Canada's Housing Affordability Plan Hits Roadblock
The Canadian government's efforts to address housing affordability have been criticized for their lack of progress. The Canada Mortgage and Housing Corporation (CMHC) initially stated that building 3.5 million homes by 2030 would restore 2004 levels of affordability, but has since revised its goalposts, now expecting 4.4 million homes to achieve the same level of affordability by 2036.
This change in target comes despite a significant drop in population growth, which should have made it easier to meet the original goal. The CMHC's revised math has raised concerns about its accuracy and effectiveness in addressing housing affordability.
In other news, BMO Capital Markets warns that Canadian mortgage rates are unlikely to see relief in the near future. The bank expects the Bank of Canada to hike interest rates by five times by the end of 2027, which would throttle home sales and push prices down.
The real estate market is already experiencing a downturn, with prices falling 0.7% to $657,500 in August and demand balance hitting a 29-year low. The combination of sticky inventory and declining home sales has pushed the housing recovery into reverse gear.