But how low prices will go depends on the part of the country where you live, with a recent report by Desjardins Economic Studies suggesting that the cities with the highest growth rates in the pandemic are now experiencing the biggest declines. Major Canadian housing markets, including Toronto and Vancouver, saw lower sales activity and even lower prices in April and May as the Bank of Canada began raising interest rates over the past three months.
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This “colder wind,” as RBC economist Robert Hogg called it in a report last week, is expected to continue to push housing values down from the highs of the pandemic era as demand dwindles and time is given. in housing stocks for reconstruction. The story goes on under the ad Randall Bartlett, chief executive of Canadian Economics at Desjardins, told Global News that the rate hike was “the pinnacle of the real estate bubble that developed during the pandemic.” The Desjardins report, published last week, predicts that from the peak of national housing prices in February this year until the end of 2023, the average selling price in Canada will fall by 15%. Almost all markets are expected to see some declines, but some could see the value erode faster. At Maritimes, for example, prices in Nova Scotia and New Brunswick are expected to fall by 20 percent over this time frame. Ontario and Prince Edward Island could see a drop of 18 percent, with British Columbia giving up a drop of up to 15 percent. Desjardins predicts that every province will see falling house prices between the recent peak and the end of 2023. World News The story goes on under the ad Markets that saw the highest price increases in the last two years, when interest rates were low and the bourgeoisie left the big cities, are now going to see the biggest decline in home value, Desjardins predicts. “Some markets will go down to that balance faster than others. “And the corrections will be bigger in some places,” says Bartlett.
Prices in Maritimes, communities around the GTA are going to fall
Royal LePage COO Karen Yolevski tells Global News that while national trends may be helpful, the Canadian housing market is really made up of individual “micro-markets” and each follows its own path. “It simply came to our notice then. In some areas there are still many offers on homes. “Some people see a little bit of this price restraint,” he explains. Desjardins expects counties that saw prices rise more modestly during the pandemic – including Alberta, Saskatchewan, Newfoundland and Labrador – to fall less by the end of next year. The story goes on under the ad Large cities such as Montreal, Toronto and Vancouver are likely to have a smaller decline, in part due to the steady demand associated with their status as immigration hubs. But in markets such as Nova Scotia and New Brunswick, where prices rose nearly 70 percent from late 2019 to the February high, there is much more value to be given, says Bartlett. Trending Stories
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The start of the pandemic saw many workers leave the big city and move further, either in search of a more affordable housing market with more space or closer to friends and family. 1:57 There are no signs of cooling in the NB housing market as the influx of population continues There are no signs of cooling in the NB housing market as the influx of population continues Now that many workplaces across Canada are starting to call employees back into the office, on a permanent or hybrid basis, the reverse could be true. “Our expectation is that not only will the higher interest rates drive these markets down, but also the fact that people will get back to work somehow,” says Bartlett. The story goes on under the ad Ontario itself has become a miniature of this national trend, Bartlett says, as residents working in the greater Toronto area moved to work remotely in more affordable communities for the same salary. As a result, Desjardins predicts that cities within hours of Toronto – including Bancroft, Windsor-Essex and Tilsonburg – are at risk of more than one withdrawal over the next 18 months. Desjardins expects cities around Toronto to see the sharpest drop in house prices in Ontario between February 2022 and December 2023. Desjardins Economic Studies But as the pandemic we hope weakens, not every worker will necessarily return to the status quo. Yolevski tells Global News that buyers are at a “bit of a dead end” right now as they wait to see not only how high interest rates will go up, but also what kind of lifestyle is possible for them after the pandemic. The story goes on under the ad “There are some buyers on the sidelines right now who are waiting to plan their next step. “Some of them are also wondering where they can live in the long run.” Bartlett agrees and says he expects the power of maintaining remote or hybrid work arrangements to help isolate falling prices in smaller communities. 2:00 House Rates in Kingston, Ont. house prices in Kingston, Ont are starting to relax. begin to cool While Desjardins expects every province to see at least moderate price declines, Bartlett says the forecast requires correction, not collapse. The story goes on under the ad No housing market is likely to see prices fall below pre-pandemic levels, he says, calling the forthcoming fall a welcome return to “equilibrium” for younger Canadians and lower-income households left on the sidelines. house for years. “There are some positives that come out of this,” he says.
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The big unknown is how high interest rates will go, Bartlett notes. He admits that Desjardins are more “pigeons” than most in their forecast, expecting the Bank of Canada to raise interest rates by up to 2.0 percent to 2.25 percent before being “constrained” by the housing market correction. But the central bank has warned in the past that interest rates may have to rise to as high as 3% to curb rampant inflation. Bank of Canada Governor Tiff Macklem said last week that he believes the economy can continue to handle rising interest rates and said the housing market is just one factor the bank is considering when assessing the impact of high interest rates. . 1:45 The economy can handle further interest rate hikes, says Bank of Canada governor The economy can handle further interest rate hikes, says Bank of Canada governor “What we could see a bigger correction is if the Bank of Canada decides it needs to do more to push back inflation,” Bartlett said. The story goes on under the ad Even though the correction is sharper than Desjardins’ predictions, Yolevski says homeowners who stress about the erosion of equity can find some consolation that house prices tend to rise over time. For the majority of buyers who first buy a home as a place to live and a second value store, it predicts that falling prices in the near future are unlikely to sink their investment. “If you are buying for shelter, you are buying for the long term, it is possible that these dives will not have such a big impact,” says Yolevski. “It is likely that we will continue to see a strong market over time.” © 2022 Global News, part of Corus Entertainment Inc.
