Falling Home Values Deepen Canada’s Housing and Economic Strain
CIBC economists describe Canada’s homebuilding economics as “simply broken,” with prices still too high for buyers but too low to make many projects viable. National home prices have returned roughly to their pre-pandemic trend, but benchmark prices sit about 28% below trend in Ontario and 13% below in British Columbia. Condo oversupply has driven the deepest correction, while adjusted estimates suggest actual housing starts are significantly below headline figures in the Greater Toronto and Vancouver areas.
Declining home values are weakening consumer spending, home-equity borrowing and construction employment, with Ontario and British Columbia facing the greatest strain. The price correction could reduce consumption by roughly $5,000 per household, while about 6% of mortgage holders may face payment increases exceeding 40% upon renewal this year. Although the national average home price has fallen about $110,000 from its 2022 peak, CIBC argues that modest affordability gains cannot offset the economic drag or resolve the high cost of building new homes.
Read on: Yahoo Finance Canada
