Many Canadian economists recently conducted a survey on interest rates in housing values and its impact on Canadian real estate. They believe that the promise of low-interest rates to date attracts more buyers keeping the high price intact. But, despite the current situation of the market, economists expect that a modest increase in housing values in Canada's largest market will only increase in 2021.

Detailed information can be found in a Finder.com report, which conducted a survey featuring 19 Canadian economists.

The survey states that 68% of the economists believed that the current interest rate would be active until 2023-2024. This inference was released way ahead of publicizing the latest policy rate decision, which was to be aired on December 9 by the Bank of Canada.

Positive view on housing affordability was reported to be 44% in July 2020, whereas the current survey shows it to have reduced to zero according to economists. Moreover, experts have predicted that there will only be a 3% average growth in the residential housing values with the highest gain of 5% in Toronto during spring 2021. Nevertheless, experts have agreed that the low-interest rate situation but the high price could change in 2021.

Chief economist and head of market analytics for CoStar Group, Carl Gomez, has analyzed how the interest rates have impacted during the lockdown. He said that the demand that increased when the interest rates were lower got spent by the end of the first lockdowns. He further states that the restrictions imposed on immigration led to reduced population growth, mortgage deferral programs being ended, employment troubles, and the under-confidence of consumers have affected the housing market, especially in high-density condos.

However, Gomez further states that there will be strong demand from urban buyers for single-detached homes in the suburban and exurban areas with equity.

The Managing Director and Deputy Chief Economist of CIBC, Benjamin Tal, agrees with Gomez where the condos might have some softening in the near future. Indeed he is expecting to see a “solid spring market” in the coming days.

Moshe Lander is a Senior Lecturer at Concordia University who believes that the housing markets will be experiencing continued interests as people would reconsider their housing options since they are shifting to work from home.  

Lander said that the predictions with respect to real estate keep changing due to the impending collapse. The post-pandemic world will have changed immensely as more and more people accept the choice of work and the home being together. These changes will also reflect on their decision on reconsideration of living spaces in the future.
The Canadian economists expect that Canada's major markets will experience a modest increase in housing values during spring 2021.

A panel of eleven members has forecasted an average increase of 3% in the spring market peak, where the highest among them would be tied between Toronto and Winnipeg with a rise of 5%. Vancouver and Hamilton would be following them right behind with an overall increase of 4%. Altogether, the variation will not be much between markets as each city in the survey is expected to have the property prices increased by an average of 3%.
RE/MAX has recently forecasted that Toronto home prices will rise to 6% in 2021. This is according to the 12% hike seen in the first ten months of this year compared to the 2019 average.

 

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