The average price of a Vancouver region home could tack on close to $400,000 in value by 2023 as the market continues to adjust to rock-bottom mortgage rates that will provide fuel for significant appreciation in the years to come.
That’s according to the new Spring 2021 Housing Market Outlook published last week by the Canada Mortgage and Housing Corporation (CMHC) which contains price forecasts up to 2023 for 17 of the country’s largest housing markets.
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The housing agency uses a low and high-end forecast range for its home price predictions. At the end of 2020, the average home price in the Vancouver region sat at $1,008,688, having climbed by more than nine percent since 2019 to crest the million-dollar mark.
The high end of the CMHC’s forecast range for 2023 has the average price rising to $1,395,000, an increase of $386,312, or 38 percent, from the 2020 level.
However, if the market ends up following the lower end of the CMHC’s forecast range, prices will still remain above the million-dollar mark from 2021 to 2023, but won’t come close to scaling the heights of the upper-range of the forecast. This scenario could come to fruition if mortgage rates rise faster than anticipated and keep more buyers out of the market.
CMHC Senior Analyst Braden Batch wrote in the report that, in most scenarios, the issues facing the Vancouver housing market in the post-pandemic world of the early 2020s will look awfully similar to those affecting the market in the pre-pandemic period.
“Vancouver’s housing market will adjust to reopening borders and development in fundamentals over the next three years,” he wrote.
“Buyers will face higher prices and see their budgets decline, while a flow of newcomers will place pressure on the rental market. In essence, the market will face the same sorts of affordability and housing shortage challenges that preexisted the shock of COVID-19,” he continued.
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.