The trough

The spring Rutting Season was again a bust across the nation. But, lo, real estate is having a moment this autumn. (As predicted.)

Sales are up year/year by 11% in the country’s second-biggest market (où l’on parle français). In Vancouver the number of deals last month inched past September of 2024. That was enough to break out the Okanagan bubbly.

“With another cut to Bank of Canada’s policy rate behind us, and markets pricing in at least one more cut by the end of the year, Metro Vancouver homebuyers have reason to be optimistic about the fall market,” gushed realtor spokesguy Andrew Lis. “Easing prices, near-record high inventory levels, and increasingly favourable borrowing costs are offering those looking to purchase a home this fall with plenty of opportunity.”

By the way, houses in Van are cheaper by about 4% than last year, with the average at $1.1 million and detached slipping below the two-mill mark. In Victoria, sales were ahead month/month and flat for the year. Ditto for prices. Calm seems to have broken out across the BC market.

We’ll have data from the steamy GTA in a few days, but realtors report MOI is down and the SNLR is up. Translation: the lease on the Range Rover can be paid for another month. In poor Calgary, sales are flat, inventory has spiked and prices are holding. It’s been brutal for sellers despite Danielle Smith’s efforts to unite the province with Texas.

All real estate is local, of course, but there are trends emerging across the country which suggest everybody waiting for a collapse in prices should stop waiting. Sad as it may be for the houseless, there are solid reasons why wwe may have reached the trough of this correction.

The chief Parliamentary Budget Officer – the same guy warning Mark Carmey about borrowing too much money – has just reported a big boost in real estate affordability. Jason Jacques says the gap between what a house costs and what an average family can afford has narrowed. Like, dramatically. That shortfall fell from an impossible 80% in September of 2023 to an only-painful 34% this year. Reasons: cheaper mortgages, higher incomes, lower prices.

The biggest improvement, says the PBO, came in the GTA and Vancouver, but Jacques still acknowledges prices are crazy stupid. The biggest affordability gap is in Halifax. The smallest in Edmonton. Overall, mortgage debt service ratios are back to 2019 levels – and likely to improve more as we see then next Bank of Canada chop arrive at the end of this month.

And yesterday RBC had this chilling headline aimed at doomers waiting for a 50% price crash: “Bulk of affordability gains now in rearview mirror.”

The bank says a period of six consecutive quarters of things getting better for buyers is ending. During that time its aggregate affordability index (the share of pre-tax income needed to carry a place) dropped to 53.6% from an all-time high of 63.5% at the end of 2023.The biggest improvements came in Vancouver, the GTA and Victoria.

Source: RBC Economics

But wait. “The speed of improvement is likely to slow,” says the bank. “We expect further easing in ownership costs, but see the effect of earlier interest rate cuts fading. Decelerating income growth will also dampen buyers’ purchasing power.”

There are worries about the trade war, increasing unemployment and reaccelerating house prices making homes more challenging to buy and carry despite falling interest rates. Robust income growth is over. “Increasing slack in the labour market is now weighing on wage growth, creating fresh challenges for prospective homebuyers. This shift threatens to negatively impact buyers’ purchasing power just as housing markets show signs of stabilization across several regions.”

If you believe the country’s largest bank (and mortgage lender) plus the office that monitors the country’s finances, the price slide for real estate is done. The ability to enter the market probably gets tougher from here. Drops in mortgage rates will feed sales (already happening in several markets), and that demand will shore up asking prices. Meanwhile a weaker economy and a weirder America will impact jobs and incomes.

So, no boom on the horizon. Nor a bust. Just a terrifying stability.

About the picture: “This is Frodo, who is 14 and lives in Oxford, England,” writes Cynthia, “where, as autumn approaches, it can be pleasant, if somewhat ungainly, to warm your nether regions by an old-fashioned gas fire (it being obviously too soon to switch on the central heating – European touch.) He is having his usual quiet evening while his mistress reads ‘Lucky Loser’, something that she expects will soon be forbidden to Americans on pain of exile / ICEing, as the noisily self-righteous MAGA champions of European free speech clamp down on their own embarrassingly home-grown products. His mistress also reads ‘Greater Fool’ daily with great interest, as part of her cheering-on of the Canadian resistance; the voice of sanity is getting ever fainter, and all remaining examples deserve our faithful support and attention. So, many, many thanks to you (and to all those joyous Canadian pets) for your excellent and interesting blog.”

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

Source: https://www.greaterfool.ca/2025/10/02/the-trough/