Dear Clients, Neighbours and Friends,
Despite our patience and optimism for a brisk fall market the uptick in buyer demand has yet to materialize. There are many factors at play, pointing to a market that is neither overheating nor collapsing but continues to be highly sensitive to external pressures.
Canadian Economy: The focus of global financial markets has shifted to concerns about growth prospects in Canadian and American economies. Tariffs drove sharp declines in Canadian exports along with business investment. Stabilizing (but lower) trade and ongoing growth in household spending may help the economy rebound but as rising unemployment and ongoing tariff clarity loom, we expect economic growth to be hampered.
Interest Rates: The Bank of Canada has made a tangible shift in policy rates with their most recent lowering of interest rates on September 17th. Fixed rates have been drifting higher thru the summer however recent economic data should cause this trend to reverse course. The BCREA expects the uninsured five – year fixed rates to come down to around 4.45 per cent by year end. Variable rates have moved in close alignment with fixed for most of the year, but the impacts of rapidly evolving trade policy will likely pull variable rates closer to 4 per cent by year end. We are optimistic this downward trend in lending rates will stimulate stronger sales activity by the new year. The next rate announcement is October 29th.
Housing Supply: Resale homes / active listings are on the rise however current supply trends are highly variable. Contributing to this variability is the flow of new construction units for sale. Projects that were underway in recent years are now on sale, saturating their local market. Other areas have projects that developers have tabled due to weak demand, some even shifting their concepts from condos to purpose built rental housing. Despite the variability, we expect supply across housing types and markets to steadily tick upward as we move into 2026.
Buyer Confidence: Despite the favorable rates and increase in supply buyers continue to be cautious around the idea of making a move. With pricing slowly (but surely) trending downward, the thinking for most is to wait for pricing to soften further before jumping in. In this scenario, we see sellers of well positioned homes in good locations attracting the few who must make a move but improving financing and supply conditions continue to give buyers all the leverage and bargaining power.
Reflecting on the factors noted above, we anticipate a modest rebound in sales activity at some point between now and the new year. All the broader trends point to it, but more patience will be required. Sellers in these conditions need to reevaluate their ask prices to lead the downward trend in pricing, as opposed to follow. Asking at or below recent sale prices should do the trick but depending on local conditions, ask prices may need to be 10-15 per cent below recent sales.
For sellers looking to downsize or move sideways, there are many opportunities to take advantage of.
If your curious what we mean, give us a call to chat about it. We can help draft a course of action that is in line with your short- and long-term real estate goals.
Jenn
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