CMHC Housing Market Outlook 2024 & Beyond

CMHC Housing Market Outlook – Insights and Projections

The recent housing forecast released by the Canada Mortgage and Housing Corporation (CMHC) has sparked conversations across the country.

According to their newest report released today, the CMHC says that home prices might rise to levels similar to those in early 2022 by next year and could set new records by 2026.

In line with our previous insights on the Canadian real estate market outlook, particularly focusing on the GTA market, where the shortage of homes persists amidst a growing influx of newcomers and first-time homebuyers, the CMHC’s latest report resonates with our observations.

The cyclical nature of the real estate market dictates that it experiences peaks and valleys over time. When prices dip, it’s often followed by a recovery period typically spanning 2-3 years, ultimately leading to the establishment of new peak prices surpassing previous records.

Over the past four years, we’ve diligently tracked home sales and prices, consistently sharing our findings through monthly market performance reports. Through these reports, you can see a discernible pattern depicting the cyclical nature of the market, characterized by peaks and valleys. Moreover, the trajectory is beginning to hint at an upward trend, reaffirming our anticipation of future price hikes.

Let’s explore what the CMHC forecast entails for home buyers, home sellers, renters, and the broader housing market landscape.

GTA Monthly Statistics as per TRREB Reports
 Avg. PriceHome Sales
 20212022202320242021202220232024
Jan$966K$1,242K$1,036K$1,026K (Bottom)6,8875,5933,0834,223
Feb$1,044K$1,334K (Peak)$1,096K$1,108K10,9259,0284,7545,607
Mar$1,097K$1,298K$1,108K$1,121K15,62710,8646,8766,560
Apr$1,090K$1,250K$1,153K13,6137,9417,501
May$1,108K$1,210K$1,195K11,9027,2298,997
Jun$1,089K$1,145K$1,182K11,0526,4247,481
Jul$1,061K$1,073K$1,118K9,3384,8715,250
Aug$1,070K$1,079K$1,082K8,5505,5915,281
Sep$1,135K$1,086K$1,119K9,0105,0084,642
Oct$1,155K$1,087K$1,125K9,7434,9304,646
Nov$1,162K$1,079K$1,082K8,9794,5344,236
Dec$1,157K$1,051K$1,084K6,0133,1173,444
Annual$1,095K$1,190K$1,126K$1,093K121,63975,04765,93616,347

Supply and Demand Dynamics

Despite an uptick in rental housing availability in 2023, the CMHC foresees a challenge in matching supply with burgeoning demand in the years ahead. This imbalance could lead to increased rents and decreased vacancy rates. Chief economist Bob Dugan noted that demanding financing conditions might impede home builders from embarking on new rental projects in 2024. Nonetheless, there’s optimism on the horizon; the CMHC anticipates a shift, fueled by lower interest rates, governmental support, and policies advocating denser urban living, potentially rendering more projects feasible by 2025-2026.

Affordability Concerns

Affordability remains a significant concern within the housing market. With declining mortgage rates and robust population growth since the 1950s, there’s an expectation of a resurgence in home sales and prices over the next three years.

Despite the considerable dip in home sales and prices from their peaks in early 2021, the CMHC notes a growing pool of potential homebuyers owing to population growth, augmented savings, and increased incomes.

Anticipating Market Rebound

As mortgage rates decline and economic uncertainties diminish in the latter half of 2024, the CMHC foresees a revival in buyer activity. This resurgence is likely to be fueled by a shift in demand towards more affordable housing options across Canada.

Sales and Construction Outlook

While sales activity from 2025 to 2026 is projected to surpass the past 10-year average, it’s expected to fall short of the record levels seen from 2020 to 2021, primarily due to housing affordability challenges. Housing starts in Canada are anticipated to dip this year before rebounding in 2025 and 2026, influenced by higher interest rates affecting builder new construction projects.

Regional Variances

Ontario and B.C.: These provinces are expected to drive the decline in national housing starts for the current year, with challenges such as financing costs potentially hindering apartment construction.

Prairie Provinces: Conversely, the Prairie Provinces may experience growth in housing starts due to their relatively affordable home prices and stronger economic outlook, attracting both homebuyers and job seekers.

Quebec: While housing starts are predicted to increase in Quebec, they are anticipated to remain below pre-pandemic levels following a sharp decline in new construction last year.

Atlantic Region: This region may experience less pressure on new home construction compared to recent years, as migration patterns normalize, aligning more closely with weaker population growth.

In conclusion, the CMHC report provides valuable insights into the current state and future trajectory of Canada’s housing market, highlighting both opportunities and challenges for various regions and stakeholders.

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