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Vancouver, Calgary, Toronto Housing Market Outlook 2024-2026

In this episode, I want to share the latest housing market outlook report released by the CMHC, Canada Mortgage and Housing Corporation.


We will start with a few general highlights for the national housing market.


Then we’re going to dive into the outlook for the Vancouver, Calgary and Toronto housing markets, that’s where things get really interesting.


There are 5 highlights for the overall Canadian housing market.


#1 Economic Growth Outlook


Weak economic growth in 2024.  No surprise there.  


In fact, if they don’t cut the interest rate soon, we will be in economic trouble.


CMHC is projecting a momentum regain in the next 2 years as interest rates come down.


#2 Housing Starts Prediction


Housing starts are expected to be low in 2024.


Of course, pre-construction sales have been slow since the middle of last year.


And this year, we have only seen a handful of pre-construction project launches.


Constructions cannot start when sales are not good.


The consequences of low housing starts will show up as supply challenges in the next 2 years down the road.


#3 MLS Price Forecast


CMHC thinks that demand is going to push MLS prices beyond previous peak levels.


When we get into the specific sub-markets, you will see how high they think prices can go and by when.


#4 MLS Sales Rebound


CMHC foresees demand coming from strong population growth.


Sales are expected to surpass the past 10-year average levels but will remain below the record levels of 2020 to 21.

#5 Rental Housing Demand


It is getting more and more expensive to own, so more people will be staying in rental housing.


Even though there are more rental completions, that won’t be enough to meet the growing rental demand.


Rents will rise and vacancy rates will fall.


I do agree with these 5 general trends.  They are pretty much in line with my observations in the market.


Now, let’s dive into the Vancouver, Calgary and Toronto markets.


Let’s start with the most expensive market in Canada.


#1 Vancouver


CMHC foresees a robust recovery in Vancouver.


They expect the average resale price to grow in 2025.


And by 2026, the average resale price in the Lower Mainland will surpass all-time highs last seen in early 2022.


Yup, so they think that the most expensive city in Canada is going to get even more expensive.


Let’s take a look at the price prediction graph.


Back in 2021, the average price in Vancouver was around $1.1M.


One year later, it spiked up to almost $1.2M.


After the rate hikes, it came back down to around $1.13M.


This year, 2024, we are halfway through, prices are more or less flat.


CMHC comes up with a lower bound and an upper bound prediction.


There are a few factors that could drive prices down.


One, interest rates continue to stay high for a prolonged period of time.

Two, the government limits population growth.


Three, the government implements new policies to constraint the resale market.


I think these factors all make sense, the question is how likely they are going to happen.


What about the factors that drive prices up?


One, earlier or larger than expected rate cuts.


Two, higher than expected immigration inflows.


Three, new policies meant to encourage development.


Now, let’s go back to the prediction graph.


CMHC thinks that the lower bound for this year is for prices to continue to stay flat, more or less the same as last year’s levels.


The upper bound is an almost 7% increase from last year.


That’s a pretty aggressive prediction, probably only happening if there are multiple rate cuts in the next few months.


2025, the lower bound is slightly higher than 2023, which essentially means prices continue to stay flat.


The upper bound though, would be at $1.3M, which is almost 10% higher than the peak in 2022.


Going into 2026, lower bound, continues to stay flat.


Upper bound, spikes to $1.4M.  If that’s the case, prices in 2026 would be almost 18% higher than the peak in 2022.


So CMHC is basically saying in the worst case scenarios, prices will continue to stay flat.


But in the best case scenarios, prices can surpass the previous peak by 18%.


I was actually a little surprised to see this kind of predictions from CMHC because they are typically more conservative.


Another interesting point in the report is that lower priced homes will be the main driver for the recovery from a slow market.

Those are the homes that are further away from the city core, in the North and South Fraser regions.


The buyers for lower priced homes are the most sensitive to mortgage rates.


Even a small drop in the mortgage rate can affect their budget.


As mortgage rates start to come down, people who are waiting on the sidelines would move back into the market.


When the market becomes very active again, it will drive sales in all home types.


That’s Vancouver.


Now let’s take a look at:


#2 Calgary


Calgary has been the hottest market in Canada in recent years because of the price point.


Prices are 60% off from Vancouver.


Average prices are only sitting at around $550,000.


Let’s take a look at the prediction graph.


$500,000 in 2021.


$530,000 in 2022.


2023, prices continued to go up despite all the interest rate hikes.


2024, even with the lower bound prediction, prices are still going up.


This market seems unstoppable.


By 2026, if the best case scenario happens, prices would be up at $700,000, which is a 32% increase from 2022.


The report didn’t even mention any risk factors for Calagry.


They think that this market is just unbeatable.


Is it a good time to jump into the Calgary market now?

If there’s enough interest, maybe we can talk about that in future episodes.


If you want to learn more about Calgary, give me a like, comment below and let me know.


#3 Toronto


The second most expensive housing market in Canada.


One of the highlights in the Toronto market is the struggle that condo developers are going through.


Their material, labour and financing costs are all going up.


If they cannot raise prices, they can only shrink their profit margins.


In some cases, they would actually be losing money.


And not to mention that they are going to face strong headwinds launching a project into the market because most investors are hibernating.


So the trend going into 2025 will be a continual decline in new housing starts.


Developers won’t be building until they find a way out.


If the government sees this problem and they come up with new policies to encourage developers to build, that would be an upside factor for the market.


And of course, higher than expected population and income growth, larger than expected rate cuts would all be upside factors.


In terms of the downside risks, if interest rates continue to stay high and the economy is weak, more and more people would try to sell and listings would start piling up.


Let’s take a look at the prediction graph.


We saw the big jump from 21 to 22, then the big slide from 22 to 23.


Now that we are in 2024, prices are more or less the same as last year.


But CMHC thinks that the upside could be as big as an 8% jump from last year.


That would be highly dependent on when the first rate cut happens and how many we’re going to get for the remaining half of the year.


For 2025 and 26, the predictions are very similar to what we saw in Vancouver.


With lower bound prices, they would be more or less flat from now throughout to 2026.


With upper bound prices, by 2026, prices would be 18% higher than the peak in 2022.


What do you think about CMHC’s predictions?


Comment below and let me know.


The big announcement from the Bank of Canada is coming up on Wednesday June 5.


Would there be a rate cut or not?


It could be a crucial turning point for the housing market.



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