The housing correction picks up pace

The Canadian housing prices will fall by ~25% from recent all-time highs by the end of next year, according to a new report from Desjardins.

Why it matters: This drop will “bring some sanity back” to Canadian real estate which in turn would help ease inflationary pressures.

  • Desjardins previously projected a 15% drop but explained that weaker-than-expected housing sales and bigger-than-expected interest rate hikes would push prices down further.

Yes, but: Just because prices fall doesn’t mean it will be affordable to buy a home. 

  • Even with a 25% drop, housing prices will still be higher than they were before the pandemic in many parts of the country.
  • A fall in prices could actually make finding affordable dwellings harder for renters as lower house prices have contributed to a surge in rents.
  • And for those who do still want to own, higher interest rates have made mortgages more expensive (and more difficult to qualify for).

Bottom line: It’s going to take more than a 25% drop in home prices for the average Canadian to be able to buy into the market.