The Spring Market rebound that never came

Sellers have been holding their breath at each Spring Market, hoping this year would be the year of the rebound. The year in which prices would improve enough to offset the losses, improve to recover capital, or improve enough for them to break even. And each consecutive Spring Market since the 2022 peak has been slightly worse than the last. Each Spring Market, following 2022, has rebounded seasonally; this is typical for the busiest season in Real Estate. However, each subsequent Spring Market has been slightly weaker than the last.

With Real Estate, prices rise fast but are ‘sticky’ on the way down. With each passing year, sellers hold out to their price, hoping for the right buyer. Some get lucky and get their price; most don’t. The sellers that are struggling financially or do not have the ability to hold onto the property until next year end up selling low - they take the best price they can get the quickest. These lower sale prices set the benchmark for buyers. Over time, prices have slowly come down.

It feels like we are reaching a potential inflection point. Resale supply is starting to turn over. The number of new listings each month is lower than the previous year, and active inventory is declining. Compounding with the lack of new construction (the lowest since the 1980s), we are actually starting to see market conditions tighten. With a peace deal being negotiated with Iran and the US, gas prices have dropped, and inflation expectations have cooled. This has pushed the predictions for any rate increases by the Bank of Canada to next year.

However, we are still seeing slack in the market. Power of Sale listings, already at their highest levels in decades, continue to rise. So, even though there are signs of improvement, we are not out of the woods yet.