There’s a common belief that cutting interest rates will solve Canada’s housing affordability issues—but the reality is more complex. Recent central bank research shows that while lower rates can spark a quick jump in home resales (with the full impact appearing 18 to 24 months later), new housing supply doesn’t catch up until roughly two years down the line. That lag means easier borrowing often boosts demand long before we see more homes built, which can actually push prices higher in the short term.
In my work as a REALTOR® and mortgage expert here in Calgary, I see firsthand how strong labour markets—like we have now—can make this effect even stronger. When people feel confident about their jobs and financing is accessible, buyers move fast. But for builders, the process is slower. Higher prices and cheaper financing do help make new projects viable, but construction, permitting, and planning (especially for multi-unit homes) are lengthy undertakings.
So while rate cuts may eventually encourage new supply, the delay means monetary policy alone isn’t a silver bullet for affordability. Smart property decisions require understanding both the immediate impacts and the long game—something I aim to break down in all my educational content and client strategies.
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