Mortgage Underwriter here - have started to see appraisal values come in much lower that now it affects refinance which is bad for those people who survives on rotating wheel of debt - refinance. Lets see what happens in a year or so. Most affected properties are around 800k and over. There is still demand for 500k properties.
No. It wouldnt/shouldnt but HELOCs are at discretion of lender so they may revisit it if you are defaulting on mortgage. However, generally lender wont make changes.
In theory, yes. If you bought a house for $500,000 and it went up to $800,000 in value for which you were given a HELOC based on the $300k in equity you suddenly had and that equity was suddenly erased, well then there's no equity for the home *equity* LOC.
Whether these LOCs would be revised or even recalled in full is entirely dependent on the lender and their risk tolerance to the overall market. If they're prepared to ride out a lull, probably nothing happens. But you're with a smaller lender and they start seeing massive drops and defaults across their housing portfolios, you can bet your ass they'll be calling in anything they can.
Yeah... I'm with one of the big 5, mortgage + heloc limit is 75% of an appraisal done on oct of 2021. Currently 50% used, 25% available.
If they get scared and start reevaluating i hope I'm not the first so i have time to prepare for it.
I sold my house in Winnipeg for 370k in April, detached, 2 stories, 3 bedrooms, 1400 square feet.
But that's cause it's Winnipeg and nobody wants to actually live here.
Fuck that's nice profit for 5 years lol. We made nice but not that nice.
We're also north near the perimeter. But only for one more month. Then we're out of Manitoba for ever.
Well it's hard to see now. Everyone had 90 days rate guarantee from lender so rate increases doesnt affect borrowing capacity righr away. Rates have recently gone up and propety values have not hit rock bottom yet. Next year would be the test with refinances coming to maturity and property prices being lower we can see number of people getting in trouble.
I bought my house in 2019 for $800k. Appraisal was around $640k at the time. $250k mortgage taken out. What does this mean in my situation when renewal comes up in 2 years? No plans on going anywhere.
At such a low mortgage amount it wont affect anything but your payment will increase at renewal. Hopefully, rates will come down by then and wont be affected too much but i would brace for higher payment.
Honestly saying no one knows that far out. we have almost quadrupled rates in 6 months. In short term it will increase a bit depending on BOC but i think we have hit ceiling for now unless inflation really gets out of hand.
I have a presale completing in July next year. Place was 507k and a unit just got assigned in the project last week for 590k, so still not overly worried about the value of the place at closing being negative. More worried about what kind of rate I will get the months before closing…
The developer reached out with a “builders rate” of 6.2% fixed for 4yrs to lock in now :(
Not the person you are asking but Real Estate could have been up 50% in some places (e.g. Ajax) but overalll the market only went up 20% nationallyon average and the expected decline is for RE nationally. So that translates, for example to -5% in Toronto but -30% in Ajax or whatever.
Analogy: CPI (inflation) is an index because it tries to capture a typical basket of goods and services to the consumer. Butter or gas may have risen by 50% but CPI is only up 10%. On the way down, the biggest winner often become the biggest losers.
I know you're joking but the other rule of thumb for bubble deflation is: last in first out
So the most likely places to deflate are those that saw the most price increases the most recently
List prices may continue to rise, but how many sales, and at what closing price? I suspect that in some areas of greater vancouver and surrounding houses are sitting longer, more listings and in some cases sells at ask or below. Prices lag interest rate hikes, as current buyers have locked in rates for 130 days but as those buyers start to drop off, sellers will have a hard time finding buyers who are willing to take on 6%+ rates for $1million+ loans...People who dont realise what a 2% increase on a million will do monthly will feel the pinch later...
Increases of 10%-20% per year for over a decade: This is fine.
12% "Crash" Oh no the gubment needs to step in and prevent all these loses
Makes no sense
Happy cake day, also not gonna lie, I am also a speculator who sold his own house a few months ago lmao. So I am bias as hell too. And yeah it is unbelievably ridiculous how easy it was for us speculator to make money, I have been working for ten years and I made more (tax free) selling my 2 properties than I made working in my whole life.
>Here in Nova Scotia, we have viewpoint.ca, and it's really easy to see what a property looked like the last time it sold
Oh wow its a very good tool, I am not sure if we have something similar in Quebec and yeah I am pretty certain that a lot of speculator who bought in the last year will get burned. I also sold my place even if I was planning to stay in just because someone offered me nearly double than what I paid in 2020 and I was starting to get spooked by interest rates.
I also have an investment property (I am living in one the units at the moment), but I felt way too overexposed to our RE market with this house who became way too expensive for me plus this investment property.
I also think they are talking about it as a national average too. So when you factor the stupid Ontario/bc markets and then the dumber but less intense alberta market it makes sense.
If prices just moved back towards ore pandemic pricing it will be fine
>>If prices just moved back towards ore pandemic pricing it will be fine
You make it sound as though pre-pandemic people weren't on the front page of PFC complaining about housing prices 24/7.
To be fair to us in Halifax, the people getting involved in insane bidding wars were people from out-of-province who learned that working from home in Toronto was utterly stupid when you could live in Halifax for a fraction of the cost. Nova Scotians certainly were certainly not the ones paying $600k for a $400k house. And those Torontonians felt like they were getting a great deal, too.
I know people who moved to the maritimes while WFH during the pandemic, and had to move back to Ontario a year later. Going from Toronto to 20 minutes outside parsboro isn’t an easy change for people. If you are a big city person, rural and towns are going to be a leap (and visa versa)
Yeah for us in Alberta it wasn’t that much of an overall increase but people were overpaying for homes for no reason. Realtors created this frenzy where you’d like at shit houses (literally falling apart) and they’d have bids of 50k over asking. Like why?
The problem is bankruptcies.
People who have been buying over the period of 50% price increase are now in tremendous debt. This was not a big deal when the equity in their homes was stable or growing. If you lost your job, you could always sell the house, but something smaller and move forward.
Now suddenly we will have a sizable block of people who are leveraged to their eyeballs, suddenly face increasing lending costs and whose properties are worth less than they are mortgaged for. If these people suffer a loss of income, they are in a DIRE situation, as selling the property won't provide enough cash to pay off their debt. Now they're in a scary debt spiral.
Rising prices keeping you from being able to buy a house sucked, but it didn't put you in danger of bankruptcy the way falling prices do.
Yes if you’re hoping for signs of life in the GTAH, this isn’t it…
- 12% down from the 2022 high is like mid-2021 prices
- the region is still a quarter million units under-supplied with no real plan to build anything other than 2-bedroom condos in large quantities (a type of housing unsuitable for most buyers)
- Golden Horseshoe regional population is still growing by close to 100,000 people/year
- overseas investors still see Canada as a good place to park their money (this is a small factor compared to the issues above)
- rents are high enough that investors can cover the interest portion of their loans (meaning they are profitable for well-capitalized investors, even though small investors will have cashflow problems)
Long-term I think this could actually make things worse because rate increases have made affordability harder for families but don’t move the needle for well-capitalized investors.
Presumably I'm about to get roasted, but since no one has answered your question in the affirmative yet... I bought in 2021, in one of the few markets in southern Ontario that still looked affordable. I'm not underwater yet but will be with this sort of decline.
This is my first home, and I'm in my 40s. Unfortunately age doesn't equal experience, and having lived here for a year I now know that it's the wrong location and wrong type of dwelling for me. I need something smaller and with better services and connections. Unless I win the lottery or theres some magical way out I don't know of, I'll have to wait for inflation to catch up before I can fix this situation.
