How Housing Market will Do in next 2 years

How Housing Market will do in Next 2 years

The newest housing market prediction from Canada Mortgage and Housing Corporation predicts that Canadian home prices will continue to fall until the middle of 2023, at which point they will reach their lowest point and begin to rise once again through 2025.

Although the average home price for 2023 will be lower than it was last year, according to the national housing agency's annual prediction, which was announced on April 27, a lack of supply and rising demand will make it harder for Americans to find affordable homes.

The CMHC projects a drop in house starts because of higher financing and building costs and anticipates that new supply will remain below 2021 and 2022 levels before beginning to increase in 2024 and 2025.

"Affordability issues for owners and renters will persist as long as housing demand continues to far outpace new housing supply," chief economist Bob Dugan said.

Even though costs have decreased, homeownership will become less accessible due to higher mortgage rates and still-high price levels, according to him.

According to the housing agency's predictions, the Bank of Canada will keep interest rates stable for the remainder of the year and begin to gradually lower them in 2024, according to Dugan. On April 12, the central bank maintained its benchmark interest rate at 4.5 percent.

"What's been done so far in terms of interest rate increases is going to slow the economy enough that's going to get rid of the excess demand and we're going to see inflation begin to move lower," he claimed.

After BOC begins to reduce interest rates in 2024, steady decline in rates will boost housing demand and increase home sales, with tight inventory.

Despite cooling inflation lack of affordability will continue and a gradual decline in mortgage rates, which are both expected to help housing demand, he said.

As a result, many households will remain in the market, which is already facing severe supply shortages, especially in Toronto, Vancouver, and Montreal, the CMHC said.

As far as demand is concerned, CMHC said Canada has reached the bottom and will see a stabilization of housing demand and house prices in the second quarter of 2024, with growth in demand picking up from there, thanks to stabilizing interest rates.