So you may have heard (as I have been told by many) that the market is going down in value (or crashing) and that prices may drop up to 20% by next year. This is the media for you. Stories written and talked about by people who dont understand the market or what is happening in it. I am no expert but I can tell you that prices wont drop 20% (unless over a million in value where we are seeing softening). In fact, just when you think the market might have a little give in it – the SPRING market comes marching in
If you listed to the media, it can be tempting to think the housing correction is still in the middle of things and heading downward where in fact, the correction may already be over and the market rebounding.
In some markets, the bottom of the correction may have already come.
In the GTA, for example, median prices just rebounded 4.4% ($40,000) in one month. There’s clearly spring in the housing market’s step, despite fear merchants blasting headlines last week about the ominous upturn in yields.
With tight inventories, massive demand and sales picking up, it’s going to take more than 25-30 bps higher mortgage rates to derail this spring market. What has been missed in all these rate hikes is that rents have also increased which puts people in a very interesting dilemma – do they keep persisting with renting and pay $2500 and up for properties that were renting for less than $2000 only a few years ago OR do they pay the extra on a mortgage right now and ride the wave of the rates coming down over the next few years knowing that money they spend on housing will go into their pocket and not someone else’s?
As people in some markets see prices recover—after being on sale 10-20%-plus—both buyers and sellers will gain confidence. Sellers will start to receive more offers and suddenly buyers’ negotiating leverage disappears which will inevitably drive prices up again. Will we see 30% increases as we did through COVID, maybe not, but you can likely take 10-15% to the bank and possibly more as the rates begin to soften over the next couple of years.
So where do you see the market going?
(Courtesy of Mortgagelogic.news)