Four Reasons for Canada’s Slowing Real Estate Market

Some less-often-discussed reasons for today’s challenging detached-home market in many areas. You’ll find this interesting.

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Hey, some quick thoughts I think you’ll find very interesting on the slowing real-estate market we are currently seeing in many parts of the country. Forget the condo market here for a second— it’s getting a ton of coverage on its own — and let’s focus on detached homes. Suddenly many listed homes can’t catch a bid. Or even a formal viewing. Or even an open-house regular dropping by looking for free carrot cake.

What gives? Well, there are a ton of really good videos on YouTube about the market’s current condition and its causes. Excellent, well-informed presenters in many cases. Do a search and give them a watch. And we’ve had some of the best minds and top communicators in the biz on our podcast, including Ron Butler and Ben Rabidoux.

Make sure you give them a listen if you already haven’t. Obviously, these experts touch on the economic uncertainty out there, from the tariff challenges to a potential recession. First time and move up buyers naturally back off when tough times set in or even threaten. Makes sense. They also discuss the affordability issues,

of course. Yes, prices are significantly down from peak in most areas, but interest rates though off from their highs are up from where they were when the market initially topped. And relative to incomes, houses are still crazy expensive, plus all life costs are up. Potential buyers are well aware what they’re now paying for

things like groceries, car insurance, et cetera. It’s tight. That’s impacting decisions around major purchases. But here I want to quickly look at four more reasons for the market slow times that are also important, but not getting as much attention. 1) In the last few months, a lot of would-be-buyers have concluded that prices are going to go even lower.

So they’re being patient, they’re waiting things out. I have a family member doing that, and I know some friends kids thinking that exact same way. Enough of these potential buyers do this. And guess what? We’ve gotta a self-fulfilling prophecy. 2) Yes there are a lot of listings, inventory of for-sale homes is running hot in many cities. But are they really legit listings when many sellers are asking just under the peak prices of four-ish years ago? Buyers don’t care that the seller paid too much or that the neighbour’s house sold for $50,000 more than this listing price way back in late 2021.

It’s a new market. Some of the lack of movement we are seeing is because a certain percentage of sellers are refusing to accept reality. 3) A meaningful portion of the traditionally-likely-to-move-up-group, can’t. This is big. Many who bought four and five years ago now have negative equity.

They owe more on their mortgage than their house is worth because of the price decline. They’re upside down. Hey, that doesn’t mean they’re gonna lose their homes. They need to keep making their payments, of course. But it does mean they can’t sell and move up as the proceeds of the sale don’t have enough there.

They don’t leave them with the needed down payment for the move-up purchase. Clearly this doesn’t affect all or even the majority of the potential-move-up-buyers, but it’s still an issue. It can freeze the market a bit, a lot. And the only thing that can thaw it out is rising prices. And what about the traditional condo-seller-mover-upper. Yikes. The dynamics of all this stuff is tricky. So many variables affect other variables. And 4) Last one, the move-up buyers who can move up, who do have the needed down payment, who can qualify for the needed mortgage, almost always have to put in an offer conditional on the sale of their own place.

Nobody wants to carry two houses, and banks don’t seem too enthusiastic about that right now either. All of these conditional offers gum things up in this already slow market. Just saw one the other day. “Well, we have sold conditionally, but our buyer has to sell their house. Though she’s expecting an offer today.

Ah, but it’s conditional on that buyer selling his condo.” You can see how we can get into a negative-feedback loop here with all of this. Anyway, interesting times. For buyers and for sellers.