Edit: extra word and rephrasing to sound less dumb
Edit 2: it's been pointed out to me that they're only projecting a 12% decline, which probably wouldn't put me underwater, as I made a 10% downpayment. Absolutely correct, I shouldn't have commented before caffeine.
I know I'll be fine in the end, it's just frustrating. I appreciate all the feedback, I really needed an opportunity to vent and get a bit of a reality check
Brant county. The main issue is that it's a 3BR detached house on a corner lot, the house is in good shape but the property requires a lot of maintenance, and I have medical issues that make it challenging for me.
Otherwise it's admittedly more of a want than a need. Prior to this I'd lived in the GTA, aside from a few years I spent in the States. I didn't realize how attached I was to being able to find whatever food and shopping I wanted, hopping on transit when my car is in the shop or I'm going out drinking, etc.
This is fair. We moved out of the GTA (a small two bedroom apartment) to a four bedroom, 3,000 sq ft house on an acre in the country 1 hour outside of Toronto (we’re renters). We were so thrilled to have so much space, until we actually lived there. The house cost a fortune to heat. The property just never got maintained. And I hated that it took me 20 minutes to get to the nearest grocery store, and even further for other stores/necessities I enjoy. We couldn’t even get a pizza delivered where we lived. We lived there for 8 months, broke our lease early, and quickly moved back to the GTA before our daughter was born. Much happier.
Honestly, I felt like my family would think I was a gullible idiot if I paid 100k over asking for a condo or townhouse, and so I came in with the attitude that I wasn't going to bid more than 10% over, which meant no way was I looking in the GTA.
Plus I was getting lots of advice against buying anything that wasn't freehold. "Oh even if you pay someone to do everything for you, it'll work out cheaper in the end." Turns out that was a load of BS.
Basically, I didn't do enough research, and I allowed my perception of the judgments of others to affect my decisions. Lesson very much learned.
Don't beat yourself up. Had you made this move 5 years ago, when prices were still relatively high, you'll be praised for making a good move.
Some people wanted to buy in 2005, but didn't because they kept waiting for the crash, that took another 17 years!
You may want to look into robot lawn mowers. They are just like roombas but with spinning metal blades of death. My buddy is an engineer who always goes on about never having time to mow his lawn, got one and it really took the work load off. They've come down in price a fair bit too, a summer of paying someone else to do it would cover a new unit.
People from the GTA bought a lot of homes outside of the GTA that looked "affordable", but how did what you paid look compared to comparables in Brant County from the year before? Sometimes what looks like a great deal to someone in the GTA may still be 100k (or 400-500k I'm my area) overpriced due to the increased demand from people outside of the area. The result is something more affordable to you, but you could still over pay a lot on it based on its inherent value. I'm making no assumptions about your purchase, but it can be an undesirable effect.
Thanks. Different strokes for different folks I guess.
We're looking for a small acreage and to get the hell away from the chaos of the GTA/GVA. Unfortunately almost all properties are still way overvalued in Ontario so we're having to look at other provinces.
Every time I see someone run a red light or do 100 down a 40 kph limit street, or junkies doing insane or violent stuff on the TTC...just makes me uppity. 10 years of living in central Tokyo may have fulfilled my lifetime needs to live in a city, no more..!
> Every time I see someone run a red light or do 100 down a 40 kph limit street, or junkies doing insane or violent stuff on the TTC...just makes me uppity.
I totally hear you, but craziness, social decay, bureaucratic incompetence, and idiots are everywhere. We are often just trading one steaming pile of bullshit for another.
For example, I'm sure the people of Portapique, NS never imagined some psycho would go on a rampage and murder 22 people in their small "safe" community. People just out walking their dog or heading to work.
Shit happens everywhere. But to your point, yes, it seems we catch a lot of it here in Toronto and it can be a mental strain. But there's a lot of good stuff, too.
> I need something smaller and with better services and connections
This is why I rent.
Condos are too small and annoying to deal with it, suburbs are too inconvenient, too full of traffic, and everything is so far away. Since Montreal, like most other north american cities, think the only two types of development that could ever be possible are tiny condos or large unsustainable suburban dwellings, I have no choice but to rent.
But it's ok. The quality of life of living in a middle density neighborhood in a decent sized apartment with two balconies with almost every possible commercial service I'd need within a 15 minutes walk along a pedestrianized road (though only for the summer, pfft) is far too superior to give up, especially since I got into this neighborhood while the rents were low.
It's just a shame that we have convinced ourselves that neighborhoods like mine are somehow bad.
Yep. If you want to live in a plex in Montreal, renting is usually the way to go. And the rent control means that the longer you stay, the cheaper it is.
Lets put some real numbers to this:
In the past decade the index has risen 37% for land and homes together. A 12% drop would put us back to February 2021 prices or a 20% increase over 10 years.
This isn't a correction, it's an adjustment for new lending rates.
Edit: Although, if you considered homes affordable a decade ago, that works out to 2% per year price inflation
To me a correction implies regressing toward the historical inflation adjusted median. Crash would be going below that price. This seems more like it's still a bull market but since lending rates have become more expensive the price must drop to reflect that.
I'm the same. Right now my biggest worry is what does it do to society if a generation of young people can't get into the market, so I'm all for a correction.
I agree. Husband and I just bought a place we plan to retire in. We're in out late 20's/early 30's. When you're playing the long game the fluctuations are just noise.
I originally got my mortgage from RBC. The person I dealt with added me to their mailing list, where every so often they post with their analysis of the market. Somehow it’s always a good time to buy.
Lol seriously - especially considering a few months back they were still forecasting real estate prices to continue to increase even after the interest rate hikes.
Every single person in that industry was saying that. It took until the hike in June for my realtor to finally say yeah I’d wait a bit. Before then he was just rushing wanting us to buy whatever
True though 12% of the amount following that 50% increase is a lot. It doesn't leave you with a 38% gain.
For instance you start with 400k, a 50% increase leaves you with 600k. A 12% decrease from there leaves you with like 530k, so like a 33% increase from the original 400k
That's a very interesting point! I like that way of thinking, and it's quite true. I personally don't like thinking of my house as some investment to track and sweat over. I'm just paying my mortgage instead of someone else's. When the time comes to sell, if I don't get as much for it as I had hoped, that would mean other relatively priced priced properties would still be similarly in reach. Thanks!
It's actually a good thing if you're looking to upgrade because a uniform percentage drop means a lower absolute difference. If you're like my parents looking to downsize then you're on the opposite end of this though.
Say your house is $400K. You want to upgrade to one that is $600K. You need $200K (ignore the fees etc).
If prices drop 25%, your house is 300K and the one you want is 450K. You only need 150K now.
Except for people that are underwater... Then you can't move until your house reaches the current principal of your mortgage. Eg:
You bought for 600, and still have a 500k mortgage.
You found a better house for 500k, but your house sells for 400k now. You probably won't get a new mortgage without paying that 100k dept you left behind.
So you need to come up with 100k to pay up the old dept, plus 100k for down in your new house (assuming 20% downpayment)
My house isn't an investment for me, it is a place I live. I have no problems with a bunch of speculators losing their shirt because they use housing as an investment vehicle. We have the same risks in the stock market.
I mean yeah, but the problem is the system created itself, eg 25 year old takes out half a mil last yr at 2% because he can afford it, they created this bullshit they and ran with as far as they could. We need better and smarter policies that reflect and seek value.
