Panic? What panic?

Monday’s Tariff Man scare whacked bonds, driving yields down as investors stared into the abyss of recession, unemployment and general poochedness. The Canada five-year sunk fast to 2.5%, and so did the pressure on mortgage rates.

Now long-term home loans, if you shop around hard enough, can be found sub-4%. High-ratio, CMHC-insured mortgages are also sporting a three-handle – and it appears Trump has been spanked enough by sane people on both sides of the American borders that 25% tariffs are kaput. Maybe.

After all, it was insane. Like oceanfront condos in Gaza. Or firing the whole CIA. He’s nuts.

Anyway, ‘what does all this mean for Canadian real estate?’, the masses cry. Because nothing else actually matters. Girls just wanna have condos.

In the days since way back on Tuesday, realtor sentiment has been gaining froth. Home loan costs are falling. Spring is just weeks away. Thirty-year amortizations are here. So are downpayments up to 60% less. CHMC is insuring $1.5 million houses. The mortgage renewal tsunami looks like a nothingburger if rates stay in the threes. There are more new listings to choose from in most markets. Demand is building like a lovesick 16-year-old’s hormones. An eruption seems likely.

So where are we now?

In the mighty GTA sales were down 8% last month while listings surged 49% over year-ago levels. MOI has dipped smartly, nonetheless, suggesting more competition may emerge. The average price is ahead of this time last year by a few nose hairs.

In Vancouver listings have also swollen (by 46%), so sellers are expectant. Sales were up almost 9%. “In the three months preceding January, we’ve watched buyer demand gain momentum, but it appears that momentum is now shifting toward sellers to start the new year,” say the realtor wizards. “Even with this increase in new listing activity, sales continue to outpace last years’ figures, signaling some buyer appetite remains after the upswing that finished off 2024.”

At $1.1 million, average prices have not moved in a year. The sales-to-active-listings ratio for detached homes has jumped, and the average price is one used Kia above $2 million. That’s up three points in the past twelve months.

In Calgary inventory has rebounded to more-normal levels, which agents say should mean more balance and slower price growth. Sales are down (12%) but new listings have popped substantially and MOI has more than doubled. The average Cowtown property is 3% more expensive, but at just $583,000 it makes Toronto or Van buyers’ eyes bleed. The average detached is just over seven-fifty.

And look at sleepy Victoria, where sales last month jumped almost 24%. Condo deals popped by 30%. “We’ve seen a strong hand off from the December market to January with a good sense of momentum building,” says the giddy cartel leader, Dirk VanderWal. “Over the course of the month, we saw an uptick in new listings, and it is the first time in ten years that over one thousand new listings were added to our inventory in a January. This is a positive sign for our market as we head into 2025.”

Detached houses in this city now average almost $1.3 million, up 3% from last year and down a few bucks from December.

Other markets report a similar story. There has been no massive exodus of buyers since the Trump election in November or the ascension of the King three weeks ago. Prices, year/year, have not really budged, despite six interest rate decreases, massive political uncertainty, mortgage policy changes and a flaccid economy. Sales in the final months of 2024 increased. Good listings in demand areas got slammed. The inventory of unsold new homes – especially condos – continued at historic levels.

What do we make of this?

Is no Tariff Man effect taking place? Do people not care that this guy has the potential to turn our economic lights off with a single executive order handed to him in the Oval by a nerd with male pattern baldness tendencies? Are we ill-informed, or just meh? Or perhaps now – four whole days after a national crisis – people believe the orange guy is more wind than storm?

Dunno. But the gamble is that the year’s worst week may be in the rearview.

About the picture: “Hi Garth… (happy?) New Year!” writes Chris. “Here’s a pic of Emmy for your blog, if needed. What a start to the year.  Keep up the good work on the blog, appreciate the principled stand you take.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2025/02/06/panic-what-panic/