Canada’s national housing agency is forecasting things are going to get worse in the next few years. The CMHC’s latest forecast expects a booming population and lower rates driving housing demand. As a result of the surging activity, existing home prices are expected to rise over the next couple of years. Despite soaring demand and prices, along with their helicopter money to stimulate development, they actually see annual new home starts falling over this period.
Canadian Home Prices Forecast To Surge 20% Over 2 Years
The CMHC sees existing home prices ripping higher as interest rates are cut. By the end of this year, they expect the average sale price to rise to $711,429—advancing 4.9% from last year. Explosive growth is forecast for 2025 (+9.5%), seen moderating in 2026 (+4.6%). Their baseline forecast has the average existing home fetching $814,851 by 2026, or 20% higher than last year. Most of the activity is forecast to occur in smaller, more affordable cities.
Canadian Real Estate Sales Are Forecast To Rise
Cheaper mortgage credit is also seen boosting existing home sales, but they’ll remain weak. Last year CREA reported the fewest purchases since 2008, so it’s an easy beat. This year the CMHC is forecasting 482,244 existing home sales, an increase of 9% from last year.
They see it followed slower growth in 2025 (+7.9%), and 2026 (+1.1%), ending the period with 525,991 existing home sales in their baseline forecast. An improvement, but the volume is still significantly lower than 2021.
Annual New Home Starts Forecast To Fall Significantly
The CMHC helicopter cash to incentivize development isn’t forecast to help much. The agency sees just 224,485 new home starts this year, a decline of 9% from last year. A slight bump is observed in 2025 (+3.5%), but 2026 doesn’t see much growth from there. By the end of the forecast period in 2026, annual new home starts are expected to be 3% lower than last year.
Canada’s national housing agency sees all of this occurring against a backdrop of a weaker economy. Prior to 2020, a weak economy wasn’t exactly considered a fundamental driver of price and home purchasing. Low rates stimulate purchasing activity and facilitate price growth, but usually it’s after a market bottom. Labor market erosion isn’t typically a big driver of home purchasing.
You Might Also Like
FAQs
Explosive growth is forecast for 2025 (+9.5%), seen moderating in 2026 (+4.6%). Their baseline forecast has the average existing home fetching $814,851 by 2026, or 20% higher than last year. Most of the activity is forecast to occur in smaller, more affordable cities.
What is the house price forecast for Canada? ›
Simple Moves & Storage Predictions
| 2024 | 2026 |
|---|
| Canada Average | $703k | $775k |
| Greater Vancouver | $1,205k | $1,329k |
| Greater Toronto | $1,128k | $1,244k |
| Victoria | $868k | $957k |
2 more rowsMay 15, 2024
National home price decline is only halfway there, and could plunge more than 30 per cent from the peak by the middle of 2023, according to a report from Oxford Economics. Updated July 19, 2023 at 6:38 a.m.
What is the housing forecast for Canada in 2024? ›
Market to be a little busier in 2024
We project home resales in Canada to rebound 9.2% year-over-year to 484,400 units in 2024—partially reversing massive declines of 25.1% in 2022 and 11.1% in 2023. That number of transactions would still fall short of the level reached before the pandemic in 2019 (490,900 units).
What is the market prediction for 2024? ›
Analysts project 11.5% earnings growth and 5.5% revenue growth for S&P 500 companies in 2024. Fortunately, analysts see positive earnings and revenue growth for all eleven market sectors this year.
Is now a good time to buy property in Canada? ›
While we've seen house prices decline recently, they are still up 1.1% from this time last year and 28.4% compared to 3 years ago. For example, the average price of a Toronto home in 2023 may have risen by 2.4% compared to last year but fallen by 3.8% compared to 3 months prior.
Where are home prices falling the most in Canada? ›
Where Real Estate Prices Are Dropping in Canada 2024
- Kitchener-Waterloo, ON: 8.9 per cent.
- London-St. ...
- Greater Toronto, ON: 7.7 per cent.
- Hamilton-Burlington, ON: 7.7 per cent.
- Cambridge, ON: 6.9 per cent.
- Guelph and District, ON: 6.6 per cent.
- Niagara Region, ON: 4.4 per cent.
- Winnipeg, MB: 4.4 per cent.
Mortgage rates are expected to come down in 2024, and inventory and home sales are likely to increase. Homebuyers and sellers can also expect prices to continue to rise, albeit at a slower clip than the past couple of years.
Will rent go down in 2024 in Canada? ›
According to the Canadian Consumer Price Index (which tracks rents alongside prices for many other items in the economy), rents jumped by 8.6% in March 2024, compared to their level one year prior. This rapid rent growth is consistent with what TD Economics expects will come in 2024.
Is Canada in a housing bubble? ›
Toronto scored the highest in the world in Swiss bank UBS' real estate bubble index in 2022, with Vancouver also scoring among the 10 riskiest cities in the world. The Royal Bank of Canada analysis showed that Canadian housing had become the least affordable that it had ever been.
"2024 is bound to be a better year for homebuyers, if only because of how terrible 2023 was," says John Graff, CEO at Ashby & Graff Real Estate. Graff anticipates falling interest rates and increasing inventory could result in more opportunities for homebuyers in the months ahead.
What is the best investment in 2024? ›
Overview: Best investments in 2024
- High-yield savings accounts. Overview: A high-yield online savings account pays you interest on your cash balance. ...
- Long-term certificates of deposit. ...
- Long-term corporate bond funds. ...
- Dividend stock funds. ...
- Value stock funds. ...
- Small-cap stock funds. ...
- REIT index funds.
5 best stocks to buy
| S.No. | Top 5 Stocks | Industry/Sector |
|---|
| 1. | Shriram Finance | NBFC |
| 2. | SBI Life Insurance | Insurance |
| 3. | Axis Bank | Banking |
| 4. | Mahindra & Mahindra | Auto |
1 more row2 days ago
Canadian Home Prices Forecast To Surge 20% Over 2 Years
By the end of this year, they expect the average sale price to rise to $711,429—advancing 4.9% from last year. Explosive growth is forecast for 2025 (+9.5%), seen moderating in 2026 (+4.6%).
Will houses ever be affordable again in Canada? ›
“Under our base case scenario, the share of an average household income needed to cover ownership costs would only fall to mid-2022 levels by 2025,” explains Robert Hogue, assistant chief economist at RBC. Adding, “meaningfully restoring affordability will likely take years in many of Canada's large markets.
How much does a house cost in Canada in US dollars? ›
On average, a house in Canada costs $617,000 and the average US home price is $445,000. As you can see, the difference between the average Canadian and US home prices is $172,000 and this number continues to grow.
