After the Bank of Canada announced a small rate cut in June, bringing the overnight lending rate down to 4.75 per cent from 5 per cent, real estate experts in Toronto geared up for an almost immediate response in the market from would-be buyers who were waiting for that first rate cut to jump in. But it hasn’t been so simple in the condo market, which has been in a slump since rate hikes began — leading to a two-decade low in new condo sales. Brad Lamb, founder of Lamb Development Corp. and president of Brad J. Lamb Realty, shares his take on where the condo market is heading in the second half of 2024. 

What’s happened in the condo market since the rate cut?

May this year was really bad — 7,000 trades versus 7,100 in April, and May is always far better than April. So obviously something was afoot in May. People were clearly very aware of the noise around interest rates and the potential for a rate cut in June, so they were sitting on their hands, waiting for that to happen. In fact, the amount of showings in May was one of the lowest I’ve ever seen. 

In June, people started showing property again, so you’re now seeing some life in the market and you’re seeing transactions take place. But it’s what you’d expect from a quarter point reduction interest rate. Imagine that there are 100 people sitting on the fence, saying, “I have to buy real estate as soon as I can, but I’m afraid.” With a quarter point drop, you had just about 8-10 per cent of those people re-enter the market. 

When do you anticipate the market will finally recover?

It’s not going to be quick, but by September, October, November there could be enough momentum where it could happen. I’d say things will be quite strong next spring, and it will take two years before we get back to where we were in early 2021, assuming that the rate is going to fall a couple of points between now and next June. 

When should buyers and investors start jumping back in? 

Now’s the time — prices are probably going to rise faster than interest rates are going to fall. In most of the city, if I were to sell a new building, and I needed X, you can buy the same product right now for 75 per cent of X. And I think that’s not going to last — there’s probably 2,000 to 3,000 units that could be picked up for a song. Do you want to pay $1,500 a foot or do you want to pay $1,200 a foot? We’ve seen an increase in prices of about five or six per cent since last fall, and I think that will continue. People should get in the market if they can. There is never going to be a very clear green light, and if there is, everyone’s in and it’s too late.

What about the new condo market? 

It’s still not there. By the fall, it’ll be bubbling a little bit. And by the spring, I think you’re going to see a lot of developers launching stuff again. There has been some success selling new product, but it’s not going to be shooting fish in a barrel. I don’t think it’ll be like that for the new condo market for a couple of years. But I think it’ll be decent, where you’ll see maybe 20,000 to 30,000 starts. So in 2025–2026, you’re going to see cranes popping up again.