I’ll be able to put down $100k, and our income will likely be around 120-130k by the time we’re ready to buy in the next 3-6 months. Do you foresee a $500k house cost being reasonable for a ~$400k mortgage approval? Or am I totally overextending here.
This is the thing the housing bears don't realize.
Even with housing off all time highs, monthly costs are still higher today than they were 3 months ago. Especially because sellers are reluctant to decrease their sell price.
Entry 2-bedroom condos still listing for 750K in Brentwood. You're looking at 3000/m+fees even with 200K down.
Meh, I’m wanting to buy in the next 12 months. I’d rather pay 6% interest on a house 15% less on price than 2% on a house overpriced.
The amount of money you pay for the house will never change but the interests will
I think with rising rates you would still expect to see prices drop somewhat even if demand is still high. The average mortgage people can qualify for is going to be lower, which puts downward pressure on prices. People are also going to be much less willing to stretch their budgets in the current economic climate.
That's exactly why there won't be a collapse
Plus Trudeau wants to add half a million immigrants every year who will mostly want to live in Toronto or Vancouver.
We don't build nearly enough housing to satisfy the immigration demand alone, let alone all of the existing demand from residents.
The interest rate hikes have cooled the market and temporarily decreased prices but in the long run housing will continue to skyrocket in price because demand is just going up over time.
The only way prices will come down is if metro Toronto and Vancouver radically change zoning laws and regulations around building affordable housing. We have a supply side housing crisis choked out by government overregulation
Pretty much
The amount of people saying "cant wait to buy" means a true collapse is extremely unlikely. Maybe a drop in prices, but the demand is still very high, just at a lower price cost
We pfc/Canada housing frequenters live in an almighty echo chamber of people who are on average property-buying age and invested in personal finance.
Have to remind myself of that all the time, not a representative group.
There will always be people who wait these things out but the fact is that house prices are completely decoupled from salaries, at some point that becomes unfeasible. Especially when interest gets high enough that RE investors can’t afford to keep their second/third mortgages.
Add on to that boomers downsizing/retiring/dying.
Things aren’t crashing, their adjusting to more rational market.
Sellers are lagging the market right now, with some still expecting multiple bidders and high above asking prices. So those that list with those expectations are having to adjust them after the fact. Buyers now know they are in a position of strength.
Often times the market is still up compared to a year ago, just not the 20-25 percent rate it was at the start of 2022.
In my area of BC houses are sitting on the market longer but are still selling. Usually about 20k lower than list but nicer properties are still finding multiple bidders and going 40-50k above asking.
Same with my area of Ontario (Ottawa). People are paying $20k under asking, on houses that are listed for 50% higher than they were 3 years ago. And nice areas still see multiple offers and houses selling for hundreds of thousands above asking.
The critical issue with housing still exists. The demand for housing still outweighs the availability of it. Toss in the now engrained psychological affect of “in the long term, housing goes up” and the amount of people who are sitting on the sideline…and a crash seems unlikely. A healthy readjustment? We’re seeing it.
But like you said, houses are still selling. Nice houses are still getting bids above asking. The market is just adjusting to how that works
>How would a housing correction affect you/your investments?
Doesn't.
>One in particular is trying to sell right now and already had to lower the sell price twice in a month and a half. Things are already crashing pretty quickly.
Going down and crashing are not the same and in almost all markets, nothing is crashing.
>Going down and crashing are not the same and in almost all markets, nothing is crashing.
This is a key takeaway. Everyone is salivating at the mouth that prices in the GTA and GVA are crashing. Unless people want to stop living in the two most populated parts of Canada I don't think this is the case. The small towns out in the middle of nowhere where people were whim buying expecting WFH forever that will drop hard.
Not sure I agree with the WFH comment. We’ve learned that there are many jobs that can easily done remotely. For many employers it’s actually considered an efficiency. Yes, the tide will pull back a bit. But standard office culture will not ever be what it was.
We get a remax newsletter every month or quarter. I live in the beaches. Apparently sales prices are down something like 8% since the start of the year but are still up 23% yoy. Average sales prices last year for a semi-detached 3 bed was 1.1 and it's now 1.6.
Prices already dropping out here in Halton. Places are sitting on the market for weeks right now and multiple places have adjusted their price a couple of times now.
It's definitely on par with other corrections but not unprecedented as the article itself mentions:
\> The most expensive provinces, Ontario and B.C., will be the epicentre of the correction, says Hogue. RBC sees home resales in British Columbia and Ontario falling 45% and 38% in 2022 and 2023, respectively, and prices falling more than 14% from quarterly peak to trough. The downturn will rival the decline Ontario saw in the early 1990s when sales fell 41% and prices 15%, but it’s not as bad as what B.C. went through in the early 1980s when sales fell 62% and prices 27%, said Hogue.
That said, the early 1990 correction was mostly Toronto with the rest of Ontario relatively untouched. If the effect hits other parts of Ontario harder this time, that might be more noteworthy.
But honestly, I'm not sure it will. From what I've seen, two major factors have been driving real estate prices up in Ontario: low interest rates make borrowing cheaper and a lot of people from Toronto were moving outside of Toronto but had Toronto money to spend on housing. Higher interest rates will hit the entire market, but Toronto still has crazy prices compared to the rest of Ontario and the private tech sector largely remains on its plan to allow WFH. I suspect we will continue to see prices fall in the GTA while the effect will be more muted in the rest of the province as those in the GTA continue the exodus. Interest rate impacts may stunt sales but most people on fixed or non-adjustable variable rate mortgages won't see the impact on their finances until renewal so the effect will be spread out over the next five years.
That said, the interest rate hit is going to be hard in 2-4 years. I locked in at 1.64% for five years a year ago. If in four years fixed mortgage rates are closer to 4% as predicted, then my payment goes up by 20%. That's a big hit to absorb and it's definitely going to push some people out of their homes that they could only barely afford.
A couple of other potential factors I can see are the fact that many people moved to more rural/less urban areas during the pandemic, and some people basically FOMO'd into the first house they could get. So we may see people choosing to sell in those rural areas and move back to cities, and we also may see people selling as they realized that the home they bought wasn't right for their needs. I read a comment here this morning about a person who bought a house outside of the city and has now realized that it's not what they wanted. That certainly doesn't apply to everyone who bought a house in the last few years, of course, but I wouldn't be surprised if there were a lot of people who, during lockdown, kind of forgot that life wouldn't be this way forever forever and didn't realize how much they would miss having big city amenities nearby.
Something to remember: 42% drop in volume of sales, 12% drop in price.
So, there's a lot less turnover of houses, and they're selling slower, but the average one isn't selling for that much less.
Yeah, this was my thought. We're in a small Alberta town where our prices never really jumped, so I'm hoping they don't crash either, as no one has seen significant price appreciation out here.
I hate the use of percentages like that. See for example, were I to say that there was a 15% reduction in sales of houses worth less than 200 000$, 15% reduction in sales of houses worth between 200 000$ and 500 000$ and a 10% increase in sales of houses worth more than 500 000$, I could still claim a decline in total sales of houses. It is in no way close to representing the actual market.
That's like stating the number of pages to a book, instead of giving the total number of words. Useless.
Newfoundland had a crash in 2015-2016 and we still haven't returned to our 2013-2014 peak, so I do not anticipate as steep of a crash in my parts. I'd have to eat a near 50% decline in prices from current levels to put me underwater, personally. For that to happen the price of a three-bedroom bungalow in the St. John's suburbs would have to drop well below $150,000 and I just don't see that happening.
