Local market remains tepid despite rate cut

Sales in May were down 22% year over year, a trend that may continue

- CLARRIE FEINSTEIN

"There's little activity in terms of offers from buyers. They want to see another rate drop," says Toronto realtor Sean Mayers.

For months, real estate experts and economists debated the impact of the first Bank of Canada interest rate cut, with a large camp thinking buyers would return to the market as they did following last spring's two-month rate pause. If a pause in rate hikes could spur such activity, imagine the impact of a rate cut, experts warned.

But two weeks after the Bank of Canada cut the key overnight rate by 0.25 percentage points, the drop seems to have had little effect.

"There's a listing for a detached home near Avenue Road and the 401, in an amazing neighbourhood and priced competitively," said Sean Mayers, a realtor with Century 21 Regal Realty brokerage, based in Toronto.

"There's been showings, but there's little activity in terms of offers from buyers. They want to see another rate drop, and sellers are sitting on the sidelines waiting for more buyers to enter the market."

Post-rate cut, Toronto's real estate market is at a standstill, experts say, as affordability is stretched to near record high, hindering first-time homebuyers from entering the market. Sellers, hoping the rate cut would spur a run up in prices, continue to stubbornly price their homes above market value.

In May, sales were down 22 per cent year over year, a trend that will likely remain through out the year unless there are more significant rate cuts down the road, said John Lusink, president of Right at Home Realty.