Canada’s hot housing markets could be in for cold reality check

TORONTO, Aug. 25, 2020 /CNW/ – Don’t be fooled by the blazing housing markets of summer. Experts say we won’t see…

TORONTO, Aug. 25, 2020 /CNW/ – Don’t be fooled by the blazing housing markets of summer. Experts say we won’t see the full effects of the pandemic on Canada’s real estate market until later this year and the coming reality check could be a painful one, according to the latest report on Canadian housing and mortgage trends from

Mortgage deferral programs have helped offset the economic shock to households across the country. But the end of these programs in the fall could lead to an influx of properties on the market as some Canadians may no longer be able to afford their homes, triggering a slump despite low mortgage rates.

«It’s very hard to say right now if the blistering house price gains we’ve seen in the past few months will continue into the autumn and winter season. That’s when the market will really be tested,» said Justin Thouin, CEO of «The overall economy is continuing to struggle with elevated unemployment and businesses hesitant to spend. So far, hot housing markets like Toronto’s have shrugged this off, but there’s higher risk than normal now of that reversing.»

«Something that will continue to at least help housing prices will be ultra-low mortgage rates, which we expect will continue to stick around for at least a couple of years, if not more,» Thouin adds.

According to the Canadian Mortgage Rates and Housing Trends 2020 report:

  • Toronto’s 17% YOY increase in average selling prices in July is the result of a short-term demand shock from the housing market shutting down at the beginning of the pandemic
  • National mortgage rates could drop even further than the current 1.69% fixed rates we’re seeing. Rates are expected to remain low for years
  • A lull in immigration could significantly impact the Toronto and Vancouver markets
  • Negative interest rates, such as those implemented in Denmark, are not on the horizon for Canada

«There is too much volatility right now for the Bank of Canada to raise interest rates,» says Thouin. «But this doesn’t guarantee stability in Canada’s housing market.»


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