The effect of rising interest rates

Since the 2000s, buyers and sellers have witnessed a strong appreciation in the Toronto housing market as illustrated in the chart above. Over this time period, the city and the Ontario province as a whole were developing as a financial and technological hub which lead to an increase in population, investment in building construction and overall inflow of capital into the real estate market. 

The onset of the pandemic brought with it a drastic cut in interest rates by the banks. These cuts, along with a shift in buyers' preferences seeking to move out of apartments and into a larger home, have accelerated this upward momentum in favour of sellers across the market. 

With the world reopening the Grand Toronto area market is still heavily in demand by buyers from all over the country and from international buyers but has seen a noticeable slowdown from the previous year’s peak since the start of 2022. 

However, with the key interest rate having been maintained near 0 for the past 2 years, a slowdown was to be expected the day they were going to rise again. 

The past two years were a testament to the importance of the mortgage market in our qualification process. It helped many first-time buyers acquire the home of their dreams, young professionals move downtown into newly built condos or new families upsize in bigger square footage. 

It also serves to illustrate the importance of having a professional broker by your side for each party of the transaction. In a world of rapidly rising demand, brokers helped sellers get the best offer for their properties and protected buyers in the overall transaction process.