An Ottawa family is packing up their belongings and moving to what they hope will be their "forever home," but they won't be bringing nearly as much cash with them as they'd hoped to get from the sale of their first house.
"We figure we lost about $150,000," said Robert Hawkins.
"I know we didn't 'lose it' because it was not ours, right," said Natalie Hawkins. "But to not earn as much as other people have earned three weeks earlier … that's a lot of money to miss out on."
To make ends meet, the family will be renting out an upstairs bedroom in their new home.
"And that's something … we've never considered," said Natalie Hawkins.
As home prices drop across the country, sellers are having to come to grips with the reality that sky-high sale prices aren't guaranteed.
The couple bought the four-bedroom, three-bath detached home in Barrhaven in 2015 for $350,000.
They've since finished the basement, landscaped the backyard, put in a fence, a deck, a patio, and stainless steel appliances.
Recently, they spotted a slightly larger home being built just up the street that had a two-car garage and a bigger yard — perfect for the couple and their two young children.
"It looked like our forever home," said Natalie Hawkins.
"And just the way that the market was, we could sell this house for maybe not too much of a difference to get to the new house price. That was our expectation."
They put down a $100,000 deposit and prepared to sell their first house.
They had watched their next-door neighbour sell a mirror-image model of the same house for $890,000 and hoped to fetch a similar price for their own home.
But then market conditions changed abruptly.
They considered keeping their first house as a rental, but securing an additional mortgage proved difficult. They hired a realtor as the value of their home continued to plunge.
A buyer was found and the sale closed. The price: $740,000.
While the family did lock in a sizeable profit from their first home, they are now facing what they expect will be nearly a decade of extra mortgage payments to make up the difference in value between that house and their new one.
Downward trend clear across the country
For those who've been keeping a close eye on the housing market, a correction was always in the cards.
"Things went up too far. They went up too fast," explained Garth Turner, a financial adviser, author and a former member of Parliament.
"It was inevitable we would see the pendulum swing back. And here we are."
Statistics published by the Canadian Real Estate Association (CREA) for June 2022 show the seasonally-adjusted national Home Price Index (HPI) dropped by 1.9 per cent.
A look at the national average house price excluding the country's two priciest markets — Vancouver and the GTA — shows the average house price in Canada came down by $114,500 relative to June 2021.
The ratio of sales to new listings came in at 51.7 per cent, its lowest level since January 2015, meaning a fairly equal balance between supply and demand.
Turner explains that a unique set of circumstances led to a temporary spike in home prices.
The COVID-19 pandemic prompted people to cocoon at home and spurred interest in having larger houses on bigger lots in the suburbs.
Combined with exceptionally low mortgage rates — some could briefly be had for under two per cent — and an influx of government money through pandemic relief programs, this perfect storm caused prices to soar by 30 to 40 per cent, said Turner.
He expects it will take several years for the housing market to rebound. He recalls the major housing crash of the early 1990s.
"It took 14 years to recover," he said. "Three years to go down; 11 years to come back up to the same level."
"We're only halfway through" the current decline of home prices, he predicted.
Realtors face a changing marketplace
Real estate agents, who have spent the past few years managing rapid sales and submitting bids over the asking price, are now having to explain to prospective sellers that things have changed.
"For the average person who was expecting to get $700,000 (selling) a townhouse in the suburbs, that's just not the case anymore," said Nicholas Crouch, a broker at ReMax Hallmark Realty Group.
Crouch pointed to the number of days spent on the market as a key indicator of cooling conditions. That number has risen from just five days at the peak of the market to nearly 20 days now.
He adds that buyers now have time to shop around and submit offers with conditions, something they "haven't seen in years."
Family still feels "very lucky"
Robert Hawkins expected a market correction, but said that it came at a uniquely bad time for the family.
Even after the setbacks they've endured, he's keeping things in perspective.
"We're very lucky to be in the position we're in," he said, adding that they would not have been able to afford their new home without the accumulated equity from their first house.