Despite the economic turbulence being created by the United States, the outlook for Canada’s housing market is, generally, positive. While most of the forecasts were prepared before the current U.S. administration took office the threat of stiff, American tariffs was well established and has been taken into account.
The main concerns about the tariffs are a rekindling of inflation and the potential for a recession in Canada.
Bumpy Start
Canada Mortgage and Housing Corporation’s latest forecast looks ahead to 2027. It sees a slow and uneven improvement to economic conditions through this year with a return to more normal growth by the end of the forecast period. Key factors in CMHC’s outlook are ongoing reductions in interest rates by the Bank of Canada and a decline in immigration.
Falling Rates and Immigration Offer Key Relief
The housing agency expects there will be further rate cuts this year as the BoC works to mitigate any inflation or economic slowdown created by U.S. tariffs. Variable rate loans will see the biggest and most immediate impacts. Fixed rate mortgages are also seeing declines due to shrinking bond yields. Those lower interest rates and new mortgage rules are expected to release some pent-up demand. Many market watchers, including the big bank economists, agree.
Resale vs New
Falling immigration is expected to help build inventory in the resale market even as the new home market faces constraints. An overall slowdown in new construction is expected through the forecast period, largely due to a reduction in condominium apartment construction.
More Sales but Stable Prices
The increased inventory is expected to help keep price growth in check even though sales are forecast to increase. Well know housing economist Robert Hogue is projecting a 12% increase in resale transactions for this year, but sees prices appreciating by just 1.4%.