Canada: Rate Cuts Can Worsen Affordability | SUNNY PUREWAL REAL ESTATE

There’s been a lot of talk about whether interest rate cuts will truly make homes more affordable in Canada. Central bank researchers have found that when rates drop, demand for homes jumps almost immediately—resales start rising right away, with the biggest impact seen 18 to 24 months later. But here’s the catch: new housing supply takes much longer to catch up, with construction typically picking up around two years after the initial rate cut. When the job market is strong and lending is easier, buyers feel more confident to make moves, which can heat up our already competitive market even further. Builders, on the other hand, only start new projects when higher prices and better financing make it feasible, and approvals—especially for multi-unit homes—take real time. In other words, while lower rates may eventually encourage more homes to be built, they can actually drive prices higher in the short term because demand leads and supply lags. As someone who’s helped hundreds of clients navigate Brampton and Caledon’s changing markets, I’ve seen how these cycles play out first-hand. It’s a reminder that affordability is about more than just rates—it’s about how quickly our communities can grow to meet demand.