Where Are Canadian Housing Prices Headed?

Ben Rabidoux explains where he thinks housing prices could be headed in Canada.

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But the big question is where do you think it’s going? And I hate to put you on the spot like that, but of course our listeners and viewers are thinking, “Okay, how does this all shake out over the next three to five years? Do we hit a bottom in the next 12 months?

Do we start trending up in some of the geographical areas?” What’s your broad thinking on that without getting too specific?

Well, I mean, for starters, we gotta acknowledge that there is no kinda Canadian housing market. It’s a really weird time in Canada. you have parts of the country where housing is still at peak today and, and accelerating at a 10% annual clip, right?

And so that’s again, parts of Quebec, Saskatchewan, parts of Manitoba. Um, and at the same time, you’ve got parts of Southern Ontario where prices are off 30% from peak, 30%.

And some houses, specific houses down 50.

Absolutely. We are seeing power of sale that are down 50% from their prior sale price. That’s not entirely uncommon anymore, which is, I mean, I mean, just a wild stat.

So you know, it’s really hard to make definitive statements when you, you’re looking across the country and you’ve got such geographic diversity in, in, in the trend. What I would say though, is from a high level, what generally tends to mark sort of the lows in cycles is, I believe, on more on the supply than the demand side. I always come back to, you know, if you’re trying to predict one thing or the other, it’s way easier to predict supply than it is to predict demand. Demand, there’s too many moving parts. You’re dealing with psychology and interest rates and who the heck knows? But you know what supply’s gonna look like ’cause we have great data on what’s currently being built.

So the one thing I, that I’ve been highlighting is if we look at, you know, the, the the hardest hit parts of the, of the country, Southern Ontario and BC, you have building permits for single family that are now the lowest in 50 years, five zero. We’ve never seen.

And think about our population base difference since then. Like, it’s absolutely crazy, it is, it is another crazy stat. Like, 50 years with a way bigger population

Right, Right, so we can see for certain that there will be less new supply being added into this market over the next year or two, three. Um, and so we’re already starting to see that active listings, so homes currently for sale are starting to roll over in Ontario and BC. Um, I believe a lot of that’s related to the fact that you’re, a lot of builders are not bringing as much new supply to the market.

Um, that’s a trend that’s probably gonna continue. And so I think, you know, I’m not bullish on house prices in Southern Ontario and BC, but it’s also hard to get, uh, extremely negative when you can see that the supply is gonna start to tighten. And I’m talking specifically single family, right? So I think, um, the next few years are just gonna frustrate both the bulls and the bears, ’cause I think it’s just gonna be a market that grinds.

And this is very similar to the last big housing cycle in the late ’80s where you had an initial kind of two, three-year drop, and then prices just ground sideways for years. And, and in real terms they were negative.

And I think that’s gonna be what ultimately will end up restoring some of the affordability, is we just get like a number of years where prices are just, just don’t do anything.