First Time in History - Worst February Ever for Real Estate

Hello again and welcome back to Bad News Tuesdays. Is this the beginning of the financial and real estate apocalypse? Let's find out. Okay, breaking news just released before I made this video today. Inflation rises in Canada up from 1.9% in January as government disinflation measures expires, the tax holiday, the HST holiday. There it is, up 2.6%. This can't be good news for the Bank of Canada and I don't know how this is gonna affect their next rate decision, but I guess we'll see what other data comes out before then. Now check out this news that was released this week. Fake mortgage broker raked in $6 million, 23 agents charged and $500 million in shady loans exposed. 875 fraudulent mortgage files processed over nearly a decade, 500 million plus in mortgages arranged through fake documents. Six million in fees pocketed by unregistered broker Kay Canth Chowdhury. 23 real estate professionals charged. 15 cases concluded. Agents faked income and savings to secure fraudulent mortgages, suspensions, fines up to $130,000 and lifetime bans issued. Investigations still ongoing. More transactions expected. So wow, this is a really big news story right now and the magnitude of it, like all these agents, I don't know if these agents know each other. They obviously knew this mortgage broker and were these for their own properties, clients' properties, but huge mortgage fraud. Of course, we know this, we've heard about it in the news, but yeah, now we're seeing these charges being laid here. And there it is, nearly two dozen BC real estate agent professionals face sanctions for working with fake mortgage broker. Check out this post from Shazzy when the Bank of Canada cut the rates last week. And yeah, he made a good prediction here, but let's read through it. Bank of Canada just cut rates and somehow made mortgages more expensive. Bank of Canada cuts rates by 0.25% to 2.75%, but instead of relief, borrowing costs just went up. Five-year bond yields jumped after the cut, pushing fixed mortgage rates higher. Homebuyers expecting cheaper rates now paying $2,000 more over their term. Bank of Canada ignored its own inflation data. CPI expected to rise soon. And this was on the 14th, so yeah, he called it. If inflation jumps past the target, rates could go back up. Rate cut deja vu. Wow, yeah, there it is, Better Dwelling released that article on it. And next from Market Mania, we have another non-shocking infographic on investors here. Shocking not, Statistics Canada reveals investors made up over 25% of buyers in Nova Scotia in 2018, 2019, and 2020. Most of the investors were from Nova Scotia. So there it is, that's the infographic from Statistics Canada, breaking it all down there. And yeah, this is, again, it's not shocking. And this was in 2018, 2019, and 2020. Now, Nova Scotia still reached new highs last year, as of last year. Maybe this year, I haven't seen the data yet. But think of how many investors are still purchasing properties. I bet you it's even more. I bet you it's up to 30, 35% now. From Steve Suresky, I've talked about this on my channel before. I've made a few charts of my own. Are house prices going up, or is the currency just being debased at an alarming rate? Of course, we know that the currency is being debased. And here they compare the HPI on the blue to gold in the yellow there. And there we see prices are going down as of 2025, January, in gold. And of course, we know this. So prices have pretty much been flat. Everything should be flat when you compare it to other tangible assets that hold their value. But of course, our currency's being debased. It's worth less and less every year or every month at this point. And yeah, you're not getting paid that much more of it either. So yeah, this is a great chart here and kind of really puts things into perspective. And lastly, before I move on to this week's data, we have the Realtor of the Week. This is a little hard to watch, but it is funny. So let's check it out here. I'm gonna have to pause it a couple times because it uses music in the background. So yeah, anyway, check it out. Oh my God, Becky, look at that house. I mean, it's just so huge. It is a nice house. ♪ I like big homes and I cannot lie ♪ ♪ All you have to buy are tents and knives ♪ ♪ When we pull up to the ♪ What is she doing? I can't believe that someone actually does this when we go inside here. And listen to her pitch or whatever. I'm not a music guy, but yeah, it's way off. ♪ You gave me a heart, you're yearning ♪ ♪ You've got that dream, you can't stop burning ♪ ♪ Oh, bah, yeah, let me guide you ♪ ♪ I'll walk you through, I'm your Realtor ♪ It's, anyway, I guess, yeah, it's a nice house. I don't know what to say. She got the listing, so. But anyway, we'll just go to the end here. ♪ Moving, grooving, without that pin, sign that check ♪ ♪ Brianna got homes ♪ And there you have it. Gotta do what you gotta do to sell a house these days. So now we're gonna get into the Canadian Real Estate Association national data for February. And it is shocking and alarming. And this is what I'm talking about, the real estate apocalypse here. Because this is not good. This is probably the worst data I've seen on the worst news release