Is Canada's housing chaos finally coming to an end?

Currently, the Canadian housing market is experiencing a rapid slowdown. In Oakville, one of the most expensive markets in #Canada, prices have declined by over $2,200 a day since their peak. Over $130,000 has been lost in Toronto home prices since their peak.

It's a good representation of the pace at which the housing market is falling on a global scale, despite the fact that the decline of the housing market as a whole shouldn't be gauged through the hottest individual markets. #GoldmanSachs experts predict that Canada's housing market will undergo the sharpest decline of all the global real estate markets currently in decline.

Housing "balloon" has been punctured and is losing air at a rapid rate, which is a positive aspect of the current situation. Rather than shrinking, the bubble is finally bursting, and investors and homeowners will suffer the consequences.

Even if you don't intend to buy real estate assets or stocks, you should keep track of some of them and try to purchase them when the recovery finally begins.

Residential REITs

One of the largest REITs in Canada is Canadian Apartment Properties REIT (TSX:CAR.UN). The portfolio consists of 67,182 residential suites, most of which are apartment properties and about 5% are mobile home parks. This residential REIT has a significant portion of its portfolio in the Netherlands, and geographic diversification is one of its major strengths.

As a residential REIT, it may be more affected by the housing market decline than commercial REITs, but it might not be as bad as you might think. Despite a devaluation of its residential assets, the company still relies on rent for its finances.

There might not be a significant enough dip in the REIT's earnings if rents don't decline proportionally to property prices.

The REIT has fallen quite a bit (about 29%) along with the rest of the sector, and it might go down further, allowing investors to lock up a much higher yield than usual.

Property management and essential services provider

If you are looking for a relatively safe real estate stock in the current environment, FirstService (TSX:FSV)(NASDAQ:FSV) is a good choice. The company is the largest provider of residential community and management services in the country.

Even if the Canadian business suffers a significant decline, its impact on the overall financials would not be as drastic (about 87%). Currently, the U.S. housing market isn't as shaky as the Canadian one.

FirstService also has the advantage of having already gone through a correction phase. As a result, the stock fell 36% from its post-pandemic peak, negating all the growth it had achieved since the 2020 crash. It is now reasonably overvalued and ready to grow at its former pace, which is quite impressive.

If the current growth phase persists for a week or two, buying before it becomes too expensive might be the smartest thing to do.

Source: The Motley Fool

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