Canadian Residential Real Estate Outlook — The Correction Continues, but Affordability Is Set to Improve in 2023

Despite taking a brief reprieve in August, home prices and sales are expected to continue their downward slide. This is largely due to the ongoing rise in interest rates and borrowing costs facing households. We remain of the view that those provinces that experienced the most pronounced pandemic gains will also see the most precipitous post-pandemic corrections. Chief among these are the Maritime provinces and the areas surrounding Toronto, Vancouver and Montreal. Commodity-producing provinces should fare better than most, as resource prices are set to fall further but remain above pre-COVID levels. There is a silver lining to our outlook, however. Affordability is poised to improve in Canada, with the largest advances likely in Edmonton, Calgary and Winnipeg. And affordability is slated to gradually improve in Ontario and Quebec but remain well below pre-COVID levels through the end of 2024. Overall, greater affordability should support a housing market rebound starting in 2024, although efforts to boost supply must be maintained to accommodate Canada’s fast-growing population without generating new froth.