since I've been tracking it. There's no denying what's going on here with the market. And I'm just gonna read a few of these highlights here before I get into the data. National statistics. Tariff uncertainty keeping homebuyers on the sidelines. Canadian home sales fell sharply from January to February as homebuyers remained on the sidelines in the first full months of the ongoing trade war with the United States. Sales activity recorded over Canadian MLS systems dropped 9.8% month over month in February 2025, making the lowest level for home sales since November 2023 and the largest month over month decline in activity since May 2022. Now mind you, this is from January to February home sales dropped, which is unheard of. So that makes it even worse. The moment tariffs were announced on January 20th, a gap opened between home sales recorded this year and last. And he goes on to say, this is already being reflected in renewed price softness, particularly in Ontario's greater Golden Horseshoe region, which let me remind you is about 50% of all home sales in the entire country. There were 146,250 properties listed for sale on all Canadian MLS systems at the end of February 2025, up 13.1% from a year earlier, but still below the long-term average for that time of year of around 174,000 listings. So 13% increase nationally in the number of listings available on MLS. That's a huge increase. And as we've discussed before, it all comes down to market sentiment, and we're seeing that now even in this news release. The uncertainty of the last few weeks seems to be causing some buyers to think twice about big financial decisions right now. Of course you are. Are you gonna have a job? Is your cost of living gonna go up with tariffs? What's gonna happen? Nobody knows. So the best thing is to sit and do nothing. When in doubt, do not, as my father says. There were 4.7 months of inventory on a national basis at the end of February 2025, up sharply from 4.1 months at the end of January. Now we're gonna look at all this data and put it into perspective. Okay, starting off with the total sales for February. This is all February's back to 2007. And you can see on there on the right, 2025. So we are down from the average. The average is about 41,000 sales for February. So we're down. It's not that crazy. It's not the lowest February ever, but it is down significantly. And here is all month's data for sales. And you can see there, yeah, we're down below that average too. Again, it's about 41 months for all months, the long-term average. Now this is where things really take a turn for the worst when you're looking at the rest of this data. So let's go through this here in detail. So the average for February was $668,000, the average price in Canada for all residential sales. Now that is down 0.3% month over month, or $2,000. Now that's down from January, which is very unheard of, but we'll get into that in just a second. Minus 3.3% year over year from last February. So we're seeing these yearly losses now, and I think we saw that in January too, if I'm not mistaken. And down 18% from the peak, or $147,000. Now I'll just remind you of this bearish pennant pattern that's playing out. Now I honestly didn't think this was gonna play out. I saw it forming, but the spring comes, and of course prices jump back up. But you can see there, it is well within that bearish pennant pattern. And I put the two on there, so you can see which way it's gonna break. I have people comment on this. This is a continuation pattern. So of course we're coming from a high spot, and it's gonna continue to the low side. And this is why it's still forming. And I'll be surprised, honestly, if it plays out. But it looks like it's gonna, which is pretty crazy. Okay now, here is the month over month price change for February. So this is from January to February each year. All the years lined up there. Let me move my head out of the way. From 2005, this is as far back as the data goes. I had someone just call me out on X today, saying, yeah, like I said, it's the worst February in history. And it is when it comes to this pricing data. And actually year over year too, not just month over month. But when you look at this, and somebody said, well, what about the historical data? It only goes back to 2005. And yes, our CREA data, there is no national data for average prices that go back further. If you have some, please let me know, and I'll gladly use it. But CREA only started tracking this stuff from 2005. And the MLS was only formed just prior to the data. So yeah, it's gonna be hard to find accurate data that goes back further than this. But if you have it, please let me know. I'd love to look at it. So yeah, here it is. The first month over month decline for February ever recorded on this data. 21 years of data here. And this is the first time. It was a small decline, $2,000 or 0.3%. But you can see the smallest one there was in 2008, the great financial crisis year. And it was almost 1% increase from January to February. Now look at it. It's 0.3, the worst. It's never happened before. February always increases over January. It's a beginning of the year, new year thing, just like the spring goes up. And February is the start. February actually has, and I've