Canada Mortgage and Housing Corporation does not expect the country’s housing market to come off the boil until sometime in 2023.
In its Spring Housing Market Outlook CMHC projects the national average price of a home could climb as much as 14% this year, putting the high end of the agency’s estimates at nearly $650,000.
It is forecasting an average price of nearly $705,000 by the end of 2023. Those numbers may seem low, given that the Canadian Real Estate Association put the national average price at nearly $717,000 back in March.
The big “BUT” in all of CMHC’s estimates is, of course, the COVID-19 pandemic. The agency notes that the disease remains volatile and the economic recovery is uneven and uncertain. It says delays in rolling-out vaccines could prolong that uncertainty.
The agency also sees remote working arrangements as a key variable. If employers insist on bringing workers back to the office it could have a significant effect on the pandemic migration out of major centres to larger homes and properties in the suburbs and outlying communities.
CMHC cites rising mortgage rates as having a cooling effect on the market. It is holding its forecast for those increases to 2023. The Bank of Canada has brought its date forward into 2022. But U.S. interest rates are a key factor in the setting of Canadian rates and the Federal Reserve has indicated it does not foresee any increases until 2024.