Market observers highlight the possibilities over the next few years
While market activity has decelerated significantly in recent months, several factors will act in concert to prevent an all-out housing crash, market observers argue.
Chief among these trends is the inbound flow of new residents, which is expected to accelerate as borders continue to reopen and pandemic restrictions ease. New targets from the federal government call for an estimated 1.3 million immigrants between now and 2024.
“If the rate of immigration and current changes in household formation behaviour persists, we would likely not have a housing crash over the mid- to long-term,” said Kate Choi, associate professor of sociology at Western University and director of the Centre for Research on Social Inequality.
“A greater number of households overall means that those households will need more housing. So that, in turn, will exert an upward pressure on housing prices.”
Policy makers should brace for this wave, said Aled ab Iorwerth of the Canada Mortgage and Housing Corporation.
“Immigration and smaller household sizes are all pointing to greater housing demand over the long term,” he said. “We need the housing supply to meet that demand.”
Specifically, a stronger focus on multi-unit complexes could benefit high-demand markets like Toronto, which is largely comprised of single-detached housing.
“The need is to try and redevelop these areas and bring in greater density to accommodate younger households,” ab Iorwerth said.