A recent study by central bank researchers sheds light on why rate cuts alone don’t solve Canada’s housing affordability puzzle. When borrowing costs drop, we see resale activity jump quickly—often with the full impact showing up 18 to 24 months after the rate cut. Yet, new housing starts only begin to pick up about two years later, as builders need time for planning, permitting, and making projects viable, especially with multi-unit homes. Strong labour markets can make these effects even more pronounced, encouraging buyers who feel confident in their financial outlook. Ultimately, while lower rates may eventually spur more supply, demand always gets there first—so relying solely on monetary policy isn’t the answer to affordability. This dynamic is something I watch closely in Vancouver and the Fraser Valley, as understanding the timing between policy shifts, buyer demand, and new construction is crucial for anyone navigating our local markets.
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