There's a common belief that lower interest rates will automatically make homes more affordable, but research from Canada's central bank tells a more nuanced story. When rates are cut, housing demand tends to pick up quickly—resales often jump within months, peaking 18 to 24 months after the change. But the supply side is much slower to react: new housing starts typically don't ramp up until about two years later. Strong job markets can make this effect even stronger, as buyers feel more confident and lending becomes easier. Builders, meanwhile, need time to plan and get permits—especially for condo or multi-unit projects—so their response lags behind demand. For us in the Fraser Valley and Greater Vancouver, this means lower rates might eventually help bring more homes to market, but the immediate impact is often higher competition and prices. As someone who’s helped buyers and sellers navigate this market for over 15 years, I always encourage clients to look beyond just interest rates when considering affordability. The big takeaway: monetary policy alone isn’t a magic fix for housing costs—it’s just one piece of a much larger puzzle.
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