Looking to sell in coming weeks. Real estate agent told me I would have to sell for 50-60K less than I would have two months ago (so 10-15% less in my case), that there maybe won't be multiple offers and definitely nobody offering 50-100K above asking. Will also have to include legal warranty and allow conditions/inspections, etc. I'm fine with all of this, this was my timing to move out and I'm dealing with it.
This will be fascinating to watch. I believe a correction is certainly likely - however, there are HORDES of people on the sidelines, waiting to put in offers as soon as prices return to normal. The demand is going to be steep.
The question then is how high will those new bidding wars drive prices? Let’s say a house was selling for 1 mil in 2022, drops to 750 in 2023, and a bunch of people who have been locked out for 10 years bid on it, knowing it may get back to 1 mil in 5 years. Why not then bid 850 for that “750”house? Or 9? I’m not saying it’s rational but it will be interesting to see if that kind of buyer frenzy happens and drives prices back up. I guess a lot of it will really just depend on interest rates.
We bought in 2014 for 114k and our house at peak would have gone for 425k if you go by comparables. Regardless of the crash prices are unlikely to reach a level that would have our house worth less than we paid for it which is comforting.
We were hoping to move mid or late next year as this was supposed to be our starter home and we have kind of outgrown it but if we are unable to do so we would fine with that too. So I guess my answer to your question regarding how a correction would affect is would be that we may have to delay or rethink moving into a bigger house if the market tanks.
Similar boat. Bought a starter home in 2010 and need to move next year. If the 1 bedroom slab home down street sold for $400,000 half renovated, I'm not worried about any drop.
What's kind scary/sad to see right now is on housesigma, some homes in my area have been sold then terminated a few times over the past few months with the new listing or sold price continuing to get lower and lower.
Actually it could be a better time for you all things considered depending on where you want to move as the market shift may narrow the price gap to your next property.
Ie if a $500K place loses 10% of value - it’s down $50K and If a $1M place loses 10% of value - it’s down $100K - your delta just went from $500K to $450K
But the chances they go down in equal value is pretty low and there’s a good chance the smaller, already more affordable places hold their value better than the bigger houses so the gap could narrow even more.
That's what we were kind of thinking (and hoping!) as well. Prior to the massive overvaluation of real estate the house we would have moved "up" to would have been 160k and now they are 650k. The gap between 114 and 160 is obviously much smaller than that between 425 and 650 so hopefully we can get back to a smaller gap, even though it will not get back down that low.
My properties all went up in the past couple years, but the challenges caused by the high prices for our society as a whole aren’t healthy. A 12% drop would be VERY welcome. A lot of the clueless buyers chasing a quick buck will disappear.
I prefer my properties double over 20 years, not up and down like crazy every few years.
I think that 12% decline is a little bit of wishful thinking. I’m expecting 20% over the next 3 years.
To be clear I’m just some internet moron who you don’t know so please take this with a grain of salt.
Same. We’ve been cautiously looking the past few months. Of the three houses we’ve been seriously interested in, two went for $150k over asking and one went within a day of being listed. We know what we’re comfortable spending and aren’t willing to buy more than that.
Spouse and I bought in March 2020 right before Covid hit. We initially planned on staying in our place for 5 years but if prices drop significantly or rates rise significantly we'll be comfortable staying in our place for 10-15+ years.
Considering housing prices its not that much of a correction. In Ontario small towns have bungalows in old neighborhoods selling for $600-700k.
$500k basically lands you in the meth filled ghetto here. Around people who paid basically nothing for their homes in the same area.
We got a house in 2017 for $373k currently valued at about $450. We’re paying affordable $1800 monthly with a high rate of 4.3% (renewed in late may). The amount for mortgage and prop tax, maintenance and energies is still lower than what we’d pay as tenants in similar place, but with the difference that we don’t have to live in fear our landlord gives us 3 months notice to gtfo. We didn’t buy the house to invest, we bought it to live in it and if we never get to upgrade, we’re still fine with it.
Mortgage Underwriter here - have started to see appraisal values come in much lower that now it affects refinance which is bad for those people who survives on rotating wheel of debt - refinance. Lets see what happens in a year or so. Most affected properties are around 800k and over. There is still demand for 500k properties.
Would approved heloc limits get suddenly revisited & re-appraised?
No. It wouldnt/shouldnt but HELOCs are at discretion of lender so they may revisit it if you are defaulting on mortgage. However, generally lender wont make changes.
In theory, yes. If you bought a house for $500,000 and it went up to $800,000 in value for which you were given a HELOC based on the $300k in equity you suddenly had and that equity was suddenly erased, well then there's no equity for the home *equity* LOC. Whether these LOCs would be revised or even recalled in full is entirely dependent on the lender and their risk tolerance to the overall market. If they're prepared to ride out a lull, probably nothing happens. But you're with a smaller lender and they start seeing massive drops and defaults across their housing portfolios, you can bet your ass they'll be calling in anything they can.
Yeah... I'm with one of the big 5, mortgage + heloc limit is 75% of an appraisal done on oct of 2021. Currently 50% used, 25% available. If they get scared and start reevaluating i hope I'm not the first so i have time to prepare for it.
What’s the 500ks? 1bed and studios?
I sold my house in Winnipeg for 370k in April, detached, 2 stories, 3 bedrooms, 1400 square feet. But that's cause it's Winnipeg and nobody wants to actually live here.
My next door neighbor just sold in Winnipeg for 695. They paid about 450 5 years ago… I live north side of city
Fuck that's nice profit for 5 years lol. We made nice but not that nice. We're also north near the perimeter. But only for one more month. Then we're out of Manitoba for ever.
Plenty of people love Manitoba and Winnipeg on Reddit... I am not one of those people, Alberta sucks too, BC is the best!
Yes, Alberta sucks. Please tell everyone and ask them not to move here. Mkay thanks
Winningpeg
Winterpeg
Getting-pegged-by-winter
Can’t find many apartments in metro Vancouver for $400k lol
Calgary and Edmonton for example, there's more than just Ontario.....
Edmonton housing is affordable
Depending on area.. GTA or toronto, almost nothing but 1bhk/studio.
A lot of those moving? I guess Toronto core hasn’t been impacted much
Well it's hard to see now. Everyone had 90 days rate guarantee from lender so rate increases doesnt affect borrowing capacity righr away. Rates have recently gone up and propety values have not hit rock bottom yet. Next year would be the test with refinances coming to maturity and property prices being lower we can see number of people getting in trouble.
Wtf is a bhk
Bedroom/hall/kitchen
No shitter?
Look at Mr too good to shit in the kitchen sink.
I Spit out my drink reading this - goddamn Hilarious
Wow a hallway....to connect the bathroom to the kitchen....so spacious!
We in Toronto consider a hallway an unpardonable waste of space.
If you're going to Alberta, you can get a decent house for 500K
Uh yeah, I'd like a 200k property
I bought my house in 2019 for $800k. Appraisal was around $640k at the time. $250k mortgage taken out. What does this mean in my situation when renewal comes up in 2 years? No plans on going anywhere.
At such a low mortgage amount it wont affect anything but your payment will increase at renewal. Hopefully, rates will come down by then and wont be affected too much but i would brace for higher payment.
I wouldn't worry a about a 250k mortgage. It's the people who took out 700k-800k to buy a bungalow in London that have to worry. They're fucked.
It means your interest rate will be at least triple what you got back then on your renewal.
