The Canadian housing market correction has yet to run its course but it\u2019s gradually letting up. We think activity will hit bottom sometime this spring. Prices will level out a few months later\u2014provided the Bank of Canada is done raising interest rates. All told, our forecast calls for a 15% peak-to-trough decline in the national RPS Home Price Index. Roughly half of that is still to come.<\/p>\n
What happens next will disappoint housing bulls. We see the recovery phase starting slowly later this year as affordability issues and a weaker economy continue to hold back buyers. The pace should progressively pick up in 2024 once the economy clears its soft patch, inflation returns to target and the Bank of Canada reverses part of the massive rate increases it\u2019s imposed since March 2020. <\/p>\n
Booming immigration will fuel demand through the medium term (and possibly beyond), raising the odds of deep supply shortages in the future if homebuilding fails to pick up materially.<\/p>\n