mentioned this before, it actually has the biggest month over month increases out of any month historically. You can see there, yeah, 10.5% back in 2017, 9.6%. So it is one of the biggest jumps month over month. And now we're seeing negative. Now I added in the year over year here. I didn't put the numbers in there. But the darker, sorry, the lighter green is the year over year. And there was what, it's the fourth year out of 21 years. But this is the only year, 2025 is the only year that we've had both month over month and year over year price declines for the month of February. Again, unheard of. A new precedent has been set here with this data. Now let's look at the sales to new listings ratio. So it's currently sitting nationally at 49.9%. Again, the lowest out of any February dating back as far as they provide this data. CREA only goes back five years with the data for some reason on the sales to new listings ratio. I don't know why. But yeah, any other time it was well above 50%. I use or gauge a buyer's market less than 40%. CREA gauges at 45% and lower. So we're at 49.9. So we're not that far away from a buyer's market according to CREA's calculations. Next, we're gonna look at the February months of inventory or months of supply just for February. These are all February's dating back to 2011. And yeah, again, this data was only included back to 2011 for some reason from CREA. But as you can see, this February 2025 is higher than any other one since the start of the pandemic. Actually, the start of the pandemic was March. So 2020 technically isn't included in the pandemic, but it is higher than February 2020, which is technically pre-pandemic. You'd have to go back to 2019 to find a higher month of inventory for February. Now, here's every month included in the months of supply. And you can see we've broken right through not just February being highest since pre-pandemic, but every month. So this February has saw more inventory than any other month since 2019, with the exception of the first two months of the pandemic because inventory shut up because no one was buying and they hadn't removed it from the market yet. But you'd have to go back to July 2019 to find any month that had higher inventory. So we're heading in the right direction. We knew that the inventory was gonna increase. It was just a matter of time. You don't have to build it right now. It's just gonna come from investors flooding the market with their inventory, just like they are doing with rental listings. So here is the month of inventory compared to the national average price. And I've talked about this before. You can see there's an inverse correlation, very clear. Inventory goes up, prices come down. Inventory goes down, prices go up. So now we're seeing this threshold. I called about 4.5 months and above is when we're gonna start seeing some good price action to the downside. And we're at 4.7 months. I drew the trend line across it there. And yeah, we're gonna start to see that. Once this persists into January, or sorry, into March, we are gonna see downward price pressures, which is, it's gonna be odd in the spring for this to happen, so it might happen in the summer. But yeah, look at it. It's not good. We've broken this big threshold with inventory that we haven't broken in years. And yeah, now we're gonna see the fireworks happen. Now looking at the actual numbers, the average rent in Canada declined again. I think I've talked about this last week, but it was $2,100. Now it's $2,088. Continuing to trend down. I don't know how much lower it will go. I'm guessing it'll go a little bit lower, but it can only go so low rent. Now let's look at the average monthly payment on a Canadian home, and it is $2,806. I think it was $2,880-something in January. Continuing to see that trend down, and this is all based on the mortgage rates declining. Of course, the prices haven't gone up this spring, so that's helping too. And there we have the two compared. The cost of owning a home with the 20% down is getting closer to renting a home. Still $800 apart or so there. So yeah, it's still better to obviously rent a home in Canada right now with the average home than it is to buy, but we're getting closer. And again, that market sentiment dictates that it's probably not a good idea to make a major purchase right now unless you have to. In the first year, interest charges on the average Canadian home with 20% down, prime minus 1%, still over $21,000 per year, a lot higher than it was 2020 and before. You know, we need to get that down to like $1,000 a month in interest, not 2,000. It's closer to 2,000 right now. So yeah, it's headed in the right direction quickly. We're gonna see probably rates come down. I don't know with that CPI print though, but we'll eventually see rates come down a little bit more. And of course, the prices will come down to help restore that affordability and lack of interest, I should say. So there's definitely a lot of things happening right now in the Canadian real estate and financial markets. And of course, everyone's blaming it on the tariffs, but I think the tariffs, again, are just the straw that broke the camel's back. Let me know what you think in the comments as always. And until next week, I'll see you then.