Reported house price declines will shrink for the rest of the year. Here's what matters for those concerned that the market won’t come back.
A key measure of the housing market's health is the mortgage delinquency rate.
Recall that the feds imposed strict mortgage eligibility rules on prospective house buyers during the buying mania. Thanks to those rules and higher mortgage rates that dissuaded buyers, the latest delinquency rate, for last year's third quarter, is a mere 0.06 percent. That's a 10-year low and compares with a delinquency rate of 0.24 percent in the Great Recession year of 2012.
“Many sidelined buyers are waiting patiently for the bottom to be revealed," says Royal LePage CEO Phil Soper. "Once interest rates stabilize and consumers adapt to their new normal, many of today's sidelined buyers will be back - sooner than many analysts are predicting."
That pent-up demand is found among millennials and older GenZers. Many of them are calculating that soaring rents make even high mortgage payments the better proposition. There is also the record flow of immigrants, who mostly settled in Canada's major cities. The Feds plan an additional 400,000 immigrants in each of 2023 and 2024 in addition to the 431,000 New Canadians who arrived last year.
Focusing on the GTA market, Karen Yolevski, chief operating officer of Royal LePage, said last week that "With record-breaking immigration, levels reached last year, and similar figures expected in 2023, additional demand will be placed on a region struggling with a chronic shortage of inventory."
Housing will remain in short supply for the rest of this decade, meaning prices will rise.
The worst in the housing market price decline is over, and the recovery will soon be underway. In the meantime, the sidelines can be a relaxing place to be.