A new report by TD sheds light on the troubling signs becoming apparent in the market
By the first quarter of 2023, the average home price across Canada could fall anywhere between 20% and 25% from its record high seen earlier this year, according to a new report by TD Bank.
This would wipe out a significant chunk of the price gains seen over the past two or so years – essentially bringing prices to more reasonable levels despite being the greatest decline since the late 1980s, TD said.
“Our forecasted decline in national home prices would only partially retrace the 46% run-up over the course of the pandemic,” said TD economist Rishi Sondhi. “As such, our forecast can be more aptly described as a recalibration of the market, instead of something more severe.”
Data from the Canadian Real Estate Association is pointing to the beginnings of this downward trend, with prices declining by 5% annually to reach $629,971 in July.
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Fortunately for the market, the impacts will be far from the dreaded housing crash, mainly due to the palliative effects of much stronger consumer purchasing power, pandemic-era savings, and moderated activity due to depleted inventories in housing markets.
“Our forecasted peak-to-trough decline in Canadian home sales falls well within the range seen in past housing downturns and was surpassed by the global financial crisis sales tumbled by 38%,” Sondhi said.
