Canada’s national housing gave the Canadian real estate industry a further peek at what they expect for prices. The Canada Mortgage and Housing Corporation (CMHC) explained last week that price declines are expected across the country. Now they’ve provided a breakdown of the forecast, and how it impacts individual provinces. Prices are expected to start falling later this year, and don’t find a bottom for a year or two. Depending on the market, the forecast runs out of time before seeing a recovery.
About The Data
The CMHC used a typical risk forecast presentation, with upper and lower bounds for price movements. The upper bound is the high end of the forecast, and where prices head if the recovery is swift. The lower bound is the low end of the forecast, and where prices head in a longer recovery. This range is based on economic and demographic scenarios. Judging by the gap between the two, they see a significant amount of economic uncertainty.
Canadian Real Estate Prices To See Average Price Drop At Least 11%
The agency is expecting a fairly substantial dip in prices across Canada. In the upper bound, the average price bottoms at $481,832 in Q1 2021, down 11.09% from the price at the end of last March. The lower bound sees the average price bottoming at $434,645 in Q2 2021, down 19.80% from last year.
Canadian Real Estate Price Forecast
The average sale price of Canadian real estate, and the CMHC forecasted projection.
Source: CMHC, Better Dwelling.
In terms of recovery, the forecast timeline actually runs out before prices have a chance to recover. The upper bound ends 2022 with average prices down 1.95% from Q1 2020. The lower bound sees prices still down 15.83% from March levels, at the end of 2022. That gives us a little more context as to why the CMHC said “at least 2022.”
Ontario Real Estate Prices to See Double Digit Decline
Ontario real estate is one of the more vulnerable markets, due to sky high price increases over the past few years. The upper bound forecast sees prices bottoming at $598,905 in Q2 2021, down 12.28% from this past March. The lower bound forecast shows prices bottoming at $531,715 in the same quarter, down 22.12%. Both of the forecasted bottoms are larger declines than the average forecasted for Canada.
Ontario Real Estate Price Forecast
The average sale price of Ontario real estate, and the CMHC forecasted projection.
Source: CMHC, Better Dwelling.
Ontario doesn’t get a full recovery by the end of 2022 either. In the upper bound, the average price is still down 1.12% from this past March. In the lower bound, prices are still down 16.56%. In the lower bound, prices are still in a technical correction right through this year.
B.C. Real Estate Prices Expected To Have A Long Recovery
British Columbia is expected to see one of the biggest drops in the country. The upper bound of the forecast sees the average sale price bottom at $675,500 in Q2 2021, down 14.33% from the past March. In the lower bound, the average bottoms at $609,515 in the same quarter one year later – Q2 2022, down 22.69%. The province underperforms Canada generally in both scenarios.
BC Real Estate Price Forecast
The average sale price of BC real estate, and the CMHC forecasted projection.
Source: CMHC, Better Dwelling.
BC real estate is expected to see a much longer recovery timeline than the rest of Canada’s markets. In the upper bound, prices are still down 9.52% at the end of 2022, when compared to this past March. In the lower bound, prices are still down a huge 21.74% at the end of 2022. The prolonged correction is likely expected due to new housing starts not slowing down as much as other provinces.
Quebec Real Estate Prices May Actually Rise By 2022
Quebec real estate prices aren’t all that high, and consequently they aren’t expected to see very big declines. In the upper bound, the average sale price is projected to bottom at $328,076 in Q3 2020, down 3.70% from last year. In the lower bound, prices are expected to bottom at $309,882 in Q3 2021, down 9.04% from last year. Prices in the province are seeing some of the biggest gains in the country currently, but still lags those seen in Ontario and BC.
Quebec Real Estate Price Forecast
The average sale price of Quebec real estate, and the CMHC forecasted projection.
Source: CMHC, Better Dwelling.
Quebec real estate is one of the few markets that could see price growth potential by the end of the forecast. In the upper bound, the average price is actually up 4.57% from levels this past March. In the less optimistic lower bound, the forecast exits with prices still 6.65% lower.
The price forecasts have a fairly large spread between the upper and lower bounds. The spread will tighten as more data points become clear. The biggest takeaways are prices aren’t expected to see much of an impact until later this year. This is most likely due to mortgage deferrals expiring, and the long-term damage becoming more well known.
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If that’s what the CMHC is willing to say out loud, imagine what they’re saying behind closed doors.
They’re probably saying “please dear god, why won’t young people wait for a little bit so we can clear a little risk first.”
I’m a home owner. I wouldn’t buy in this situation, because of the irrationality of it. The most important thing is when people don’t expect prices to drop, that’s when you get contrarian price action. In 2017, everyone was ready – so they didn’t.
ASPs. Remember lower end housing rarely drops if it does, so mid to high end housing is going to feel the most pain on this curve.
Low-end housing is now priced at old mid-level prices. The entire tide is lifted significantly.
Narrow commodity range. That’s actually worse for prices, because it means the lower end is being sold at a premium without regard to the actual value of the commodity – people just want it.
That’s the bitcoin 2017 MO. Never going to go up, just keep paying.
Yes, agreed. “Never going to give you up, never going to make you cry.” Rick Astley has a lot to say on the current state of the market…including the low end.
Our financial system is clearly broken. Despite Banks having to set aside 10 billion for bad loans, interest rates remain at their lowest levels in history.
Home prices will rise because they won’t stop printing money.
There’s more evidence we’re moving towards deflationary pressure, than inflationary. People just don’t understand the issues with deflation.
If you look at the un-adjusted CPI from the Bank of Canada it’s a -0.2 for April, which supports the view that the balance of pressures has turned deflationary.
https://www.bankofcanada.ca/rates/indicators/key-variables/
CPI numbers have been fake for over a decade. Real rates of inflation are well above what has been claimed.
Fake inflation numbers were used to hold down interest rates and justify inflating.
However make no mistake. While the banks made good money creating tons of crap mortgages to the upside, the loss will be socialized on the backs of suckers (i.e productive society) on the downside.
This is accomplished with more fake CPI numbers, money printing, “stimulus”, bail outs, market rigging, too-big-to-fail and other acts of Crony Capitalism.
Zalzon, is spot ON. Don’t listen or believe anything that is discussed in the mainstream media and news. If you are a seller and looking to downsize and liquidate the paper wealth you have accumulated in your house. Sell it at your earliest opportunity.
For those who are renters and have been saving and waiting patiently and not in the FOMO camp. Keep your powder dry and don’t worry about you not making anything on the savings etc.. btw, i am in that group for nearly 10yrs.
The housing markets around the world are cyclical and it is controlled by the Elitists with the help of their puppets who run the Central Banks who manipulate the interest rates and currencies to make it attractive to foreigners who hold USD, YEN, Euro, GBP currencies. So in the case of Canada, they lower the value of the Loonie so someone who is in China Middle East or even the US. These folks hold their savings in USD. Hence, for these group off buyers can buy a CA $1M dollar house for only US$ 720k.
And they can bid up the price substantially. The locals, realtors and bankers, acedemics, politicians, CMHC and all those talking heads on TV and blogs have no clue what is going on, they only look at everything from a domestic view and get mislead into thinking the house prices are going up.
Our opportunity will come and will be rewarded for having the patience and hang in there, our time will come 🙂