One certainly can’t be envious of the Canadian government and the way the population has such adamant demands that they do something to reign in the ‘runaway train’ that some people have described the Canadian housing market as. The meteoric rises in home values over the last while has been somewhat surreal to watch, but the reality is that it is tough for the Feds to continue with their mandates and still keep housing affordable in Canada.
The Federal Liberals did recently make the mortgage stress test for would-be borrowers even tougher. Considering what would happen if interest rates rose (and eventually they will have to) to newly-mortgaged buyers who can’t afford the fluctuation and might find themselves underwater, they’re actually doing a lot of people a favour. But it doesn’t really dissuade those who insist the government is not being proactive enough in regulating the housing market.
But maybe there is some good news for those who are more than a little displeased about this. We can assume there’s more than a few realtors that are disappointed too, unless they’re the ones who are continuing to get listings and sell multiple properties for top price and beyond. If you’re aim is that one of those realtors then our online real estate lead generation system here at Real Estate Leads here is an excellent resource to have. The power of internet marketing and polling putting you in the position to contact would-be clients first.
We mentioned good news though, and we imagine some are anxious to hear what that might be. Apparently the heated nature of the housing market is expected to crest sometime this year in 2021, and beginning next year median home prices should come down.
Should being the operative word there of course, but the people making these predictions tend to know what they’re talking about.
Still Some Climbing
The expectation is that activity in Canada’s residential real estate market will become more moderate in comparisons to the unsustainable levels seen so far this year. However, sales should remain at an elevated pace and prices will continue climbing for quite a long while still, at least according to the latest forecast from the national housing agency.
The number of homes being sold to new buyers could climb as high as 602,300 this year from about 550,000 sales seen last year. That is according to a report from the CMHC on Thursday. The expectation is that could lift the average price for a home in Canada as high as $649,400 ($533,000 is USD), and that is up 14% from last year
Then we have the specific equation that everyone has been talking about for the last year and a half. Low interest rates, combined with a demand for more space to ride out the pandemic, have pushed the Canadian housing market to never before seen heights over the past year, with some communities seeing annual price gains of more than 30% . With the economy recovering quicker than expected, however, we may see some of the frenzy drivers losing steam.
Economic conditions returning to pre-pandemic levels by the end of 2023 should mean the pace of home sales and prices slowing over the same period. Plus, it’s expected that with faster economic growth the country’s standard 5-year mortgage rate will rise, though likely staying at very low levels if we’re going to look back all along the timeline. Unusually high savings rates have been created by people having less opportunity to spend during the pandemic, but that is obviously not going to continue once the opening-up is relatively complete.
Plus we also higher demand for single-family homes brought on by intermittent lockdowns and developers and construction companies will shift in that direction, while resuming immigration will bring demand for rental accommodation back to urban areas meaning fewer vacancies and higher rates.
The big picture predication is that the number of homes sold across Canada in 2022 and 2023 will be less than this year, though still higher in number than the quantity sold in 2019. Prices are expected to keep on increasing, with the average price stretching as high as somewhere in the vicinity of $705,000 by the end of 2023 being a real possibility.
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