Hoping for a recession to decrease housing prices is like wishing for a flood to water your garden

financialpost.com:

Housing sales data from the Toronto region suggests markets will likely favour buyers given the sudden increase in listings — some are even calling it a buyers’ market.

Homebuyers’ choices have undoubtedly improved, but affordability has not improved as much. For markets to be fully on the buyers’ side, they need plenty of choice affordability. Thousands more homes are available to purchase, but most remain out of reach of mid-income earners.

There was a 32 per cent increase in listings in September, according to the Toronto Regional Real Estate Board (TRREB), dropping the sales-to-new-listings ratio (SNLR) to 28.6 per cent. The industry rule of thumb says an SNLR of less than 40 per cent favours buyers and more than 60 per cent to favour sellers. Going just by that rule, it looks like a buyers’ market.

The same report also said the average Toronto home price in September increased by three per cent from August. The average has increased by almost eight per cent since January. If housing was unaffordable earlier, it is still unaffordable.

Housing affordability is tied as much to prices as it is to mortgage payments. Affordability worsens if either or both sharply increase. Homebuyers have recently been hit with a double whammy of rising prices and borrowing costs.

Housing prices starting in mid-2020 escalated fast as ultra-low interest rates fuelled their growth. Later, inflationary pressures necessitated an increase in lending rates, which jumped from those ultra-low levels in 2020 to much higher levels not seen in decades. The consequences were unavoidable: higher housing prices were financed at even higher lending rates.

The rapid increase in mortgage rates contributed to a significant increase in mortgage payments