They Were Selling for $900,000 in 2022
Large 4 bedrooms Townhomes in London, Ontario were selling for significantly over-asking during the Canadian real-estate frenzy in Q1 2022.
Take, for example, this large townhome — it sold for $100,000 over asking in March 2022, for $900,000.
Canada’s 2022 Real-Estate Frenzy
Such purchases were not uncommon in early 2022, when we examine a chart of real-estate pricing in London, the 2022 real-estate euphoria is easily noticeable.
It looks like Mt. Everest.
The subsequent correction and flat-line are also very noticeable.
This phenomenon was not limited to London — low interest rates and pandemic restrictions fueled an unprecedented buying frenzy in Canada, with prices surging 15-20% in a single year in most markets in Canada.
Fast forward to 2024 and 10 rate hikes later:
29%, $250,000, Losses for Some In London
The net result of this moonshot and correction is that some homebuyers who bought at the height of the frenzy are experiencing large losses.
This townhome. which is the same one that was bought for $900,000 (above) sold for $643,000 this month, taking a $257,000, -29%, loss.
At Risk: Those Forced to Sell
Most would not willingly put their house up for sale in an unfavourable market.
Some, though, do not have a choice.
The most vulnerable are those who opted for variable rate mortgages at 2% interest in 2022, and subsequently had to endure 10 rate hikes by the Bank of Canada in 2022 and 2023.
These homeowners could have been put in a position where they could no longer afford the mortgage payments, and might have been forced to sell in unfavorable market conditions.
