I’ve been talking about the impacts lowered interest rates can have on our market for quite a while now – not just on this blog – but also in our stats press releases.
And like a broken clock, given enough time, I too can be right (eventually).
With that, I’m happy to report that I believe the event us market-watchers have been patiently watching for is (finally) happening.
Behold:
Crying wolf
The plot shows us the trend in sales indexed to the start of the most recent rate Bank of Canada cutting cycle, which began in June 2024.
Up until recently, there was barely enough data to draw a trend line.
And with what little data was available until now, disappointingly1, the trends these data were showing were decidedly not heading up.
Which, for the benefit of readers who aren’t economists, is not the effect that’s supposed to happen when a central bank cuts rates! It’s the opposite!
And if I’m being perfectly honest, this early downward trajectory had me a little worried for a bit.
Not because I thought our market was in for a serious downturn, but because rate cuts coming at the speed and magnitudes we’ve seen so far from the Bank of Canada really should have been producing stronger effects from the get go.
At least, in theory.
And while it’s true that monetary policy work in lags, it was starting to make me wonder how long it might actually take before the stimulative effects of lowered interest rates would finally show up in our data.
I can only cry wolf about the impacts lower rates can have for so long before people stop believing me!
Up, and away
But with two consecutive months of sales increases punching up approximately 30 per cent year-over-year in October and now November, I believe we may be entering the phase of the cutting cycle where the impacts to sales begin being more easily recognizable in the data.
We no longer have to squint to see the effects.
And since the end of September, we’ve actually been in positive territory relative to the level of sales2 we started at when the cutting cycle began.
In fact, relative to that point in time, trended sales are up across all market segments north of ten per cent, and in the case of the attached segment, north of twenty!
The questions now are, how much more fuel is there in the tank?
Will the further cuts to the policy rate continue pushing sales higher and higher?
Or will buyers fatigue as we enter the seasonally slower winter months?
While I don’t yet know the answers, what I can say is that sales in the GVR market have now officially achieved liftoff status 🚀.