Over $2.5 trillion of opportunity ahead in Canada's purchase market: CEO

Two big factors are set to spur rising demand in the coming years, says broker network head

Over $2.5 trillion of opportunity ahead in Canada's purchase market: CEO

Shubha Dasgupta (pictured) calls it the $2.56 trillion opportunity: the potential amount of purchase activity that could be unlocked in Canada’s housing market in the coming years as younger Canadians come of homebuying age and immigration continues at a rapid clip.

Speaking at his company’s flagship Xchange event in Markham last week, the Pineapple Financial co-founder and CEO told an audience of mortgage professionals that those factors were set to spur resurgent housing and mortgage markets in the years ahead, despite the downturn that’s taken hold in recent times.

Between now and 2027, Dasgupta said an estimated four million Canadians would reach an age to enter the homebuying pool – “approximately four million Canadians that are becoming qualified, becoming eligible, that have saved up or have access to down payments, that have entered the workforce and are now looking to begin their lives, their journey, their stories, through homeownership.

“Four million potential customers that are… your potential success stories in your businesses and in your future,” he said.

Immigration set to provide a shot in the arm to Canada’s housing market

Meanwhile, with Canada having ramped up its immigration quotas in recent years and stabilized its target of 500,000 arrivals per year in 2025 and 2026, the housing market is also set to see an influx of fresh entrants and potential buyers among new Canadians, Dasgupta added.

“What does that mean for us? Statistically, 65% of new immigrants to this country will purchase a home within three years of arriving,” he said.

A study by Royal LePage conducted before the COVID-19 pandemic, in 2019, showed that 75% of newcomers arrive with savings to buy a home, with immigrants waiting on average three years to purchase.

Dasgupta estimated at upwards of $2.5 trillion the amount of purchase activity that those buyer cohorts could potentially generate in the near future, and added that demand has remained resilient even in the face of rising interest rates, a housing inventory crisis and rampant inflation over the course of the past 18 months.  

“We have a massive demand problem brewing under the surface. We have a demand crisis that has not been resolved through high interest rates, through soaring inflation, and all the other impacts and factors that you’ve seen that have had headwinds on our market and our industry,” he said.

“The demand is still right below the surface, and it’s just going to take a little bit to trigger that demand.”

Bank of Canada move could trigger surge in homebuying intentions

With that in mind, Dasgupta told attendees that it was time for mortgage agents and brokers to shift their focus towards that opportunity – particularly with just a small shift in the coming months set to release the built-up demand to market.

That catalyst is likely to be provided by the Bank of Canada, according to Dasgupta: “Not because they’re rising interest rates anymore – whatever they do in December, it doesn’t matter anymore. They’ve raised interest rates through the roof faster than we’ve ever seen in history. Another quarter point isn’t going to kill anybody anymore.

“The catalyst that we’re all waiting for – and that you need to share with all current clients – is when they officially announce that they’ve paused their interest rate tightening cycle, and they haven’t done that yet.”

While the central bank has held its benchmark rate steady in its last two announcements, it’s emphasized its willingness to hike again if economic trends don’t play out as expected – but leading economists have signalled in recent weeks that rate cuts are expected to arrive at some point in 2024.

Once the Bank signals its rate hikes are at an end, Dasgupta said, “that offers your clients that are looking to buy homes clarity and certainty. That clarity and certainty will bring them off the sidelines and back onto the playing fields.”

Meanwhile, the importance of keeping in touch with clients who purchased homes in recent years can’t be overstated, according to Dasgupta, particularly with higher interest rates and the cost-of-living crisis having caused significant stress for many Canadians.

“Don’t forget about the people that you… helped get mortgages over the last 12, 18, 24 months,” he said. “Make sure that you’re continuously in contact with them and talking to them about how their finances and their financial needs have changed over this period of time.

“How can you help provide them options, solutions, restructuring? There are many things that we can do for Canadians that purchased homes a few years ago.”

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