The State of Canadian Real Estate in Spring 2023
If you search the quote “Buy land. They aren’t making it anymore.”, you’ll find wide-ranging results from Mark Twain to Will Rogers and even, as of today, LawyerDoneDeal. Whoever said it first, got it right. If you’re playing the long game, you can’t go wrong.
That said, your law practice is probably hoping for more transactions than are happening now. Or any time soon. It’s a big country but growth may or may not be apparent all over for a while. Maybe as much as a year.
The good news? It looks like things won’t get much worse. Moreover, we may be nearing the bottom of the dip. Remax predicts a recovery later in 2023 and a busy market in 2024.
How did we get where we are? You know how complicated all of this gets.
Normally, low inventory and a shortage of workers would drive demand, inflating house prices. However, despite these very conditions, the Toronto Star recently reported the “National home price decline is only halfway there, and could plunge more than 30 per cent from the peak (in February 2022) by the middle of 2023.”
Inflation and interest rates are higher than we’ve seen in decades and are expected to remain close to where they are. That’s keeping those would-be buyers who can afford to, to wait.
Shouldn’t fewer buyers mean plenty more product? Yes. The trouble is, the would-be sellers who can also afford to wait saw the last few years’ record high prices. They’re sitting on their product till it’s worth more.
Fewer competitors isn’t bad news for buyers. But – well — there’s always a but!
In this soft market, there are far fewer bidding wars. Is this because of the current two-year ban on foreign buyers? Remax also reports that over half of Canadians believe the ban will increase the availability of affordable stock.
Remember though, right now there’s less to compete for with anyone else who’s still searching. And two years can go by like that.
Meanwhile, homebuilders are building far fewer homes because materials are still shockingly expensive. Moreover, would-be builders are having trouble finding trades workers to do the actual building.
It’s a Canadian stand-off. It feels like no one wants to sell, no one wants to buy, and no one wants to build. Everyone’s waiting for someone else to blink and hoping for interest rates to drop. Meanwhile the market is gradually deflating. The news isn't all bad, though.
How does this affect your business while they’re not transacting?
CREA predicts almost 500K properties will change hands in 2023. That's only 1/2 a percent decline from 2022.
Yet, even as we write this in the earliest days of spring, no one yet knows if there will be a "spring market". We have to wait and hope for small month-by-month improvements.
Back when interest rates were rising, many lawyers worked on mortgage refinancing to a fixed rate, as people with variable interest mortgages were seeing their monthly payments climb every month. No one’s expecting a return to the exceptionally low rates the market’s enjoyed these years — but now that they’re at least stabilizing, clients should start shopping mortgages with other useful features beyond interest rates. And they’ll need you to help with the refinancing. What can you do in the meantime?
We humbly suggest switching now to RealtiWeb for Canada’s lowest conveyancing fees.
Prepare today for the coming effects of Mark Twain’s wisdom. Switch to LawyerDoneDeal’s conveyancing application, RealtiWeb and get comfortable with it while we all wait for the market to rebound. It’s simple to use — no buts.
Keep your costs low, minimize errors and improved workflow. Then be ready when the market heats up again — whether that’s later this spring, summer or next year. You know it’s coming regardless. They aren’t making land anymore.
Start using RealtiWeb