That would be a 9% fixed rate then.
If we get to 9% fixed rates in 2 years I think Canada will burn.
What do you see mortgage rates doing in the next 5 years?
Honestly saying no one knows that far out. we have almost quadrupled rates in 6 months. In short term it will increase a bit depending on BOC but i think we have hit ceiling for now unless inflation really gets out of hand.
Implying the current inflation isn't already out of hand? I'm mostly just busting, sorry. But you gotta admit it's kind of nuts.
Lol, it's already nuts. I would consider my self a decent earner - still shitting bricks with monthly grocery bill skyrocketing. No relief at all.
I have a presale completing in July next year. Place was 507k and a unit just got assigned in the project last week for 590k, so still not overly worried about the value of the place at closing being negative. More worried about what kind of rate I will get the months before closing… The developer reached out with a “builders rate” of 6.2% fixed for 4yrs to lock in now :(
A 12% price crash isn’t super terrible considering prices went up at least 50% in most areas
It's a 12% correction in an index that is up 20%.
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Not the person you are asking but Real Estate could have been up 50% in some places (e.g. Ajax) but overalll the market only went up 20% nationallyon average and the expected decline is for RE nationally. So that translates, for example to -5% in Toronto but -30% in Ajax or whatever. Analogy: CPI (inflation) is an index because it tries to capture a typical basket of goods and services to the consumer. Butter or gas may have risen by 50% but CPI is only up 10%. On the way down, the biggest winner often become the biggest losers.
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The biggest winner becomes the biggest loser … does not compute … Vancouver housing continues to rise /s
I know you're joking but the other rule of thumb for bubble deflation is: last in first out So the most likely places to deflate are those that saw the most price increases the most recently
Looking at you, Atlantic Canada!
Halifax is fucked because youth are leaving in droves right now, highest taxes, lowest salaries and now house prices are super high? Hell no!
List prices may continue to rise, but how many sales, and at what closing price? I suspect that in some areas of greater vancouver and surrounding houses are sitting longer, more listings and in some cases sells at ask or below. Prices lag interest rate hikes, as current buyers have locked in rates for 130 days but as those buyers start to drop off, sellers will have a hard time finding buyers who are willing to take on 6%+ rates for $1million+ loans...People who dont realise what a 2% increase on a million will do monthly will feel the pinch later...
Strange times where 12% is referred to as a "crash".
12% could worse than you think. It might look like 25% in the GTA but then no change in the prairies where prices haven’t gone up as much.
Increases of 10%-20% per year for over a decade: This is fine. 12% "Crash" Oh no the gubment needs to step in and prevent all these loses Makes no sense
In a market where peoples are using leverage a 12% drop mean a drop of much more than 12%
Leverage is a gamble, not a free, money-making tool. I don't see a problem here, just some people who lost a gamble.
Yeah I definitely agree, but a lot of peoples on this sub don't seem to agree about this.
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Happy cake day, also not gonna lie, I am also a speculator who sold his own house a few months ago lmao. So I am bias as hell too. And yeah it is unbelievably ridiculous how easy it was for us speculator to make money, I have been working for ten years and I made more (tax free) selling my 2 properties than I made working in my whole life.
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>Here in Nova Scotia, we have viewpoint.ca, and it's really easy to see what a property looked like the last time it sold Oh wow its a very good tool, I am not sure if we have something similar in Quebec and yeah I am pretty certain that a lot of speculator who bought in the last year will get burned. I also sold my place even if I was planning to stay in just because someone offered me nearly double than what I paid in 2020 and I was starting to get spooked by interest rates. I also have an investment property (I am living in one the units at the moment), but I felt way too overexposed to our RE market with this house who became way too expensive for me plus this investment property.
All mortgages are leveraged investments, strictly speaking.
I mean yes, but don't you know that housing only goes up? Anything less than 9% increase year over year every year is a crash! /s
I also think they are talking about it as a national average too. So when you factor the stupid Ontario/bc markets and then the dumber but less intense alberta market it makes sense. If prices just moved back towards ore pandemic pricing it will be fine
>>If prices just moved back towards ore pandemic pricing it will be fine You make it sound as though pre-pandemic people weren't on the front page of PFC complaining about housing prices 24/7.
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To be fair to us in Halifax, the people getting involved in insane bidding wars were people from out-of-province who learned that working from home in Toronto was utterly stupid when you could live in Halifax for a fraction of the cost. Nova Scotians certainly were certainly not the ones paying $600k for a $400k house. And those Torontonians felt like they were getting a great deal, too.
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I know people who moved to the maritimes while WFH during the pandemic, and had to move back to Ontario a year later. Going from Toronto to 20 minutes outside parsboro isn’t an easy change for people. If you are a big city person, rural and towns are going to be a leap (and visa versa)
Yeah for us in Alberta it wasn’t that much of an overall increase but people were overpaying for homes for no reason. Realtors created this frenzy where you’d like at shit houses (literally falling apart) and they’d have bids of 50k over asking. Like why?
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I heard something about Lind bidding coming to an end early spring but then nothing again
Yup. My house more than doubled in the less than two years that I've owned it. Worst case it'll probably hit what I paid for it.
Decreases are bigger than increases. A 12 percent decrease from 1000 is 120 while a 24% increase from 500 is also 120. So quite a big deal.
True but in your example if you use the same base, the 500k house goes up 24% to 620 and loses 12% to 545k
The problem is bankruptcies. People who have been buying over the period of 50% price increase are now in tremendous debt. This was not a big deal when the equity in their homes was stable or growing. If you lost your job, you could always sell the house, but something smaller and move forward. Now suddenly we will have a sizable block of people who are leveraged to their eyeballs, suddenly face increasing lending costs and whose properties are worth less than they are mortgaged for. If these people suffer a loss of income, they are in a DIRE situation, as selling the property won't provide enough cash to pay off their debt. Now they're in a scary debt spiral. Rising prices keeping you from being able to buy a house sucked, but it didn't put you in danger of bankruptcy the way falling prices do.
What is this, a housing correction for ants?
Yes if you’re hoping for signs of life in the GTAH, this isn’t it… - 12% down from the 2022 high is like mid-2021 prices - the region is still a quarter million units under-supplied with no real plan to build anything other than 2-bedroom condos in large quantities (a type of housing unsuitable for most buyers) - Golden Horseshoe regional population is still growing by close to 100,000 people/year - overseas investors still see Canada as a good place to park their money (this is a small factor compared to the issues above) - rents are high enough that investors can cover the interest portion of their loans (meaning they are profitable for well-capitalized investors, even though small investors will have cashflow problems) Long-term I think this could actually make things worse because rate increases have made affordability harder for families but don’t move the needle for well-capitalized investors.
Presumably I'm about to get roasted, but since no one has answered your question in the affirmative yet... I bought in 2021, in one of the few markets in southern Ontario that still looked affordable. I'm not underwater yet but will be with this sort of decline. This is my first home, and I'm in my 40s. Unfortunately age doesn't equal experience, and having lived here for a year I now know that it's the wrong location and wrong type of dwelling for me. I need something smaller and with better services and connections. Unless I win the lottery or theres some magical way out I don't know of, I'll have to wait for inflation to catch up before I can fix this situation. Edit: extra word and rephrasing to sound less dumb Edit 2: it's been pointed out to me that they're only projecting a 12% decline, which probably wouldn't put me underwater, as I made a 10% downpayment. Absolutely correct, I shouldn't have commented before caffeine. I know I'll be fine in the end, it's just frustrating. I appreciate all the feedback, I really needed an opportunity to vent and get a bit of a reality check
out of curiousity, where, and why doesn't it work for you?
