The Canadian housing market has taken center stage in recent years, dominating headlines and sparking conversations across the country. For many Canadians, the question that looms large is, “Is the housing market going to crash?” In this comprehensive blog post, we will dissect the data and insights to gain a clearer understanding of the Canadian housing market’s current trajectory and the factors that influence it.
One of the fundamental pillars supporting the stability of the Canadian housing market is the presence of strict lending guidelines. Mortgage lenders in Canada exercise a significant degree of caution when evaluating borrowers, creating a safety net that helps prevent delinquencies and foreclosures, which could potentially lead to a housing crash. These guidelines are further fortified by measures like the mortgage stress test and mandatory mortgage default insurance for buyers with less than a 20% down payment. This dual protection not only provides borrowers with flexibility in the face of rising mortgage rates but also ensures that lenders are safeguarded, enabling them to continue financing homebuyers.
Another key factor bolstering the Canadian housing market’s stability is the country’s robust population growth. Between 2016 and 2021, Canada’s population surged by an impressive 1.8 million people, surpassing the growth rates seen in other G7 nations. What’s even more fascinating is the government’s ambitious immigration targets, projecting an additional 1.3 million new arrivals by 2024. This rapid population expansion translates into unwavering demand for housing, stemming from both end-use buyers and investors alike. This high and sustained demand has historically acted as a robust safeguard, preventing sales and prices from plummeting for extended periods and further reinforcing market stability.
Yet, it is essential to acknowledge a significant challenge that could influence the market’s future: the substantial shortage in housing supply. According to the Canada Mortgage Housing Corporation (CMHC), the country needs to construct an additional 3.5 million homes by 2030 to achieve affordability for all Canadians. However, resolving this housing deficit is not a task that can be accomplished overnight. Constructing new homes takes time, and there are also delays associated with the government approval process. Addressing this shortage necessitates a combination of meticulous long-term planning and immediate action.
So, the million-dollar question remains: Should you make a real estate move now, or should you wait for a potential market downturn? While the data does indeed suggest that the Canadian housing market is currently well-positioned for sustained expansion, it’s crucial to acknowledge the presence of economic uncertainties that can unexpectedly alter the landscape. While we cannot entirely rule out the possibility of a housing crash, the odds seem to favor a resilient market.
As we collectively navigate these uncertainties, staying informed and seeking expert advice remain critical components in making well-informed decisions about the Canadian housing market’s future.
If you have any questions about this article please reach out to my office at 519-250-4848 and either myself or one of my team members will be happy to help!