuts to policy interest rate but we are taking our interest rate decision one meeting at a time so the next interest rate announcement is July 24th so we have 6 weeks from now until then the thing that was surprising for when this rate cut happens is I thought they would probably cut closer to July but now we still have you know what is equivalent to maybe 20 to 30 days remaining of the spring Market because the spring Market kind of ends once the kids are out of school around like June 22nd this year I think so we're going to have a little bit of momentum towards the tail end of spraying how much that is TBD July tends to still have some activity especially in the cono space but not so much in the freeold space but I wonder if this sentiment change with the rate Cuts happening is going to move the needle because affordability hasn't changed with this rate cut it really hasn't like the fix rates came down a smidgen and I think people are going competitive with their rates but the affordability is still at like 5% on three-year Fix Plus the stress test which is like a 7 something %. so it's not that people can buy more homes it's that what this rate cut signals is that hey we're done raising interest rates no more head s because they're talking about cutting than they raised last year in 2023 they're talking about five cuts at the start of this year but now there's officially a cut it's like bam Wham finally we're starting that process towards lower interest rates and that will change sentiment is it going to move the needle enough where that prices are going to go up and call it the 60 90 days the answer is no right because when I show you this chart over here you can kind of see that um May so like a week ago ended with 21,000 active listings this is how many listings are available to be purchased I haven't seen 21,000 since they brought in the foreign buyer tax in 2017 in April and then nothing since then even before the GFC which tells me and tells you what one a dinosaur it is real estate industry but two this is a lot of inventory in the GTA so prices aren't going to move up until this stuff starts being absorbed right and I'll talk more about that tomorrow on the market watch video but this is what I'm watching because active inventory and the month of inventory is what dictates prices for the next 60 to 90 days the sentiment will change with the interest rate cut but is it going to move the needle that quickly I don't think so this is way too much inventory to absorb right now the thing I will mention here is that there is a lot of Penta buyers I do not deny that so where I think these Penta buyers are going to come from are generally the the first time home buyers who were already qualified to buy but they're just rating for this rate cut they're going to come back for sure then there's also the people who are looking to upsize from a condo to a freeold even though right now statistically speaking I don't think we have enough Freehold properties and when a lot of people are selling their condo to move into the freeold that upgrade it's going to be even more difficult now than it was previously before because you have more people hurting into this trade just because the interest rates came down because the mindset is that hey I'm getting a larger mortgage going from the condo to the house so I want the interest rate to be lower but but in reality now I don't think Freehold homes are going to be more available to buy it's just now there's more competition but the condos are still abundant in kind of like inventory and then you obviously have the people who are trading freeold to freeold and it's kind of been the same same for the last little bit so I do foresee the Freehold Market you know bumping up and the condo Market you really have to clear some of the inventory right now because when you look at the numbers the month of inventory for condos is like around four meaning one and four condos sell freeold it's two it's one and two that means that the speed of the freeold are moving twice as fast as a condo so that condo to freeold move is going to be so much harder now when everyone's trying to make that move right now because you have to keep in mind those are the two buyers that are going to be the most call it driven to make that move right now the most encouraged the type of buy that isn't going to be driven to come back off the fence line or investors what is a 25 basis rate cut going to do to your cash flow negative condo that's minus 1,000 bucks nothing maybe it's- 9950 right now right depending on on the mortgage size so the investors it's just a size high of relief right now it'll be like ah no more rate hikes and I can see the you know the caring costs go down a little bit but this doesn't make any of the uh investment property specific in condos kind of like go on a tear because the math still doesn't math now if you're talking like duplexes around the suburbs of like you know GTA yeah now they'll probably make more sense because they were break even before and now they're probably still Break Even but like you know they're going to get better if you ride the uh interest rate down so that's what I'm kind of projecting for the next 60 90 days now are we going to have a very strong fall market TBD because we have that July 24th rate cut potential and the September 4th right before it so a lot can change right now but at the moment we really have to kind of let the inventory kind of you know get absorbed now here's kind of the I would say speed bump that I've been concerned about and I may have talked about it in a few videos a few months ago with the rate Cuts I think we're going to get some pent up sellers okay let me explain I've been on a lot of calls and a lot of people don't really want to sell when the market was bad right it was pretty bad it's still bad now but the sentiment was bad because they're like we don't know when the rate Cut's going to be so I rather you know list when the Market's a little bit better meaning that the sentiment is better meaning this rate cut so would I see a lot of pent-up sellers come on the market right now I would not be surprised based on the conversations I've had so can that level of pent up buyers match the love of pent up sellers in the condo space I would say same same in the fre space I still think we're not on have of homes so I'm going to be watching the inventory level to see how much stuff comes out but generally I would say most people aren't going to list in the summertime especially if you even if you list right now which is very hard cuz you have to get the property ready let alone it's tenanted and you basically have I don't know 30 to 45 day Runway to sell your property before the market generally just like goes into hibernation cuz it's August and everyone's on vacation and nothing starts up until after Labor Day it may not be wise depending on the type of you have right so will I see a surplus in inventory in September I think so because I don't think a lot of this you know 21,000 active listings I showed you that we have here or 22 is going to be absorbed in time for fall and that's kind of really what I'm watching for right now so again let me repeat myself the condo Market I think is still going to be a little bit turbulent because there's so much inventory there right now and more than half of the buyers are supposed to be investors because of the entry level stuff and they're not back yet but the first time home buyers 100% is the freeold Market going to start moving yeah I think so this was the signal for a lot of people to do that upgrade and I think they're going to start making that move right now now as for the rest of the arc and some of the things I kind of highlighted here where it says the Bank of Canada is the first G7 country to start easing and Europe and ECB is basically to follow on Thursday maybe potentially look Canada was the first to raise interest rates so I'm not surprised but this is all essentially just a sign of the times that hey uh rate cuts are coming I still think personally right now that if we get more than three we're probably in deep doooo because it's recession but so much of this is predicated on data that keeps coming up right like I personally didn't think that they would have a rate cut today and that I think the Friday GDP report really just kind of put the nail on the coffin because it was really really bad right so is bad news still good news for Real Estate owners I guess so right but if we continue seeing more bad news about the economy and we keep seeing rate Cuts we all have to be concerned about our jobs because if we head into recession we got to be concerned about our incomes not so much the cost of carrying the homes over our root heads right so this is kind of what I'm like watching right now the next call it 60 days will be very very interesting and I really really think we should be watching the inventory if inventory gets absorbed while this rate cut is continuing I think the market will rebound faster than most people expect but if the inventory continues to pile up because the pent up sellers are outnumbering the pent up buyers I don't think it's going to be a very strong fall market unless we get you know two more rate cuts and maybe another one October but if we get there my concern is that I think we're in a pretty deep doooo recession anyways I hope this helps and if you do want to chat with me about kind of what your plans for Real Estate is for the rest of the year you could give me a call using the link that's right here it's ww. chatw zen.com until next time your move your future see you now that you're done watching this one how about this one or this one you know what just watch them both