Housing Outlook: Testing the Foundation
December 09, 2022
|
Commercial Real Estate,
Economic Insights
- Keywords:
- housing market
December 09, 2022
|
Commercial Real Estate,
Economic Insights
The Canadian housing market is firmly in correction mode, and the adjustment will likely continue through 2023. Despite much debate in academic and media circles about the causes of the recent housing boom, our strong view through the pandemic was that underlying demographic and supply-side fundamentals gave way to excessive froth, fueled by too-low for too-long mortgage rates and investor expectations of never-ending price increases. The sharpest monetary policy tightening in a generation has broken market psychology, and the froth is getting cleaned up.
Our baseline forecasts for housing in 2023: Sales volumes are expected to bottom in the spring as the market more actively clears; downward price discovery will continue through the year; and the supply pipeline might actually get pulled back despite an ongoing push from policymakers.
Read more
The Canadian housing market is firmly in correction mode, and the adjustment will likely continue through 2023. Despite much debate in academic and media circles about the causes of the recent housing boom, our strong view through the pandemic was that underlying demographic and supply-side fundamentals gave way to excessive froth, fueled by too-low for too-long mortgage rates and investor expectations of never-ending price increases. The sharpest monetary policy tightening in a generation has broken market psychology, and the froth is getting cleaned up.
Our baseline forecasts for housing in 2023: Sales volumes are expected to bottom in the spring as the market more actively clears; downward price discovery will continue through the year; and the supply pipeline might actually get pulled back despite an ongoing push from policymakers.
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