After more than two decades consulting on the Greater Vancouver housing market, I’ve learned that affordability is a complex equation—far more so than simply lowering interest rates. Central bank researchers recently highlighted that while rate cuts do boost housing demand quickly, supply tends to lag behind. In Canada, we typically see resales rise almost immediately after a rate cut, with the full impact showing up 18 to 24 months later. Housing starts, on the other hand, begin to respond only after about two years. A strong labour market can intensify this effect, as people feel more secure and lending becomes more accessible, fueling even faster home purchases. Meanwhile, builders are slower to react—higher prices and more attractive financing do help, but the realities of planning and securing permits, especially for multi-unit projects, mean new supply takes time. The research makes it clear: while rate cuts may eventually help add more homes to the market, the supply always chases the initial surge in demand. It’s a reminder that monetary policy alone is not the key to solving affordability pressures in our housing sector.
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