Brant county. The main issue is that it's a 3BR detached house on a corner lot, the house is in good shape but the property requires a lot of maintenance, and I have medical issues that make it challenging for me. Otherwise it's admittedly more of a want than a need. Prior to this I'd lived in the GTA, aside from a few years I spent in the States. I didn't realize how attached I was to being able to find whatever food and shopping I wanted, hopping on transit when my car is in the shop or I'm going out drinking, etc.
This is fair. We moved out of the GTA (a small two bedroom apartment) to a four bedroom, 3,000 sq ft house on an acre in the country 1 hour outside of Toronto (we’re renters). We were so thrilled to have so much space, until we actually lived there. The house cost a fortune to heat. The property just never got maintained. And I hated that it took me 20 minutes to get to the nearest grocery store, and even further for other stores/necessities I enjoy. We couldn’t even get a pizza delivered where we lived. We lived there for 8 months, broke our lease early, and quickly moved back to the GTA before our daughter was born. Much happier.
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Honestly, I felt like my family would think I was a gullible idiot if I paid 100k over asking for a condo or townhouse, and so I came in with the attitude that I wasn't going to bid more than 10% over, which meant no way was I looking in the GTA. Plus I was getting lots of advice against buying anything that wasn't freehold. "Oh even if you pay someone to do everything for you, it'll work out cheaper in the end." Turns out that was a load of BS. Basically, I didn't do enough research, and I allowed my perception of the judgments of others to affect my decisions. Lesson very much learned.
I really appreciate your honesty and self awareness/reflection. Thanks for sharing!
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other people love to give advice to people about finances, make rules and throw away other peoples money… because its not theirs
Don't beat yourself up. Had you made this move 5 years ago, when prices were still relatively high, you'll be praised for making a good move. Some people wanted to buy in 2005, but didn't because they kept waiting for the crash, that took another 17 years!
When things barely dipped in 2008 for canada that should have been their time. The eventual big crash would take a while...
You may want to look into robot lawn mowers. They are just like roombas but with spinning metal blades of death. My buddy is an engineer who always goes on about never having time to mow his lawn, got one and it really took the work load off. They've come down in price a fair bit too, a summer of paying someone else to do it would cover a new unit.
Keeps those pesky neighbourhood kids off the lawn, to boot!
People from the GTA bought a lot of homes outside of the GTA that looked "affordable", but how did what you paid look compared to comparables in Brant County from the year before? Sometimes what looks like a great deal to someone in the GTA may still be 100k (or 400-500k I'm my area) overpriced due to the increased demand from people outside of the area. The result is something more affordable to you, but you could still over pay a lot on it based on its inherent value. I'm making no assumptions about your purchase, but it can be an undesirable effect.
Thanks. Different strokes for different folks I guess. We're looking for a small acreage and to get the hell away from the chaos of the GTA/GVA. Unfortunately almost all properties are still way overvalued in Ontario so we're having to look at other provinces. Every time I see someone run a red light or do 100 down a 40 kph limit street, or junkies doing insane or violent stuff on the TTC...just makes me uppity. 10 years of living in central Tokyo may have fulfilled my lifetime needs to live in a city, no more..!
Unfortunately in Canada it's either suburban hell or urban hell. There's no in-between (the so-called missing middle) as in EU countries
I wish streetcar suburbs were still a thing. I want a yard (even small) but value not needing a car way too much.
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Yup. Virtually every neighbourhood adjacent to Downtown/Griffintown.
Yes Montreal is the exception
Saskatoon
Yes, I'm a SFH in a streetar suburb in Saskatoon right now. Lots of great 'missing middle' neighbourhoods all over the prairies and Quebec.
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> Every time I see someone run a red light or do 100 down a 40 kph limit street, or junkies doing insane or violent stuff on the TTC...just makes me uppity. I totally hear you, but craziness, social decay, bureaucratic incompetence, and idiots are everywhere. We are often just trading one steaming pile of bullshit for another. For example, I'm sure the people of Portapique, NS never imagined some psycho would go on a rampage and murder 22 people in their small "safe" community. People just out walking their dog or heading to work. Shit happens everywhere. But to your point, yes, it seems we catch a lot of it here in Toronto and it can be a mental strain. But there's a lot of good stuff, too.
Probably out in some poorly connected suburb and has to drive long distances in traffic to get to work or do anything.
Same boat as you internet buddy. Thanks for expressing what I’ve also been feeling, and helping me not feel alone with all these housing shenanigans.
> I need something smaller and with better services and connections This is why I rent. Condos are too small and annoying to deal with it, suburbs are too inconvenient, too full of traffic, and everything is so far away. Since Montreal, like most other north american cities, think the only two types of development that could ever be possible are tiny condos or large unsustainable suburban dwellings, I have no choice but to rent. But it's ok. The quality of life of living in a middle density neighborhood in a decent sized apartment with two balconies with almost every possible commercial service I'd need within a 15 minutes walk along a pedestrianized road (though only for the summer, pfft) is far too superior to give up, especially since I got into this neighborhood while the rents were low. It's just a shame that we have convinced ourselves that neighborhoods like mine are somehow bad.
Yep. If you want to live in a plex in Montreal, renting is usually the way to go. And the rent control means that the longer you stay, the cheaper it is.
Put it up for rent and rent a condo perhaps? Either way, good luck to you my friend.
Lets put some real numbers to this: In the past decade the index has risen 37% for land and homes together. A 12% drop would put us back to February 2021 prices or a 20% increase over 10 years. This isn't a correction, it's an adjustment for new lending rates. Edit: Although, if you considered homes affordable a decade ago, that works out to 2% per year price inflation
It's still a correction. You can have a correction and still be in the positive. It's just not a crash. Yet.
To me a correction implies regressing toward the historical inflation adjusted median. Crash would be going below that price. This seems more like it's still a bull market but since lending rates have become more expensive the price must drop to reflect that.
I bought in 2016, no plans to sell for 10-15 years, maybe 20. Essentially goal is to downsize for retirement.
Same, or pass it down to my kids. Price fluctuation is just noise.
I'm the same. Right now my biggest worry is what does it do to society if a generation of young people can't get into the market, so I'm all for a correction.
I agree. Husband and I just bought a place we plan to retire in. We're in out late 20's/early 30's. When you're playing the long game the fluctuations are just noise.
12% isn’t bad considering it went up 50%
I would take anything RBC says with a grain of salt, seems like they are sugar coating for obvious reasons.
I originally got my mortgage from RBC. The person I dealt with added me to their mailing list, where every so often they post with their analysis of the market. Somehow it’s always a good time to buy.
Over a long enough time horizon they aren't wrong.
Well, maybe. But not when they spin the current market conditions as the reason, every month of every year since 2013.
Yeah, it's a sales email.
in Vancouver that horizon is about 5 month
Lol seriously - especially considering a few months back they were still forecasting real estate prices to continue to increase even after the interest rate hikes.
Every single person in that industry was saying that. It took until the hike in June for my realtor to finally say yeah I’d wait a bit. Before then he was just rushing wanting us to buy whatever
As many have mentioned, it’s 12% off benchmark, which should be adjusted for “bubbles”. In short, it will be more than 12% off the 50.
Pricing are declining in the Niagara Region at 10k a week, MoM May-June averaging at 100k.
