There are “eerily similar circumstances” to today’s rapidly rising interest rate environment and what happened to the housing market in the 1990s when the Bank of Canada raised rates rapidly, a Re/Max executive says.
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The Bank of Canada raised interest rates from 1.0 per cent in April 2022 to 5.0 per cent in July of this year. In comparison, between February 1994 and January 1995, the central bank raised rates from 7.25 per cent to 10.5 per cent.
Elton Ash, executive vice-president of Re/Max Canada, said the impact of the 1990s increases on the GTA’s housing market was immediate, with sales softening and average price declining from close to $209,000 to $198,000 in 1996.
The same factors are at play today, with the market’s only saving grace the lack of inventory currently listed for sale, Ash said, commenting in the Re/Max Hot Pocket Communities Report, which was released in