veryone is asking the same question right now: how long will this last? Because the housing market doesn’t just feel slow—it feels stuck. Prices in many Canadian markets are still down meaningfully from their peak, sales activity is hovering near multi-decade lows, and key indicators like the sales-to-new-listings ratio remain in soft territory. But what makes this cycle different is that inventory hasn’t exploded in the way most people would expect during a downturn, and underlying demand hasn’t disappeared. Instead, it’s been suppressed. On a per-capita basis, housing demand is sitting near levels we haven’t seen in decades, not because people don’t want to buy, but because they can’t. Higher interest rates have pushed mortgage payments up dramatically, affordability hasn't improved enough, and household balance sheets are under pressure.

We’re seeing rising insolvencies, increasing mortgage delinquencies, and a sharp drop in consumer confidence. When you combine those factors, you don’t get a traditional crash it looks more like a freeze. Buyers step back, sellers hold firm, and transaction volumes collapse. At the same time, the supply story is more nuanced than the headlines suggest. In the short term, there is pressure.

Vacancy rates have increased in several major markets, rents have softened, and a large pipeline of units that began construction during the peak is now completing. But beneath that, future supply is being quietly constrained. Housing starts are trending lower, building permits have fallen sharply, and developers are delaying or cancelling projects due to financing challenges and weak pre-sale absorption. In many segments, particularly ground-oriented housing, new supply is approaching multi-decade lows.

This creates a disconnect between today’s conditions and tomorrow’s reality. While the market works through elevated inventory and weak sales in the near term, it is simultaneously setting up a future supply shortage. But before that imbalance becomes evident, there is still pressure to work through. A significant portion of Canadian mortgages will reset over the next few years at higher rates, which is likely to introduce incremental forced selling and continue to weigh on pricing. We are already starting to see transactions occurring below previous purchase prices, gradually resetting market expectations. This is typically the final phase of a downturn. Housing markets don’t bottom when the data looks strong—they bottom when the data stops deteriorating.

That inflection point is usually driven by stabilization in interest rates, a recovery in consumer confidence, and the release of pent-up demand. Because current sales levels are unsustainably low relative to population growth, it’s not a question of if demand returns, but when. When it does, it won’t be entering a market with abundant supply. It will be entering a market where construction slowed, listings declined, and new inventory failed to keep pace. That’s why housing recoveries tend to feel abrupt rather than gradual. The shift isn’t always obvious in real time, but once it begins, momentum could build quickly.

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Dan Wurtele, PREC, REIA

604.809.0834

dan@thevancouverlife.com

Ryan Dash PREC

778.898.0089
ryan@thevancouverlife.com