What if?

A big week. Both the Fed in the States and our own CB will be cutting their policy rates Wednesday. Our guys in the morning. The embattled Yanks at 2 pm ET.

The current betting is that American rates (more than 1% higher than ours) will come down six times before settling. Forecasts here are all over the map. Economists at CIBC say the Bank of Canada will chop four times, taking its rate to just 1.75%. Scotia’s Derek Holt says two cuts – and warns they may be followed by as many increases later next year when inflation roars back. The consensus seems to be a half-point drop by Christmas, then Dog-know-what after that.

Meanwhile Trump is still assaulting the Fed, trying to fire one of the governors (so he can get another of his guys in there). She’s suing. Trump lawyers have asked for a decision today – so she can be punted before this week’s rate vote. In the USA these days, everything is political.

Now, did you catch the latest real estate news?

The national realtors association says house sales across Canada have increased for five months running. Today we found out August was the best such month in four years. About 2% more homes sold than the same time last year. Meanwhile July sales were about 4% higher than those in June. Says CREA’s economist: “With every month that goes by here, I think we can say more and more that the rebound we’ve been forecasting for the last year… was just delayed by a few months and now we’re sort of in it.”

Listings are plentiful – 335,602 across Canada as of this morning – which means almost 10% more choice for buyers than a year ago. The average Canadian price ($664,078) is up 2% year/year.

Rmember, in February of 2022, that average was $816,720. The drop since then is almost $153,000, or about 19%. (Last month that reduction topped 20%.) As stated here on the weekend, in Toronto single-family homes have shed 27%. There are many condos on the assignment market listed at a 30% reduction.

So… Lower prices + lower rates + more supply = higher sales? Could the realtors be correct, or are the doomsayers reported in yesterday’s blog speaking truth?

Don’t kid yourself. Nobody knows. But the anecdotal evidence is pointing to a resurgence (if tepid) in buyer interest for a few valid reasons.

First, as mentioned, price. Houses in some urban areas are almost a third cheaper than in the spring of 2022. The odds of this discount hitting 50%, or even 40%, are remote. For that to happen the wheels need to come completely off the economy.

Second, financing costs. Variable-rate mortgages will be cheaper on Wednesday and cheaper still by November. Five-year fixed loans may well be in the 3% range later this year or in the spring.

Third, the US is out of its collective mind. Trump now appears certain to take control of the Fed – a shocking development – by the spring (the current chair’s term is up in May). This dramatically increases the odds of more rate cuts to come in that country, which influences central bank policy here. It may be iresponsible, but it’s coming.

Fourth, Carney. On Sunday he pumped $13 billion into his housing strategy and while most of that will go for non-market units, it’s a signal this government is seized with real estate, considers it too big to fail, and will backstop valuations. In fact the new housing minister said exactly that. Prices will not collapse.

Fifth, the tariff terror is passing. What scared the crap out of people in March and April has faded by September. The trade war has upped our jobless numbers but has not squished consumer confidence, resulted in hurtful inflation or emptied store shelves. People who delayed a house-buying decision are shopping again.

Are prices still stupid? Yes. Are they beyond the means of average people? Of course. Are builders hurting bigtime? You bet. But are there enough people being sucked in by lower prices and cheaper loans to buy? Yes there are – especially equity purchasers.

None of this is news the hairshirt crowd wants to hear, but human nature is on the move once again. After three years, there are signs this market is scraping the bottom. Some parts of it – like urban condos – will continue to rot. But decent houses in demand areas will attract offers – and increased sales mean an end to price reductions.

It does not take a tsunami of buyers to accomplish this. And they’re already on the horizon. We’ll know in six months if they were fools.

About the picture: “This is Otto,” writes Shirley in Calgary. “He is a mini Australian Shepard born in February 2020. He is fun loving, obedient and extremely agile. When no one plays with him, he plays ball by himself, dropping them down the stairs and fetching them. He never whines or complains. He sleeps outside in -20C and loves it because he has such a thick coat. When a treat is placed on his muzzle, he will leave it in place until he is told he can eat it. He is a good boy.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/09/15/what-if-4/