For a brief moment the week before last, it seemed there may be a glimmer of a sliver of hope on the horizon for the real estate market.
Markets rallied, bond yields began to fall, and agents and mortgage brokers across the land found some pep in their step as they ran to dust off the old ring light and film some content to share the good news: the bottom was in!
Surely this meant that we would see fixed rates start to drop, which is exactly how last spring’s market rally got started. All it took was a little optimism that the worst was over and the buyers came out to play.
But ten days later, the fixed mortgage rates remain largely unchanged and the bond yields are trending back up again. And, of course, lest the markets be confused about his hawkishness, Powell came back out on Thursday and announced the Fed’s position that the battle against inflation may not yet be won and more hikes are on the table.
Here in Canada, prospects feel pretty bleak.
With a recession looming and real estate markets appearing to be in a deep freeze everywhere but in Alberta, many are sharing prognostications about where we go from here. Will we see prices start to drift downwards or will the levy break at some point?
Social media abounds with side-by-sides of listings of properties bought during the run-up now being sold at gasp-worthy discounts – in some cases landing back in the ballpark of 2018 pricing.
But one can assume the desperation is mounting in every single over-leveraged Canadian who has up until now hoped to white knuckle their way through and wait out the storm. Whether that looks like pulling the property to relist in the spring, or opting to rent out the house rather than sell in these market conditions, at a certain point something will have to give.
The prices and the power that home sellers had grown accustomed to won’t be returning any time soon.
In October’s Market Watch, released last week by the Toronto Regional Real Estate Board, the data clearly shows a market seized. We have sales down 12% from September – a month that already felt apocalyptically quiet – and inventory up 38%.
Prices appear to be holding but with so few transactions and among them a few big sales on the upper end of the luxury market, it seems like those average sale prices might be a little wonky.
One publication declared this market to be the toughest in 25 years.
There is no escaping these interest rates. And if they hold as long as it seems like they will, prices have nowhere to go but down.
The bottom feels quite a ways off yet.
