Falling housing prices may seem like a boon for first-time buyers who have until now been priced out of home ownership, but it’s not all good news for people trying to get into the market.
Driving the news: The real estate bubble has burst, with the latest data from the Canadian Real Estate Association showing sales falling 32% in September and the MLS house price index dropping 9% from its peak in February 2022.
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Prices are falling because higher interest rates have made it more expensive to borrow money and mortgages tougher to secure, reducing demand in the market.
- Unfortunately, those higher rates mean the cost of getting a home (assuming you need a mortgage to do it) may be even greater now than it was when prices were higher—so much for affordability!
Yes, but: Even if housing isn’t much more affordable, there are still some positive aspects of the housing slump for buyers.
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Bidding wars are out. There’s less competition between buyers now, meaning the days of blind bidding that drove prices sky-high are over.
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Conditional offers are in. A buyer’s market means you have time to secure financing, research insurance rates and requirements, and get a home inspection.
- And now you have some time. At the peak of the market, buyers were rushing to buy properties because of fears the price would be higher next week. That’s something you no longer have to worry about, so take your time and find the right home rather than the first one you can get.
What’s next: A new rule from the CREA goes into effect on January 1 that will restrict brokers from keeping listings private, meaning there should be even more selection to choose from.