Current Real Estate Housing Market in Canada and Its Impact on Buyers and Sellers
2022 was a record-breaking year. But in all of the bad ways. Not only all the bad ways, but all the wrong ways! We were in an environment of rapidly rising Canadian interest rates.
The cost of living has absolutely soared for everyone.
Despite the challenges, we discovered positive aspects and chances for robust economic growth.
We Broke a Record
But, it’s not a good one that you want to break. Before I tell you what that record is, I’m going to let you get a little squeamish.
Maybe go grab one of those air-sick bags if you’ve got one around the house, and we’re going to dive into it in just a sec.
What’s good, everybody? It’s Darin Germyn from the Germyn Group, where we know you’ve only got one chance to either buy or sell your next home. So, we’re here to help you get it right.
So, here we go. The benchmark rate in Canada for a home fell 1.6% in December. Now, while that doesn’t seem like a lot, it was from a peak to a trough of about 13.2%. That is a lot of money.
We are putting that into a local perspective where we have townhomes in the South Surrey, White Rock area that may be worth about $850,000. So, 13.2% equates to about $112,000 of change in value from the very peak of the Canadian housing market.
Now, this was a number from across Canada, but the reason that this is relevant is that this is the most significant decline on record. We might be in for some more rate hikes too.
But This Isn’t Good News…
This isn’t a record that anybody really wanted to break unless you’re looking at getting into the real estate market to buy a home.
Home buyers are probably rejoicing because the average prices are significantly lower across Canada to buy a home. Albeit, a lot of that gain in terms of the real estate price being down has been offset by increased mortgage rates.
So are you really winning? Hard to say.
What Is Recession?
This raises another question: are we heading towards a recession?
You might already be familiar with the term, but if not, let me explain it in simple terms. A recession is generally defined as two consecutive quarters of decline in GDP or gross domestic product.
Observe how we’re still trying to determine who will re-enter the Canadian housing market first—buyers or sellers.
Now, let’s discuss recession. Does the potential arrival of a recession truly matter?
It’s important to consider that a recession is akin to looking in the rearview mirror. Doing so will inform us about the events that occurred during the previous two quarters.
Average Home Prices Decrease, Who Will Take Advantage?
The current market condition doesn’t reflect the situations we experienced during the past two quarters.
Real estate values have decreased, and the cost of living has increased. As a result, many people believe that the economy and everyday life have been difficult for the past six months.
Regardless of whether someone declares we’re in a recession or not, it has undoubtedly been difficult.
So, who will return to the real estate market first? Home buyers or home sellers?
We don’t want to keep breaking records negatively. One of the intriguing aspects of the national housing market is the limited supply of homes, leading to unique market conditions. But that’s a topic for another post.
We’ve set a negative record, but it’s crucial to understand that not everything is terrible, and the situation isn’t as dire as it may seem. If you’re considering buying a home, guess what? Homes are more affordable compared to six to nine months ago, with housing prices having dropped considerably.
But, as mentioned earlier, mortgage rates have also risen.
Is Normalization on the Horizon?
So, some of the savings you’ve gained with the real estate prices coming down will be offset by the rising mortgage rates.
But don’t get into the hot market because of mortgage rates. Buy the house and refinance the mortgage later. Get that mortgage under your belt and get those monthly mortgage payments done because you’ll own it sooner than later if you get in. For any Canadian resident that owns a home, it’s not all bad news either.
In Canada, home prices are still up 33% from about three years ago. So there is a lot of equity made by many people. In the Fraser Valley Board, we’re still up about 40% over the last three years.
The good news is the declines have really started to round out over the last few months. So they aren’t free-falling like they were in the past.
This levelling off is positive, as it typically indicates that the hot market is beginning to normalize. Of course, this doesn’t mean we’ve reached the end, but we might be getting closer. Only time will tell.
So, my question to you reading this post is, what do you think? You probably own a home if you’re reading this, or you’re paying attention to buying a home because you want to buy a home.
It’s About Time You Discover the Secrets to Success in the Real Estate Industry
We made a prediction post, my good friend Steve and I, a couple of weeks back that you can find on our channel.
We’re usually really good with our predictions, which is awesome.
But as a bonus, I’ve added in the description below the projections from the British Columbia Real Estate Association. That comes from their economy team. It’s their Canadian home sales forecast. So check it out because you’ll get some value before I let you go.
I also promised at the start of this post that there was something that you are definitely going to want to get your hands on.
That is a new publication that we just made available called Five Secrets that the Bank Doesn’t Want You to Know.
I’m not kidding when I say this; they don’t want you to know these things. So this publication is packed with five incredible tips on when you will get a mortgage, the questions to ask, and what you need to know. Plus, a downloadable PDF is available with it as well, so you get it right the first time.
If you’re interested in that, make sure to check it out.
If you are in South Surrey, White Rock, or Surrey, British Columbia, and considering buying or selling a home, I can help. Book a time in my calendar to speak directly with me.
My team of real estate professionals will set you off on the right foot to ensure you get the information you need to succeed!
Hey guys, thank you for reading this post and subscribing below. I look forward to seeing you at the next one.
Thanks for reading. Cheers.
BCREA sales forecast 2023: https://www.bcrea.bc.ca/wp-content/uploads/2022-11-08-forecast.pdf
Watch the full video here:
So you’ve done your research on what neighbourhood you want to raise your kids in. You’ve looked over thousands of online listings that are available to purchase. You swipe every early morning before work, or evening…
An Overview of the City’s Neighbourhoods Are you looking to plant your roots in the Great White North? Look no further than the bustling Surrey City, Canada! With its unique array of neighbourhoods, there’s something for…
Popular articles from our blog
The process of purchasing a home often raises the question, “When is the best time to buy a home?” While various factors contribute to the answer, it is essential to look beyond timing. Many first-time home…