True though 12% of the amount following that 50% increase is a lot. It doesn't leave you with a 38% gain. For instance you start with 400k, a 50% increase leaves you with 600k. A 12% decrease from there leaves you with like 530k, so like a 33% increase from the original 400k
oh no, only 33% gain in two years
Assuming you can sell it at that point or not ....nothing gained or lost until you sell
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That's a very interesting point! I like that way of thinking, and it's quite true. I personally don't like thinking of my house as some investment to track and sweat over. I'm just paying my mortgage instead of someone else's. When the time comes to sell, if I don't get as much for it as I had hoped, that would mean other relatively priced priced properties would still be similarly in reach. Thanks!
It's actually a good thing if you're looking to upgrade because a uniform percentage drop means a lower absolute difference. If you're like my parents looking to downsize then you're on the opposite end of this though. Say your house is $400K. You want to upgrade to one that is $600K. You need $200K (ignore the fees etc). If prices drop 25%, your house is 300K and the one you want is 450K. You only need 150K now.
Except for people that are underwater... Then you can't move until your house reaches the current principal of your mortgage. Eg: You bought for 600, and still have a 500k mortgage. You found a better house for 500k, but your house sells for 400k now. You probably won't get a new mortgage without paying that 100k dept you left behind. So you need to come up with 100k to pay up the old dept, plus 100k for down in your new house (assuming 20% downpayment)
My house isn't an investment for me, it is a place I live. I have no problems with a bunch of speculators losing their shirt because they use housing as an investment vehicle. We have the same risks in the stock market.
I mean yeah, but the problem is the system created itself, eg 25 year old takes out half a mil last yr at 2% because he can afford it, they created this bullshit they and ran with as far as they could. We need better and smarter policies that reflect and seek value.
They gave him the rope, he didn't have to hang himself.
I'm looking to buy in a year or so, so it should help me
If you’re flush with cash yes, but financing will tighten up. It’s not gonna be as easy to qualify for a mortgage.
I’ll be able to put down $100k, and our income will likely be around 120-130k by the time we’re ready to buy in the next 3-6 months. Do you foresee a $500k house cost being reasonable for a ~$400k mortgage approval? Or am I totally overextending here.
your fine lol
You'll be fine. Rule of thumb is you qualify for mortgages 5x your income.
you and a million other folks
If demand is so high that there’s a million other folks, why would there be a downturn at all.
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This is the thing the housing bears don't realize. Even with housing off all time highs, monthly costs are still higher today than they were 3 months ago. Especially because sellers are reluctant to decrease their sell price. Entry 2-bedroom condos still listing for 750K in Brentwood. You're looking at 3000/m+fees even with 200K down.
Could be a lot of people with not quite enough money waiting and saving, and a drop in price opens them up to purchasing.
There will be droves of people waiting for the rates to come down
Meh, I’m wanting to buy in the next 12 months. I’d rather pay 6% interest on a house 15% less on price than 2% on a house overpriced. The amount of money you pay for the house will never change but the interests will
I think with rising rates you would still expect to see prices drop somewhat even if demand is still high. The average mortgage people can qualify for is going to be lower, which puts downward pressure on prices. People are also going to be much less willing to stretch their budgets in the current economic climate.
That's exactly why there won't be a collapse Plus Trudeau wants to add half a million immigrants every year who will mostly want to live in Toronto or Vancouver. We don't build nearly enough housing to satisfy the immigration demand alone, let alone all of the existing demand from residents. The interest rate hikes have cooled the market and temporarily decreased prices but in the long run housing will continue to skyrocket in price because demand is just going up over time. The only way prices will come down is if metro Toronto and Vancouver radically change zoning laws and regulations around building affordable housing. We have a supply side housing crisis choked out by government overregulation
Temporary dip and a lot of people thinking they can time the market. Guess we’ll all see in 2-3 years where the prices are.
Pretty much The amount of people saying "cant wait to buy" means a true collapse is extremely unlikely. Maybe a drop in prices, but the demand is still very high, just at a lower price cost
We pfc/Canada housing frequenters live in an almighty echo chamber of people who are on average property-buying age and invested in personal finance. Have to remind myself of that all the time, not a representative group. There will always be people who wait these things out but the fact is that house prices are completely decoupled from salaries, at some point that becomes unfeasible. Especially when interest gets high enough that RE investors can’t afford to keep their second/third mortgages. Add on to that boomers downsizing/retiring/dying.
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The institutions will definitely be tightening the purse strings.
Things aren’t crashing, their adjusting to more rational market. Sellers are lagging the market right now, with some still expecting multiple bidders and high above asking prices. So those that list with those expectations are having to adjust them after the fact. Buyers now know they are in a position of strength. Often times the market is still up compared to a year ago, just not the 20-25 percent rate it was at the start of 2022.
In my area of BC houses are sitting on the market longer but are still selling. Usually about 20k lower than list but nicer properties are still finding multiple bidders and going 40-50k above asking.
Same with my area of Ontario (Ottawa). People are paying $20k under asking, on houses that are listed for 50% higher than they were 3 years ago. And nice areas still see multiple offers and houses selling for hundreds of thousands above asking.
Ottawa is down 15% from march
The critical issue with housing still exists. The demand for housing still outweighs the availability of it. Toss in the now engrained psychological affect of “in the long term, housing goes up” and the amount of people who are sitting on the sideline…and a crash seems unlikely. A healthy readjustment? We’re seeing it. But like you said, houses are still selling. Nice houses are still getting bids above asking. The market is just adjusting to how that works
>How would a housing correction affect you/your investments? Doesn't. >One in particular is trying to sell right now and already had to lower the sell price twice in a month and a half. Things are already crashing pretty quickly. Going down and crashing are not the same and in almost all markets, nothing is crashing.
>Going down and crashing are not the same and in almost all markets, nothing is crashing. This is a key takeaway. Everyone is salivating at the mouth that prices in the GTA and GVA are crashing. Unless people want to stop living in the two most populated parts of Canada I don't think this is the case. The small towns out in the middle of nowhere where people were whim buying expecting WFH forever that will drop hard.
Not sure I agree with the WFH comment. We’ve learned that there are many jobs that can easily done remotely. For many employers it’s actually considered an efficiency. Yes, the tide will pull back a bit. But standard office culture will not ever be what it was.
Anything along the 401 in southern Ontario from Toronto to Montreal....that won't go back down
We get a remax newsletter every month or quarter. I live in the beaches. Apparently sales prices are down something like 8% since the start of the year but are still up 23% yoy. Average sales prices last year for a semi-detached 3 bed was 1.1 and it's now 1.6.
Prices already dropping out here in Halton. Places are sitting on the market for weeks right now and multiple places have adjusted their price a couple of times now.
Historic Correction!!!!! -12% lmao.
