Canada

Canadian Home Prices Forecast To Grow Much Faster Than Inflation For Years: CMHC

Canadians should prepare for the Hunger Games and an all-out attack on affordability. That’s the takeaway from the Canada Mortgage and Housing Corporation (CMHC) Spring 2021 forecast. Last year’s doomsday forecast is now followed by one of ambitious price growth. The national housing agency’s worst-case scenario is prices grow much faster than incomes. If you can’t afford a home in this market, the message is it won’t get any easier… aren’t they in charge of affordability?

Canada Real Estate Prices Expected To Rise Between 10% and 14%

Canadian real estate prices are forecast to show solid growth, even on the low-end of the forecast. By the end of the year, the average sale price is forecast to hit $628,400, up 10.69% from the year before. It’s then expected to be followed by a further 3.69% growth in 2022, and 2.75% in 2023. By the end of 2023, the average sale price hits $669,500 — 17.93% higher than last year. This is the low side of their forecast.

Canadian Average Real Estate Price Forecast

The average sale price for Canadian real estate, and the CMHC forecasted projection.

Source: CMHC; Better Dwelling.

On the high-end, Canadian home prices are forecast to see almost 50% more growth. By year-end, the average sale price is expected to reach $649,400, up 14.39% from last year. The growth is forecast to be followed by another 4.17% growth in 2022, and 4.20% on top of that in 2023. By the end of 2023, they see the average sale price at $704,900, up 24.17% from last year. 

Toronto Real Estate Prices Forecast To Rise Between 3% and 17%

Greater Toronto real estate prices are forecast to see huge growth in the low end as well. The average sale price is expected to hit $962,500 by year-end, up 3.53% from a year before. It would be followed by 3.76% in 2022 and another 2.60% in 2023. By the end of 2023, the average sale price is expected to hit $1,024,700, up 10.22% from last year’s numbers. 

Toronto Average Real Estate Price Forecast

The average sale price of Toronto real estate, and the CMHC forecasted projection.

Source: CMHC; Better Dwelling.

The high end of the forecast range sees prices climbing hundreds of thousands of dollars. The average sale price in this scenario hits $1,087,600 by year-end, up 16.99% from the previous year. It would be followed by 5.87% growth in 2022, and another 4.69% in 2023. By the end of 2023, the average sale price is expected to hit $1,205,400, up 29.66% (!) from last year’s numbers. 

Vancouver Real Estate Prices Forecast To Rise Between 2% and 11%

Greater Vancouver real estate is forecast to stay relatively flat on the lower end of the range. The average sale price is expected to reach $1,036,000 by year end, up 2.71% from the previous year. It would be followed by an increase of 0.48% in 2022, and a decline of 1.54% in 2023. By the end of 2023, the average price would hit $1,025,000, only about 1.62% higher than last year. 

Vancouver Average Real Estate Price Forecast

The average sale price of Vancouver real estate, and the CMHC forecasted projection.

Source: CMHC; Better Dwelling.

On the high end of the forecast range, Vancouver’s price growth outpaces even Toronto. The average sale price is forecast to reach $1,129,000 by year end, up 11.93% from a year before. This would be followed by a 12.22% increase in 2022, and another 10.10% increase in 2023. By the end of 2023, the average price would hit $1,395,000 up 38.30% from the previous year. The forecast range is much wider than the National forecast, or even Toronto. This generally implies a greater sense of uncertainty. 

Income growth generally tracks with inflation — at the best of times. Even in the lower end of the forecast range, home prices are expected to rise faster than incomes. Add to that, rising carrying costs are forecast to rise with interest rate normalization. If homebuyers would struggle to buy in the event of a correction, they’re in for a heck of a time when the worst case scenario is prices rise faster than their incomes.

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14 Comments

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  • Terrance Yu 5 months ago

    Is this the CMHC kiss of death? Bless a narrative, and watch it crumble to crap?

  • Average Man 5 months ago

    Uh, WTF? Isn’t it the CMHC’s job to do something about this?

    • GTA Landlord 5 months ago

      I think this is the most amazing point right here. They’re basically saying we really sucked at our job over the past few years, and we predict we don’t do anything over the next 3 years either.

  • Peter Drunken 5 months ago

    We’re delivering 30% more supply than the previous capacity needed, so obviously this is a shortage and we need more homes.

  • GTA Landlord 5 months ago

    I look forward to real estate agents that said the CMHC doesn’t know what they’re talking about when they forecasted a crash, suddenly becoming CMHC fan bois.

  • Sam 5 months ago

    This is great news. Just apply the CMHC inverse formula to all CMHC predictions, like the “Covid Cliff” prediction of 2020, and we should see substantial price drops.

  • Tom Wolfe 5 months ago

    Money has become meaningless in the wake of the COVID windfall. What do you people do when they have more of anything than they need? They waste it.

  • WS 5 months ago

    CMHC’s forecasting record is dismal.
    This latest forecast is no different.
    Suspender wearing commerce majors cannot understand that the current mania is a social phenomena which is better understood by psychology.
    Government hand outs, low interest rates, the pandemic, etc etc are contributing factors, but can’t justify the extent of the price inflation of housing.
    Perhaps the political science, criminology , and psychology combined might explain it better.

    It’s a bubble.

  • V 5 months ago

    From prices dropping 18% to this forecast? Uh! Sorry but we can’t believe anything they say, the clearly are completely wrong everytime. Do we even need their input?
    Their starting to sound like Al Sinclaire, ” Prices will keep going up”. Yeah right?

  • Michael 5 months ago

    The Vancouver numbers are interesting, +40% on a CAD 2M property with 25% equity would be a 160% return on equity, or CAD 0.8M return on a CAD 0.5M investment by’23, all with very low property tax/holding cost

  • Johnson and Joe 5 months ago

    They don’t have the will (or ability) to make prices go down, but I’m concerned that they do have the ability to make the prices go up.

  • graham peacock 5 months ago

    Evan Siddal was right when he said “trees don’t grow to the sky”…Nope they don’t!,…but housing does when your government with an unlimited supply of taxpayers money decides that they are going to grow the housing bubble at a priority of National interests of every canadian.
    Everything else be damned,…that includes our children’s futures, pensions and retirement, and any other sectors of the economy that could otherwise grow and provide revenue and wealth for Canadians.
    It’s only housing now folks.

  • Smug Canadians 5 months ago

    What a joke! Seems the TREB cartel are pulling their strings?

  • Ashley 5 months ago

    If CMHC proofreads what they have written, they would laugh at themselves. Market is slowing down and an act of desperation from CHMC to create the FOMO.
    Instead of wasting time on misguiding people, crown agencies should think about how to get business investment in Canada but I guess they are way too much incompetent to do so.

Comments are closed.