Schrondinger’s Cat

Kind of an odd title for a mortgage related blog, don’t ya think? Why would I ramble on about a feline experiment when there is quite obviously bigger problems in real estate land. Well, the answer is quite simple:

Canada’s housing market is just like Schrodinger’s Cat. For those who aren’t familiar with the concept, here is a link you can use to brush up on it https://en.wikipedia.org/wiki/Schr%C3%B6dinger%27s_cat . Canada’s housing market faces the exact same paradox today as the poor cat did back in 1935.

The poison in the original theory has been replaced in housing speak by high interest rates. While we know eventually that high interest rates will “kill” housing, we don’t know exactly at what level, and when. So, until we have data that confirms it, we are in a weird Schrondiger’s cat paradox for housing. The Canadian housing market at this point can be thought of as both “alive” and “dead” at the same time – much like the poor feline in the original experiment. No one knows for certain – although there is no shortage of “experts” that will tell you they know best – no one actually knows at what level, at what interest rate, and at what time the housing market rolls over. I have witnessed people lose millions trying to time the real estate market as far back as 2010. I still have clients that are waiting for the market to fall – for the last 13 years. On the other hand, I have clients that bought in 2021 ( when we all knew it was nuts ), and they have managed to do okay. Every time you see a house sell above list price – 50% of the population will tell you every reason why housing goes higher ( immigration, demand, low supply, etc. ) and every time we see a power of sale hit the market, the other 50% of the population will tell you why a real estate crash is imminent ( higher rates, declining economic numbers, rising unemployment ).

So, all we know for 100% is that the real estate market is both dead and alive at the same time. Over the next 90 to 120 days, and rolling into the end of the year, I suspect we will get some data that will help us determine the pulse of the Canadian real estate market, but until then, no one is definitively wrong, and no one is definitively right. What matters to us – and ultimately our clients is what housing represents. A house should be a home that people can go home to every day. It should be a place where bread is broken around the dinner table, where children are raised, and people celebrate the milestones of achievement. It is a place where we feel safe, we feel relaxed, and where we welcome friends and family. Irregardless of what financial market pundits tell us, our job is to help our clients into home ownership that will allow them to plant roots and grow.

In the daily grind, the endless rate hikes, every evolving lender requirements, and massive data points that have us riding emotional roller coasters, it is important to remember what people come and see a broker for. They come to a broker to help find a solution, and to help them achieve their goal. Be the broker than helps them do it!!