Canadian Housing Market Reaching Tipping Point in 2021

Key Highlights

• Home sales expected to jump in 2021…ease in 2022
• Construction activity shifting to single-family homes

Canadian Home Sales to Shift from “Unsustainable” to Moderate by 2022

The Canadian housing market continues to push through the roof as low interest rates, demand for more space and annual price gains have reached more than 20% – 30% in some communities.

According to the Canada Mortgage & Housing Corp (CMHC.), home sales could well exceed 600,000 in 2021. Average home prices could also push as high as C$649,500, or $553,000, an increase of 14% from 2020.

CHMC Projections

“Economic conditions are expected to return to pre-pandemic levels by the end of 2023, if broad immunity to COVID-19 takes hold by the end of 2021,” said Bob Dugan, chief economist with CHMC.  “this includes the pace of home sales and prices, which we expect to see moderate from 2020 highs over the same period.

Here are CHMC’s “The Peak is Near” projections about the “unwinding” of the pandemic home sales frenzy:

• 2018 – home sales of 45,600
• 2019 – home sales of 489,900
• 2020 – home sales of 551,400
• 2021 – home sales projections – 602,300
• 2022 – home sales projections – 547,1000
• 2023 – home sale projections – 561,100

Tipping Point Coming for Canadian Home Sales

Due to Canada’s faster than expected economic growth from the pandemic, CHMC is predicting that Canada’s standard five-year mortgage will rise by 2022 while still remaining quite low compared to historical standards.

Likewise in the US, Canada’s unusually high savings rate during the pandemic will begin to fall as the economy opens up and people return to pre-pandemic spending.

Home Prices Expected to Continue Rising

Though CHMC predicts that sales volume will peak by the end of 2021, CHMC also predicts that home prices will continue to rise.  Average home prices could well go as high as C$704,900 by the end of 2023.

Thanks to Bloomberg

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