Posthaste: Hoping for another housing boom? You might have years to wait
Home prices soared during the pandemic housing boom, but it could be another four years before they return to those levels, say economists.
“While resale prices have found a floor across most markets, it’s still a long way back to the 2022 highs — as we’ve often said, think years not months,” Robert Kavcic, a senior economist with BMO Capital Markets, wrote in a recent report.
The aggregate price of a home in Canada rose 3.8 per cent year over year to $819,600 in the fourth quarter of 2024, according to the Royal LePage House Price Survey out today.
The real estate company expects prices to rise another 6 per cent by the end of this year as further Bank of Canada interest rate cuts and new mortgage rules that make home-buying more affordable bolster the market.
BMO forecasts more modest gains with the national benchmark home price rising 4 per cent and sales increasing 12 per cent.
“Activity and prices have recently improved alongside Bank of Canada rate cuts, and that moderate upward momentum should continue through 2025 — but we don’t expect another exuberant takeoff,” said Kavcic.
BMO forecasts that even with a stable economy, steady wage growth and neutral interest rates, home prices won’t return to 2022 levels until about 2029.
A seven-year gap between peaks is in line with some of the longer price corrections in the past, as this BMO chart shows, though not as long as the bear market of the 1990s.
The reason for the lengthy recovery is secular forces have changed since the boom days, he said.
Coming out of the pandemic a number of “bullish forces” peaked in the housing market. Just as millennials were entering their home-buying years, demand was further stoked by an immigration boom — and interest rates reached
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