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House prices are like a roller coaster, from peak to collapse.
All major composite indices are down from their November peak, according to the Canadian Real Estate Association (CREA).
With the sharp change in reality and higher interest rates, more than a dozen Canadian real estate markets have even “collapsed”.
Nationwide, typical home prices have fallen by 16.4% (- 142300 yuan) since their peak in March 2022. No market is immune, and some markets have fallen by more than 20% from their peak-a definition of a crash.
The biggest declines were London-St. Thomas (- 26.1%), Kitchener-Waterloo (- 25.8%) and Cambridge (- 25.1%), according to tabular data.
The three markets have officially collapsed, with 18 major market indices showing a collapse.
The Toronto and Vancouver markets have not gone to extremes, but they are also “not immune to adjustment”-the typical Toronto residence price has fallen 18.4 per cent (- 245200 yuan) since its peak in March. In Vancouver, prices are down 10.5% (- 133100 yuan) from their peak in April 2022.
It is worth mentioning that house prices in Vancouver have not risen as much as in Toronto in the past two years. However, in less than a year, these are still six-figure losses.
Briand Melanson, a resident of Toronto, Canada, now feels “suffocated”.
At the peak of the housing market this year, when he bought the investment house in one fell swoop, he still felt like Superman.
At the time, floating loan rates were at an all-time low of 1.5 per cent, with a monthly payment of 730 per cent for the home he bought in 2010 and 1100 a month for the investment rental house he bought last year.
Everything was fine until. The central bank “violently raised interest rates”. Now, both of his apartments face about 6 per cent mortgages, with monthly repayments soaring, with monthly payments of 1165 yuan and rental apartments rising to 1775 yuan.
“it suffocates me,” Meranson said. “it’s more suffocating than I thought.”
To that end, Meranson suspended all his social life, including concerts, hockey games, restaurants, going out for drinks or the cinema. For him, who is gregarious, “there is basically no life.”
However, in Canada, such stories are numerous and increasing.
“if people buy a house during a pandemic, it will be very difficult now, especially for first-time buyers who have gone to great lengths to buy their first home,” said Leah Zlatkin, a mortgage broker and expert at LowestRates.ca, an interest rate comparison website.
We can now see more and more people defaulting on privately financed loans, more and more people turning to other lenders or taking out second mortgages, and more people’s houses are being auctioned by banks. ”
According to some experts, the Bank of Canada may further raise overnight lending rates in January 2023 to bring inflation down to the target of 2%.
But some economists say interest rates will fall in the next 15 to 18 months.
What will happen to the Canadian housing market in 2023? At the end of the year, experts also began to look forward to the direction of the coming year.
Most of the economists and experts interviewed said they expected the housing market to cool down until 2023, the Global News reported.
Where prohibitively high mortgages, low market inventories and the Bank of Canada’s interest rate cycle will eventually peak remains uncertain.
