It predicts a positive housing outlook long-term.
Housing markets across Canada could see a substantial price drop by early 2023, according to a new TD Bank report. Home buyer behaviour during the pandemic has shifted as people move toward remote work and away from city centres, causing a shock wave of price growth in smaller markets and fast deflation in major ones.
National average home prices fell by 9% this summer and are expected to fall another 20-25% by early next year. Ontario and B.C saw the most substantial price reduction, while Quebec saw affordability decline. Home prices remained stable in the Prairies and Atlantic Region.
Since February, prices for single-detached homes have dropped by 7% across the country. Condo prices have held firm, although the report predicts they could also fall by the end of the year, "providing some counterbalance to rapidly rising rents."
The overall housing market is expected to "recalibrate" by early next year. That means steep home price declines forecast primarily in B.C and Ontario. Quebec, Alberta and the Atlantic Region are expected to see more modest drops.
The report finds that investors played a major role in housing demand during 2021 and earlier this year. But their influence is waning as the housing market cools.
Supply should go up as people continue to change jobs, move towns and list their homes. The number of available homes across the country is on par with existing populations, which likely means more supply and lower prices based on demand. Population growth is predicted to stay healthy, which will keep the demand for housing high.