WHAT’S NEXT – BOOM OR BUST?

It’s a pretty safe fact to say that the real estate market has been flatter than Frankenstein’s head of late, but where do we go now? That’s the burning question. There need to be at least 2 more interest rate drops by year end to get things on the move again. This is the first time in years that we have wandered into a buyer’s market. The past decade has pretty much been controlled by the sellers, hence the crazy bidding wars and price increases. We are now seeing more homes coming onto the market for sale and the ones already listed are now sitting for weeks, where it used to be only days before the sold sign went up. Before all this madness got under way some 20 years ago a house would be listed and it wouldn’t be unusual to see it sit for 60-90 days before a legitimate offer came in. That offer might also have included some conditions including (dare I say it) a condition on the buyer selling their property. Most of those conditions pretty much disappeared over the last 8 years but are now creeping back into the marketplace. And that’s not a bad thing. Buyers are becoming more cautious and careful about their purchase. That has really become evident of late. In September, inventory in the Durham Region was up including a 25% increase in new listings. At the same time sales sagged by 8% and average sale price dropped 1.5%. Days on the market increased as did the months of inventory. The months of inventory segment truly defines what is happening in the industry. It is now closing in on 4 months which clearly places us in a buyer’s market. When things were really crazy 2-4 years ago the months of inventory was less than 1 which was clearly a seller’s paradise. In Toronto sales were up 8% in September and what usually happens in the big city filters its way out to the regions. The average price dropped 1% there as well. None of this activity seems to have slowed the “flippers” in the housing market. The number of flippers reached almost record proportions in September. And even though Deloitte Canada has predicted that the key lending rate might be below 3% by mid 2025, that may not help some people these days. It was reported that there were 204 power of sale listings across the GTA in September, an increase of 112% over last year’s 96. People that bought during the pandemic and had an extremely low interest rate are now having to re-up at a rate that is triple what they originally signed on for. In many cases it could be disastrous. In 2020, the average number of power of sales per month was 4.5. That number jumped to 83 in 2023 and is at a whopping 159 so far in 2024. For many, the interest rate drops can’t come soon enough. For others, they will have to tough it out for the better days ahead. Here’s hoping the Bank of Canada realizes the pressure these buyers are under and will drop the rates to a more manageable level. That can’t happen soon enough.