1. Prices Are Declining
Your recent memory serves you right, with the exception of the 2008 global financial crises, Canadian Real Estate prices have steadily increased over the past few decades. We even saw some of the most robust growth occur during the Covid-19 Pandemic; with the peak in Feb 2022 by a record 29%.
Most of us were justified in feeling that this rapid price appreciation was not sustainable as prices were far outweighing family income growth. Demand is softening, however on the flip side rent is actually getting more expensive. Young families and new immigrants are the most impacted as they tend to rent before eventually looking to home ownership. Of course those that own rental properties stand to benefit from the rise in rent.
2. There are Material Impacts to Rising Interest Rates and Inflation
By late Oct, we saw the overnight lending rate increase to 3.75%. This makes it more difficult for the average family to afford a home in Canada (namely young families and recent grads). The increase in inflation has impacted everything from gas and groceries to consumer goods.
3. Varying Impacts Across Canada
Major metropolitan urban centres such as Toronto, experienced limited price declines across the housing sector. Whereas, Kitchener-Waterloo, Cambridge and London have seen the most dramatic price decreases.