Are you worried about the price of your home dropping even further then they have today? It is understandable but before you worry too much, let me try to ease your concerns as allow home prices are falling, they are likely not expected to fall much further. The reasoning behind this, according to the CMHC deputy chief economist is because of the housing shortage.
If the shortage stays low and the demand even just stays the same, then housing prices are likely to hit a stand still soon and middle out the market. Also, it is important to note that homes median value have fallen only 2.8% from the end of 2021 to the fourth quarter of 2022. The aggregate price was down 2.3% on a quarter-over-quarter basis to mark the third consecutive quarterly decline.
Does this feel less low than you thought?
That is likely, and to spring better news, the aggregate home price in the fourth quarter of 2022 was up 13.8% compared with the same quarter in 2020 and 17.2% higher than in the fourth quarter of 2019. It is understandable if you feel like you struck during the buying spree of 2021 and first half of 2022 because you bought your property too high. However, you should remember 2 things:
- You should only enter the real estate market when you are ready.
- If you move or sell and feel you lost value, you must remember the property you moved to likely also lost in value. Of course, it is dependent on where you move to, but it is still an important thing to remember.
Ok now back to our main topic, Is this house shortage good news?
It entirely depends on which demographics you are coming from and how you are approaching the real estate market.
Approaching the market is just like what we talked about above; If you move or sell and feel you lost value, you must remember the property you moved to likely also lost in value. Of course, it is dependent on where you move to, but it is still an important thing to remember.
This is not the first, second or third time we are bringing this up, but entering the market as a first-time home buyer has still never been harder. Not only are prices of homes not correlating to the value of salaries, but the supply of homes is very low. Construction on new homes has gone down and the demand is only becoming higher and higher. We have talked about different incentives that can help first time home buyers find homes but unfortunately without the proper supply of homes, it is harder to find a suitable place to live.
Do not let this bring your hopes down. New condos, apartment, townhomes, and more are thought about and put on an agenda every day. Local elections just took place in the Fall and many councils like to start out strong but proposing infrastructure in the likes of places to live. These will start to ramp up and we believe that opportunities for first time homer buyers to enter in the near time future will improve. For now, take a look back at this blog that helps you understand more about the first time home buyer incentive.
For people who recently entered the market and are still making payments towards their mortgage, have likely seen a large chunk of their payments going to interest only which is not fun. Yes, it may feel like you’re paying rental fees again, but it is important that this will not last forever and millions of people are in the same boat.
For everyone who has paid off their home would likely be happy to hear that the market is not likely to dip much, but as always, the market fluctuates and if you are planning to live in that home for the foreseeable future, expect market shifts again.
Yes, there is likely to be a newfound stagnant in the housing market. We urge you not to obsess over housing prices. Just like you should not watch your stock all day, it is important to take a step back and enjoy each day. As always, we are here to help you answer any questions you may have. No one knows where this year is going to go with housing prices, inflation, key interest raises, recession fears, and more. Hold tight, but also focus on your situation first before you worry about your surroundings.