Canada's Housing Shortage Hitting Breaking Point

This week is a jam packed episode that really underscores the housing crisis in Canada is hitting unprecedented levels. With projections from the Canada Mortgage and Housing Corporation (CMHC) indicating a severe shortage of up to 4 million housing units by the year 2030, this crisis is expected to have far-reaching consequences, including a staggering 89% increase in housing prices over the next 6 years, according to CMHC estimates. That puts the average home price at an eye-watering $2,295,000 by 2030. To put this into perspective, you would need to save $181,000 per year until 2030 just to offset the difference in price from today’s number.Although it may seem impossible, these projections come against the backdrop of a relatively modest 15% increase in housing prices over the past six years. However, the past four years have witnessed a more significant surge, with prices climbing by 36%, harking back to the alarming 84% increase observed from 2010 to 2016.GDP data offers insights into the country’s overall economic health and depending on how you look at it, two out of the last three quarters have seen a decline in GDP and the last quarter having contracted. This signals that the interest rate hikes imposed over the las 18 months are beginning to take effect. Household spending has hit a two-year low, and residential investment has plummeted for five consecutive quarters. While it has returned to pre-COVID levels, new home construction has dropped by 8.2%.While building permits are at 20 year lows, developers with imminent projects have moved forward. In Greater Vancouver, inventory has increased by 11% in the first two weeks of September, reaching its highest level in three years, potentially indicating a more favourable market for frustrated buyers in the short run. In terms of rate hikes, expectations have shifted significantly. Initially, there was a nearly 100% probability of a 0.25% rate hike by January 2024, but this has now dropped to around 40%. The markets now believe that Canada may have reached a rate hike peak, barring unexpected large increases in inflation reports. The fear is that a contracting GDP may lead to a recession, with the potential consequences yet to be fully understood. So much to unpack in this one!_________________________________ Contact Us To Book Your Private Consultation:📆 https://calendly.com/thevancouverlifeDan Wurtele, PREC, [email protected] Dash PREC778.898.0089 [email protected] www.thevancouverlife.com