The 2024 Housing Market Outlook report from Canada Mortgage and Housing Corporation (CMHC) has been released and it could easily have been named the ‘2024 Housing Market: Look Out!’ The quick overview is CMHC expects weak economic growth in 2024 with a limited recovery through 2025 and 2026, based on a decrease in interest rates. The shortage of homes is a long way from being rectified, with CMHC predicting lower housing starts in 2024, with a potential, but slight, improvement over the next two years. “Supply challenges, notably the lagged effects of higher interest rates, mean that new construction in 2025–2026 won’t reach 2021–2023 levels,” says the CMHC report. “Higher interest rates made it challenging for builders and developers to get financing. This immediately slowed the construction of smaller buildings such as single-detached homes,” says the report. “We expect interest rate increases to slow apartment starts in 2024. The increased level of apartment starts in 2023 was likely the result of financing secured before interest rates began to rise.” CMHC expects demand for homes will push Multiple Listing Service (MLS) prices even higher as the year progresses, “a lack of short-term affordability improvement,” says CMHC, but it still expects a rebound in MLS sales, which is already happening in markets across the country, due to strong population growth. “Sales are expected to surpass the past 10-year average levels but remain below the record levels of 2020/2021,” says the agency’s report. “This is reflective of decreased housing affordability.” And don’t expect any kind of reprieve in the rental market. “Despite more rental completions, growing demand for rental homes will not be met because the cost of homeownership will lead households to stay in rental housing. Rents will rise and vacancy rates will fall,” says CMHC. As an acknowledgement there is no ‘Canadian housing market’ CMHC says every region tells a story. The Prairie provinces are expected to lead the country in rates of sales growth and more affordable housing, based on a strong economic outlook. “This attracts homebuyers and job seekers, leading to increased home construction with fewer constraints on skilled workers,” says the report. Ontario and BC, homes to Canada’s most expensive housing markets, will lead the nation in the decline in national housing starts for 2024. “High home prices will make certain home types unaffordable, while developers may struggle even with apartment construction because of supply-side challenges, particularly financing costs,” says CMHC. A different story in Québec, where housing starts are expected to grow more robustly, compared to those in other regions, “... as they realign with fundamental levels but remain below post pandemic levels,” says CMHC. “Québec experienced a sharp decline in new home construction in 2023, before other provinces did.” The Atlantic Region is due to stabilize, says CHMC. “The pressure on new home construction due to unusually strong migration in 2022– 2023 will ease. Housing starts in certain provinces will remain historically robust but will realign more closely with weaker population growth over the forecast period.”
The 2024 Housing Market Outlook report from Canada Mortgage and Housing Corporation (CMHC) has been released and it could easily have been named the ‘2024 Housing Market: Look Out!’ The quick overview is CMHC expects weak economic growth in 2024 with a limited recovery through 2025 and 2026, based on a decrease in interest rates. The shortage of homes is a long way from being rectified, with CMHC predicting lower housing starts in 2024, with a potential, but slight, improvement over the next two years. “Supply challenges, notably the lagged effects of higher interest rates, mean that new construction in 2025–2026 won’t reach 2021–2023 levels,” says the CMHC report. “Higher interest rates made it challenging for builders and developers to get financing. This immediately slowed the construction of smaller buildings such as single-detached homes,” says the report. “We expect interest rate increases to slow apartment starts in 2024. The increased level of apartment starts in 2023 was likely the result of financing secured before interest rates began to rise.” CMHC expects demand for homes will push Multiple Listing Service (MLS) prices even higher as the year progresses, “a lack of short-term affordability improvement,” says CMHC, but it still expects a rebound in MLS sales, which is already happening in markets across the country, due to strong population growth. “Sales are expected to surpass the past 10-year average levels but remain below the record levels of 2020/2021,” says the agency’s report. “This is reflective of decreased housing affordability.” And don’t expect any kind of reprieve in the rental market. “Despite more rental completions, growing demand for rental homes will not be met because the cost of homeownership will lead households to stay in rental housing. Rents will rise and vacancy rates will fall,” says CMHC. As an acknowledgement there is no ‘Canadian housing market’ CMHC says every region tells a story. The Prairie provinces are expected to lead the country in rates of sales growth and more affordable housing, based on a strong economic outlook. “This attracts homebuyers and job seekers, leading to increased home construction with fewer constraints on skilled workers,” says the report. Ontario and BC, homes to Canada’s most expensive housing markets, will lead the nation in the decline in national housing starts for 2024. “High home prices will make certain home types unaffordable, while developers may struggle even with apartment construction because of supply-side challenges, particularly financing costs,” says CMHC. A different story in Québec, where housing starts are expected to grow more robustly, compared to those in other regions, “... as they realign with fundamental levels but remain below post pandemic levels,” says CMHC. “Québec experienced a sharp decline in new home construction in 2023, before other provinces did.” The Atlantic Region is due to stabilize, says CHMC. “The pressure on new home construction due to unusually strong migration in 2022– 2023 will ease. Housing starts in certain provinces will remain historically robust but will realign more closely with weaker population growth over the forecast period.”