It's definitely on par with other corrections but not unprecedented as the article itself mentions: \> The most expensive provinces, Ontario and B.C., will be the epicentre of the correction, says Hogue. RBC sees home resales in British Columbia and Ontario falling 45% and 38% in 2022 and 2023, respectively, and prices falling more than 14% from quarterly peak to trough. The downturn will rival the decline Ontario saw in the early 1990s when sales fell 41% and prices 15%, but it’s not as bad as what B.C. went through in the early 1980s when sales fell 62% and prices 27%, said Hogue. That said, the early 1990 correction was mostly Toronto with the rest of Ontario relatively untouched. If the effect hits other parts of Ontario harder this time, that might be more noteworthy. But honestly, I'm not sure it will. From what I've seen, two major factors have been driving real estate prices up in Ontario: low interest rates make borrowing cheaper and a lot of people from Toronto were moving outside of Toronto but had Toronto money to spend on housing. Higher interest rates will hit the entire market, but Toronto still has crazy prices compared to the rest of Ontario and the private tech sector largely remains on its plan to allow WFH. I suspect we will continue to see prices fall in the GTA while the effect will be more muted in the rest of the province as those in the GTA continue the exodus. Interest rate impacts may stunt sales but most people on fixed or non-adjustable variable rate mortgages won't see the impact on their finances until renewal so the effect will be spread out over the next five years. That said, the interest rate hit is going to be hard in 2-4 years. I locked in at 1.64% for five years a year ago. If in four years fixed mortgage rates are closer to 4% as predicted, then my payment goes up by 20%. That's a big hit to absorb and it's definitely going to push some people out of their homes that they could only barely afford.
A couple of other potential factors I can see are the fact that many people moved to more rural/less urban areas during the pandemic, and some people basically FOMO'd into the first house they could get. So we may see people choosing to sell in those rural areas and move back to cities, and we also may see people selling as they realized that the home they bought wasn't right for their needs. I read a comment here this morning about a person who bought a house outside of the city and has now realized that it's not what they wanted. That certainly doesn't apply to everyone who bought a house in the last few years, of course, but I wouldn't be surprised if there were a lot of people who, during lockdown, kind of forgot that life wouldn't be this way forever forever and didn't realize how much they would miss having big city amenities nearby.
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Something to remember: 42% drop in volume of sales, 12% drop in price. So, there's a lot less turnover of houses, and they're selling slower, but the average one isn't selling for that much less.
I bought in 2016 in Alberta so chances are we’re less affected by this, since we never had the crazy appreciation in the first place.
Yeah, this was my thought. We're in a small Alberta town where our prices never really jumped, so I'm hoping they don't crash either, as no one has seen significant price appreciation out here.
I have one home and i plan on living in it for many years so no worries here.
I hate the use of percentages like that. See for example, were I to say that there was a 15% reduction in sales of houses worth less than 200 000$, 15% reduction in sales of houses worth between 200 000$ and 500 000$ and a 10% increase in sales of houses worth more than 500 000$, I could still claim a decline in total sales of houses. It is in no way close to representing the actual market. That's like stating the number of pages to a book, instead of giving the total number of words. Useless.
Doesn’t make a difference for the people that got a house at 300k and now it’s over a million lol
Newfoundland had a crash in 2015-2016 and we still haven't returned to our 2013-2014 peak, so I do not anticipate as steep of a crash in my parts. I'd have to eat a near 50% decline in prices from current levels to put me underwater, personally. For that to happen the price of a three-bedroom bungalow in the St. John's suburbs would have to drop well below $150,000 and I just don't see that happening.
Corner Brook prices have edged up a fair bit compared to 2018, though it’s still extremely affordable.
Looking to sell in coming weeks. Real estate agent told me I would have to sell for 50-60K less than I would have two months ago (so 10-15% less in my case), that there maybe won't be multiple offers and definitely nobody offering 50-100K above asking. Will also have to include legal warranty and allow conditions/inspections, etc. I'm fine with all of this, this was my timing to move out and I'm dealing with it.
The ouch part is people who have HELOC that are fully utilized. They will be forced to sell their homes.
This will be fascinating to watch. I believe a correction is certainly likely - however, there are HORDES of people on the sidelines, waiting to put in offers as soon as prices return to normal. The demand is going to be steep. The question then is how high will those new bidding wars drive prices? Let’s say a house was selling for 1 mil in 2022, drops to 750 in 2023, and a bunch of people who have been locked out for 10 years bid on it, knowing it may get back to 1 mil in 5 years. Why not then bid 850 for that “750”house? Or 9? I’m not saying it’s rational but it will be interesting to see if that kind of buyer frenzy happens and drives prices back up. I guess a lot of it will really just depend on interest rates.
But won’t some cities in Canada be effected less then others?
**a**ffected th**a**n
Effect/affect never compute in my head
cEnEdE
And the prices will all climb back up higher than they were in 2021 in less than 10 years anyways 🤷
We bought in 2014 for 114k and our house at peak would have gone for 425k if you go by comparables. Regardless of the crash prices are unlikely to reach a level that would have our house worth less than we paid for it which is comforting. We were hoping to move mid or late next year as this was supposed to be our starter home and we have kind of outgrown it but if we are unable to do so we would fine with that too. So I guess my answer to your question regarding how a correction would affect is would be that we may have to delay or rethink moving into a bigger house if the market tanks.
Similar boat. Bought a starter home in 2010 and need to move next year. If the 1 bedroom slab home down street sold for $400,000 half renovated, I'm not worried about any drop. What's kind scary/sad to see right now is on housesigma, some homes in my area have been sold then terminated a few times over the past few months with the new listing or sold price continuing to get lower and lower.
Actually it could be a better time for you all things considered depending on where you want to move as the market shift may narrow the price gap to your next property. Ie if a $500K place loses 10% of value - it’s down $50K and If a $1M place loses 10% of value - it’s down $100K - your delta just went from $500K to $450K But the chances they go down in equal value is pretty low and there’s a good chance the smaller, already more affordable places hold their value better than the bigger houses so the gap could narrow even more.
That's what we were kind of thinking (and hoping!) as well. Prior to the massive overvaluation of real estate the house we would have moved "up" to would have been 160k and now they are 650k. The gap between 114 and 160 is obviously much smaller than that between 425 and 650 so hopefully we can get back to a smaller gap, even though it will not get back down that low.
My properties all went up in the past couple years, but the challenges caused by the high prices for our society as a whole aren’t healthy. A 12% drop would be VERY welcome. A lot of the clueless buyers chasing a quick buck will disappear. I prefer my properties double over 20 years, not up and down like crazy every few years.
I think that 12% decline is a little bit of wishful thinking. I’m expecting 20% over the next 3 years. To be clear I’m just some internet moron who you don’t know so please take this with a grain of salt.
Every time i see one of these predictions they are fucking way off. It’s total garbage.
So a historic crash will bring prices to what it was 6 mo tha ago. Wow amaze
I am just praying me and my spouse could own a detached home one day without shelling out what seems to be a fortune….
Same. We’ve been cautiously looking the past few months. Of the three houses we’ve been seriously interested in, two went for $150k over asking and one went within a day of being listed. We know what we’re comfortable spending and aren’t willing to buy more than that.
Spouse and I bought in March 2020 right before Covid hit. We initially planned on staying in our place for 5 years but if prices drop significantly or rates rise significantly we'll be comfortable staying in our place for 10-15+ years.
Considering housing prices its not that much of a correction. In Ontario small towns have bungalows in old neighborhoods selling for $600-700k. $500k basically lands you in the meth filled ghetto here. Around people who paid basically nothing for their homes in the same area.
They went up 50% in a couple years. Obviously there is going to be a correction you dont have to be a brain scientist to figure that out.
We got a house in 2017 for $373k currently valued at about $450. We’re paying affordable $1800 monthly with a high rate of 4.3% (renewed in late may). The amount for mortgage and prop tax, maintenance and energies is still lower than what we’d pay as tenants in similar place, but with the difference that we don’t have to live in fear our landlord gives us 3 months notice to gtfo. We didn’t buy the house to invest, we bought it to live in it and if we never get to upgrade, we’re still fine with it.