Canada Mortgage and Housing Corporation (CMHC) expects home prices to bottom out this year, but they aren’t expected to fall below pre-pandemic levels.
That was the takeaway from the agency’s spring Housing Market Outlook, which said weaker growth and higher mortgage rates will continue to slow the housing market and overall economy throughout this year. This is precisely what the Bank of Canada (BoC) has encouraged through higher mortgage rates in order to help bring inflation down to normal levels (the target is 2% and the BoC expects this rate to be reached by the end of 2024).
CMHC’s Housing Market Outlook helps anticipate emerging trends in Canada’s new home, resale and rental housing segments. It also assists with forecasting impacts on affordability, supply and other housing challenges at the national and local levels.
Key highlights of the latest report include:
• The Atlantic region’s economy remains stable and moderate relative to other regions
When it comes to Toronto, CMHC expects total housing starts to fall this year and then increase in 2024 and 2025. Higher costs (in terms of construction financing, labour and materials) will play a role in hampering construction activity.
Furthermore, the MLS average price in the Greater Toronto Area (GTA) is expected to decline in 2023 before increasing over the following two years. Entering homeownership will remain a challenge due to elevated price levels in the region while, at the same time, rental market conditions will remain tight, resulting in continued strong upward pressure on rents.
Have questions about securing a new mortgage or renewing/refinancing an existing one in today’s market? Answers are a call or email away!