The Spring thing

No shock in the major cities. House prices are stable or creeping higher. Condos are sinking. Detacheds rising. Sales volumes are holding, or increasing. Active listings have levelled off. November brought relief and a tingly hope in realtors they may not have to be baristas or Uber drivers after all.

In the mighty GTA sales jumped 40% y/y. Average prices were up a couple of percent. New listings trailed off but actives are up 30% from last year. This is still a market in moderate distress, pulled down by tens of thousands of unsold apartments.

Still, the housing pimps are pumped. “I am pleased to report an improvement in housing market conditions. Many home buyers patiently waited on the sidelines for reduced inflation and lower borrowing costs,” says head wizard Jennifer Pearce. “With selling prices remaining well off their historic peak and monthly mortgage payments trending lower, the stage is set for an accelerating market recovery in 2025.”

Hmmm. Really?

In Vancouver, a similar take – and sentiment. Sales up 28% from last year. Prices down a titch at $1.172 million (the overall average). Actives up 21% from this time in 2023. And deals are running almost 13% under the 10-year average.

“While the November market isn’t quite a Cyber Monday door-crasher, buyers are continuing to take advantage of the relatively balanced market conditions while they last,” says the local board. “As we move into the New Year, if the strength in demand continues at the current pace, and the pace of newly listed properties coming to market doesn’t keep up, it may not be long until we see the return of upward pressure on prices.”

Is that realistic? How much higher can Van prices go with the average detached at $1,997,400?

Meanwhile in Calgary, the demand tsunami came and went while other markets were digesting higher mortgage rates. (Alberta is weird.) Sales were flat from last November, but crashed from the month before with a little dip in prices. Inventory is still out there at 45% over year-ago levels. Every month it builds a little more as new listing edge ahead of sales. This has helped the place stay affordable (relatively) with the benchmark price at under $588,000. Of course if you like your Canada Pension Plan and dislike Tucker Carlson, well, stay in Winnipeg.

Says the Cowtown board: “Calgary’s housing market is following typical seasonal trends, with activity slowing compared to the fall. However, year-over-year demand remains relatively strong. In November, increased sales in detached, semi-detached, and row homes offset a decline in apartment condominium sales.”

In quaint Victoria, sales jumped almost 40% y/y in November, but fell from October. Condo sales bubbled higher and active listings actually fell – setting his market apart. And optimism is gurgling higher on the left coast. “I’ve found that buyers and sellers are feeling optimistic right now,” says the grand poohbah Laurie Lidstone. “With the steady decrease we’ve seen in interest rates and the continued balance in the market, consumers are feeling more comfortable and empowered to make the big decisions around home ownership knowing that they have a fairly stable real estate environment to navigate.”

Okay, what next? Are these real estate boards giving realistic guidance to buyers and sellers, or dealing in hopium and misinformation?

There are things several intended to goose demand and stabilize housing sales and values. The Bank of Canada rate will be dipping for a fifth time next week. It may well be only a quarter point, but it’s still a reduction – which will immediately show in the price of VRMs.

Also, as we’ve told you, all new buyers will be able to get a 30-year amortization in a few days (if dumb enough to take it). This will reduce monthly costs. And on December 15th the new CHMC price cap comes into effect, allowing the kiddos to spend up to $1.5 million, arrange an insured mortgage and therefore enjoy a 60% drop in the required minimum downpayment. On top (as we described here yesterday) the outrageously generous FHSA is in full swing now, plus the flexible new rules around using RRSP money for a downpayment.

In addition, Chrystia deep-sixed then need for mortgage renewers to pass the stress test, just as 70% of all existing  homeowners face refinancing over the next 24 month. And we have that federal mortgage charter instructing bankers to be sweet and do everything your mom would to make the indebted feel loved.

In short, governments and central bankers are pushing the big ‘buy’ button. Will the masses respond? Do the November stats support this welling realtor optimism?

Before last week, the answer was yeah, probably. Now it’s nah, not happening.

Trump changed it all as he reverted back to being Tariff Man. In mere days he had the prime minister of Canada supplicating and the government of Canada buying helicopters to chase phantom migrants. His threat to tax the poop out of our exports will, economists say, chill the CB into ending rate cuts, hasten recession here and ignite a blaze of layoffs. None of that is conducive to a bubbly spring real estate market.

Even if Trump turns 25% tariffs into 10% duties and just keeps them in place for a few months, the effect will be the same. Consumer confidence wanes. He wants us to be northern eunuchs. Maybe he wants to take over. He posted this… oh my. Will it mean we get Ohio house prices?

About the (dog) picture: “This is a photo of Jake (aka The Dude) on the beach at Cape Blanco on the Oregon Coast,” writes Tom. “My wife and I had that beach to ourselves for an entire day. It was glorious. Amazing what you find when you are willing to go off the beaten track. Your recent post gave me pause for thought. Perhaps folks that are so full of frustration, hate and vitriol should find somewhere beautiful to spend some time and get perspective on the precious value of time and the gift of life. The whole point of fin planning and patiently nurturing a BDP is to put yourself in a position to spend your time making the world a better place or at the very least finding the beauty that is right in front of us. I have spent my entire professional career in the financial services and knowthis to be a truth.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2024/12/04/the-spring-thing/