If you thought there already weren’t enough homes to go around, the Canada Mortgage and Housing Corp. (CMHC) wants you to know you ain’t seen nothing yet.
The CMHC says new homes being built could nosedive 32% this year if inflation sticks around and interest rates remain high. Even if inflation returns to a 2% target and interest rates begin to fall, the CMHC expects new home builds to still drop by almost 20%.
Why it matters: For housing to become affordable again, new home builds would need to reach at least 500,000 every year. This year, 211,000. That means prices are going … up.
The CMHC forecast:
Home prices will bottom out this year before rebounding to record highs by 2025.
A much higher level of new homes is needed if we want affordability to improve. Why is it happening:
It’s become much more expensive to build new housing in the past year due to a combination of higher interest rates, more expensive building materials, and a shortage of skilled workers. Higher housing costs will also cascade down to the rental market, Expect rents to rise significantly in every major city across the country.
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