Canada Mortgage and Housing Corporation (CMHC) expects home prices to bottom out this year, but they aren’t expected to fall below pre-pandemic levels.

That was the takeaway from the agency’s spring Housing Market Outlook, which said weaker growth and higher mortgage rates will continue to slow the housing market and overall economy throughout this year. This is precisely what the Bank of Canada (BoC) has encouraged through higher mortgage rates in order to help bring inflation down to normal levels (the target is 2% and the BoC expects this rate to be reached by the end of 2024).

CMHC’s Housing Market Outlook helps anticipate emerging trends in Canada’s new home, resale and rental housing segments. It also assists with forecasting impacts on affordability, supply and other housing challenges at the national and local levels.

Key highlights of the latest report include:

House prices and supply are expected to decrease between 20222023 across Canada. Price declines are expected to end sometime in 2023 before increasing for the remainder of the forecast period
Expect a significant drop in housing starts in 2023 with some recovery starting in 2023 to 2024 and onward
Rental affordability is set to decline due to demand outstripping supply, especially in Vancouver and Toronto
Prairie provinces expect more positive housing market conditions due to interprovincial migration and affordable homeownership
Ontario, British Columbia and Québec will see significant drops in housing starts compared to other regions

The Atlantic region’s economy remains stable and moderate relative to other regions


When it comes to Toronto, CMHC expects total housing starts to fall this year and then increase in 2024 and 2025. Higher costs (in terms of construction financing, labour and materials) will play a role in hampering construction activity.

Furthermore, the MLS average price in the Greater Toronto Area (GTA) is expected to decline in 2023 before increasing over the following two years. Entering homeownership will remain a challenge due to elevated price levels in the regionwhile, at the same time, rental market conditions will remain tight, resulting in continued strong upward pressure on rents.

Have questions about securing a new mortgage or renewing/refinancing an existing one in today’s market? Answers are a call or email away!