Everyone is wondering which direction the real estate market is heading. Based on my experience, and having lived through multiple booms and busts, one thing is clear: real estate takes a long time to turn around.
When the market dropped in the 1980s, it took nearly 20 years for prices to fully recover. In both the 1980s and today, inflation played a major role. High inflation led to high interest rates, and high interest rates ultimately caused real estate markets to stall or decline.
Back in the 1980s, inflation occurred because wages were rising rapidly. People had more disposable income, which pushed prices higher. Eventually, inflation caught up with salaries.
This most recent boom was different. During COVID, governments injected massive amounts of money into the economy to keep it afloat. That created extra spending power almost overnight, which drove prices up across the board, including real estate.
Now that government spending has been pulled back, that extra money is gone, but inflation has already occurred. The challenge today is that wages have not yet caught up. Until they do, the market will remain under pressure. And that process takes time.
Because of this, I don’t foresee a major real estate crash ahead, but I also don’t expect strong equity growth for the average homeowner in the near future. Stability, not rapid appreciation, is the more likely outcome.
Condos are a different story. In many markets, condos have been overbuilt, and I expect prices in that segment to remain very soft over the next year or two. For investors willing to take a longer-term view, condos may present a genuine opportunity.
For houses, I don’t see much from a pure investment standpoint right now. That said, housing isn’t only about investment, it’s about lifestyle. Owning your own home means stability, control, and the freedom to renovate and personalize your space. And over time, paying down your own mortgage is almost always better than paying rent to a landlord.
So while I don’t expect the market to take off or get overheated anytime soon, I do believe we’re heading into a period of relative stability. And despite everything, homeownership still makes sense for many Canadians.
There are several reasons why, and if you’re unsure whether buying, waiting, or investing makes sense right now, let’s talk it through.
