Canada’s Housing Forecasts for 2021: They’re All Over the Map

Canada's Housing Forecasts for 2021 They're All Over the Map

Anyone who knows something about market forecasts will tell you that they’re never completely accurate. But that doesn’t stop analysts from making predictions. Neither does it stop us from paying attention to their analysis. For example, the Canada Mortgage and Housing Corporation forecasted in May that the country’s housing market could fall anywhere from 9% to 18% in 2020 and the first half of 2021.

But nationwide sales jumped by 6.2% in August last year. It was a straight four-month gain since the markets froze during the height of the COVID restrictions. As of November, property prices rose by around 22%.  Of course, the federal housing agency stood by its predictions because it is not easy to predict the “peaks and troughs.”

Housing market forecasts can go either way as there are so many outside factors that impact it. Factors like the government’s increased spending to boost the economy, historically low-interest rates, and pent-up demand have been a positive development. But concerns about long-term unemployment, a drop in exports, mounting debts, and COVID could hinder the economy and affect housing prices in general.

Here’s the general summary of the different predictions for the housing market in 2021.

The Yea-sayers

The Canadian Real Estate Association (CREA)

CREA predicted a healthy year-end for the housing market in 2020 and forecasted an 11.1% increase in national sales from 2019 levels. With banks committing to keeping interest rates low until 2023, they predict home sales to increase by 7.25% in 2021. Also, the current balance between supply and demand is more likely to favour sellers.

RE/MAX Canada

RE/MAX brokers are predicting a healthy housing market for 2021. With Canadians increasingly working from home, there’s a growing demand for larger single-family homes, especially in less-dense cities or neighbourhoods.

Royal LePage

Royal LePage recently released its housing predictions for 2021, suggesting a positive outlook for the year ahead. Home prices are expected to rise by 5.5%, with an increase in demand for larger properties outside the city.

The Naysayers

Royal Bank of Canada

The largest bank of Canada has warned of property prices falling by over 30% in 2021. Their best-case scenario predicts a rise of 0.6% over the next 12 months.

Fitch Ratings

The company forecasts home prices to drop by 3% to 5% in 2021 but could rebound by 2022. The expected decline is likely to be triggered by unemployment, a falloff in immigration, a reduction in rent, and other factors.

Canada Mortgage and Housing Corporation

CMHC predicted average prices dropping by around 18% from pre-pandemic levels. It’s primarily based on having no sustainable basis for the housing demand given the unemployment figures and other economic uncertainties we’re likely facing.

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