Only the brave

In a solid middle-class Toronto hood, a house sold last month for just over a million. Three bedrooms, four baths. Totally reno’d. Parking spot. About 1,200 square feet. Semi-detached.

“In 2024, my client rebuilt it, keeping only the foundation,” the listing agent told Toronto Life mag. “It’s special because there aren’t many new-builds in the neighbourhood, so we decided to test the market and price it aggressively. In July, we listed at just under $1.5 million.”

Well, it changed hands in the final days of October for $1,085,000, after eventually being repriced down to one-one.

With the better part of 30,000 properties to choose from in this one urban region alone, determined buyers have recently been scoring homes at prices not seen since 2022. In some, cases, not since the Covid days of 2021. Sellers who have idled for months are more likely to throw in the towel, lower expectations, and yield a deal simply so they can move on with their plans and lives.

It’s a thing now, yielding headlines like this…

Yes, prices are down. Overall, for all properties, by about 15% since the 2022 peak. For detached homes, the discount is closer to 25%. The most recent report lists the average local property sale price at $1,040,000, down almost 6% from last November. The typical detached home is commanding $1,346,000, a decrease of 8% year/year.

Meanwhile sale levels are in the ditch. They were down 16% last month for resales and 80% below long-term averages for new-builds. For 70,000 area realtors is it painful. For a hundred thousand in the trades, it’s a disaster. For most prospective buyers, it’s scary. For the brave well, man, this is what opportunities are made of.

Here’s a summary of prices from local realtor and data freak Scott Ingram. “When we started 2025, average house prices were below only the wild outlier of peak 2022 prices,” he says. “As of November results, the average has also fallen below 2024, 2023, starting-to-adjust-down-2022, and starting-to-steeply-rise-2021.”

On this chart the bright blue line is 2025. Descending…

Source: Scott Ingram, X

So sales are off bigly. Prices have corrected significantly. DOM is a growing, troubling reality for sellers who are becoming increasingly anxious.

Meanwhile most people have been sitting on their hands waiting for a series of interest rate and mortagge cuts which now seem certain not to arrive. Not before the end of 2026 anyway, say the bulk of Bay Street economists. (At least one bank is forecasting increases next year.)

However, we already had a few rate cuts this year from the Bank of Canada which have sliced the cost of carrying a home by an average of 24%. The CB’s policy rate is down to 2.25% from an inflation-flighting high of 5%. That’s a dramatic reduction (more than half) in an historically short period of time. Mortgage money is widely available at about 4%, which is three hundred basis points below the long-term Canadian average.

So this brings us to two questions: (a) why would real estate values not bottom out at these discounted levels? After all, if rates stay even, inventory continues to decline (as it is), incomes inch higher and current economic growth and employment trends hold, what’s the catalyst for further erosion? Or a collapse? And (b) what then, exactly, are potential buyers waiting for?

We’re not pumping the market, since prices are still stupid by any human metric. But is it rational to expect big, additional declines? Federal spending on housing is up. Immigration levels are down. We’re weaning off America, finally. There’s no recession. Mortgages are relatively cheap, plentiful and more flexible. Both GDP and employment have been rising.

So where’s the 9-1-1 emergency?

Some things never change, kids. Buy when others are fearful. And, no, it’s not different this time.

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Source: https://www.greaterfool.ca/2025/12/07/only-the-brave/