"Is The Crash Coming?"
Jonah Hoyos
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My friend recently asked me "is the crash coming?". Rather than speculating, let's briefly look at market cycles and current trends.
Real estate markets move in cycles
Post-Covid, Canada experienced a period of rapid expansion, fueled by low interest rates. More recently, we saw a correction in many areas. This cooling was largely due to the Bank of Canada's efforts to curb inflation through rising interest rates, which made borrowing more expensive and tempered demand. This led to slower price growth and increased inventory.
However, we're now seeing signs of renewed traction. Recent data indicates stabilizing sales activity, a return of competitive bids in certain desirable segments, and growing optimism around potential future interest rate cuts.
Correction, Not Crash
While the term "crash" often suggests a severe collapse like the US in 2008, Canada's market fundamentals differ, with stricter lending regulations. What we've experienced, and continue to navigate, is more of a market correction or rebalancing. This means a return to more sustainable growth, potential affordability adjustments, and continued regional differences.
What This Means For You
For homeowners, real estate is often a long-term investment, and short-term fluctuations are part of the cycle. For those considering buying, understanding these cycles offers a more informed approach.
My advice is always to focus on your individual financial goals. Don't base decisions on sensational headlines alone.
