Low mortgage rates and heightened buyer demand could add more than $275,000 to the average Toronto region home price by the end of 2023.
The new forecast published this month by the Canada Mortgage and Housing Corporation (CMHC) provides a glimpse into what the housing market might look like in a post-pandemic world with a strong economic recovery and resumption of immigration.
In its Spring 2021 Housing Market Outlook, the CMHC provided an average home price growth forecast for markets across Canada for each year up to 2023. Using the end of 2020 as a benchmark, the Toronto region could see its average sale price rise from $929,673 to $1,205,400 by the end of 2023.
That’s a gain of over $275,000 over the four-year period. If this forecast comes to fruition, it would mean that the average resale price of a Toronto region home would have appreciated by $385,856 from the pre-pandemic period at the end of 2019 up to the end of 2023.
The CMHC uses a low and high-end forecast range for its home price predictions. To reach the high-end prediction of $1,205,400 by 2023, CMHC Senior Specialist Dana Senagama writes that employment levels would need to return to pre-pandemic levels by 2022 with immigration levels ramping up significantly from their 2020 lows.
“Downside risks [to the price forecast] include unexpected changes to borrowing conditions and a persistent pandemic with recurring lockdowns,” she wrote in the report.
Meantime, Senagama wrote that the resale market could exceed even the CMHC’s high-end expectations if mortgage rates remained lower than anticipated and demand for homes from newcomers were to surge.
The CMHC has caught some flack over the last year for its grim and, ultimately, very inaccurate Canadian home price forecast published at the depths of the pandemic’s first wave. At the time, the agency said that the average Canadian home price could fall between nine percent and 18 percent over the subsequent 12-month period.
Since then, it’s changed its tune and dramatically revised its forecast into much more positive territory for the coming years.
